A lawsuit has been filed in the Superior Court of California in Los Angeles against the state Board of Equalization, Lexington Insurance Company and 500 unnamed firms regarding the nonpayment an annual tax traditionally imposed on admitted insurers.
In the case, Stephen F. Silvers and Steven J. Gold vs. State Board of Equalization, Ramon J. Hirsig, Lexington Insurance Company, and Does 1 through 500, the plaintiffs seek a judgment that Lexington and the other nonadmitted insurers included on California's List of Eligible Surplus Line Insurers are obligated to pay an annual tax that is imposed upon insurers doing business in the state.
The State Board of Equalization in California is responsible for assessing certain taxes against insurers doing business in California. In the court filing the plaintiffs allege that Lexington has owes more than $88 million in Section 28 taxes for the period 2003-2007.
A surplus lines tax applies to all surplus lines transactions and as a result surplus lines insurers have not had to pay the annual tax in question. The suit would require nonadmitted insurers to also pay the Section 28 tax, notwithstanding the fact that a surplus lines tax has already been paid.