100+ Free Arkansas Surplus Lines Practice Questions

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An Arkansas surplus lines broker places a $100,000 premium policy. At the 4.0% rate, what is the surplus lines tax?

$5,000

$4,000

$3,000

$2,000

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Free Surplus Lines Insurance Practice Test by State 2026: 2,300+ Questions22 min read

2026 Statistics

Key Facts: Arkansas Surplus Lines Exam

65-75%

First-Time Pass Rate

Industry Data

70%

Passing Score

Arkansas Insurance Department

Exam Questions

PSI Services

2 hours

Exam Duration

PSI Services

$50

Exam Fee

PSI Services

P&C Required

Prerequisite

AID (3+ years)

Arkansas administers its surplus lines broker exam through PSI Services with 50 questions in 120 minutes and a 70% passing standard. Unique requirements include 3 years of P&C experience, a $50,000 surety bond, and a $1,035 application fee. The exam covers surplus lines markets, AID regulations, diligent search, the 4.0% premium tax, and NRRA provisions.

Sample Arkansas Surplus Lines Practice Questions

Try these sample questions to test your Arkansas Surplus Lines exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1What is the primary purpose of the surplus lines market?

A.To provide coverage for risks that admitted carriers are unwilling or unable to insure

B.To offer lower premiums than the standard market

C.To replace the admitted insurance market

D.To provide government-backed insurance guarantees

Explanation: The surplus lines market exists to provide coverage for risks that the admitted (standard) market is unwilling or unable to insure. These are often unusual, high-risk, or hard-to-place risks that require the flexibility of the non-admitted market.

2In Arkansas, which agency is the primary regulator of surplus lines insurance?

A.Arkansas Department of Revenue

B.Arkansas Insurance Department (AID)

C.Federal Insurance Office

D.National Association of Insurance Commissioners

Explanation: The Arkansas Insurance Department (AID) is the primary regulator of all insurance activities in Arkansas, including surplus lines. AID oversees surplus lines broker licensing, eligible insurer lists, tax collection, bonding requirements, and compliance enforcement.

3What is Lloyd's of London?

A.A single insurance company based in London

B.A marketplace where multiple syndicates underwrite insurance risks

C.A reinsurance company owned by the British government

D.A surplus lines brokerage firm in the United States

Explanation: Lloyd's of London is a marketplace where multiple syndicates (groups of underwriters) pool capital to accept insurance risks. Each syndicate is managed by a managing agent. Lloyd's is one of the most prominent sources for surplus lines coverage worldwide.

4What unique prerequisite does Arkansas require for surplus lines broker applicants beyond a P&C license?

A.Must have held a P&C license for at least 1 year

B.Must have held a P&C license for at least 3 years

C.Must have held a P&C license for at least 5 years

D.No P&C experience is required

Explanation: Arkansas requires that surplus lines broker applicants must have held an active Property & Casualty insurance license for at least 3 years. This is more stringent than many states and ensures that surplus lines brokers have substantial experience in the property and casualty market.

5What bond amount does Arkansas require for surplus lines brokers?

A.$10,000

B.$25,000

C.$50,000

D.$100,000

Explanation: Arkansas requires surplus lines brokers to maintain a $50,000 surety bond. This bond protects the state and consumers by providing a financial guarantee that the broker will comply with all surplus lines laws, including proper tax remittance and regulatory obligations.

6What is the Arkansas surplus lines broker application fee?

A.$100

B.$500

C.$1,035

D.$2,000

Explanation: The Arkansas surplus lines broker application fee is $1,035. This is significantly higher than many other states and covers the application processing, background check, and initial license issuance through the Arkansas Insurance Department.

7What is a diligent search requirement in surplus lines insurance?

A.A requirement to find the cheapest policy

B.A requirement to document that coverage was sought from admitted insurers before placing with a surplus lines carrier

C.A requirement to verify the insured's claims history

D.A requirement to investigate every insurer's financial strength

Explanation: The diligent search requirement mandates that a surplus lines broker must first attempt to place coverage with admitted insurers before going to the surplus lines market. The broker must document declinations to demonstrate the admitted market cannot provide coverage.

8What is the surplus lines premium tax rate in Arkansas?

A.2.0%

B.3.0%

C.4.0%

D.5.0%

Explanation: Arkansas imposes a surplus lines premium tax of 4.0% on all surplus lines policies. This is collected by the surplus lines broker and remitted to the Arkansas Insurance Department. The 4.0% rate is higher than many other states.

9Who is responsible for collecting and remitting surplus lines premium taxes in Arkansas?

A.The insured

B.The non-admitted insurer

C.The surplus lines broker

D.AID collects directly

Explanation: In Arkansas, the surplus lines broker is responsible for collecting the surplus lines premium tax from the insured and remitting it to AID. The broker bears the regulatory obligation for proper tax collection, reporting, and timely remittance.

10What is the Nonadmitted and Reinsurance Reform Act (NRRA)?

A.An Arkansas state law governing surplus lines

B.A federal law that streamlined surplus lines regulation by designating the home state as the sole taxing authority

C.A regulation banning non-admitted insurers from the U.S.

D.A federal act creating a national surplus lines license

Explanation: The NRRA, part of the Dodd-Frank Act, streamlined surplus lines regulation by establishing that only the insured's home state has authority to tax and regulate surplus lines transactions. This eliminated complex multi-state tax allocation.

About the Arkansas Surplus Lines Exam

Arkansas's surplus lines broker exam tests knowledge of the non-admitted insurance market, AID surplus lines regulations, the 3-year P&C experience requirement, $50,000 surety bond obligations, diligent search requirements, the 4.0% surplus lines premium tax, Lloyd's of London and London Market operations, eligible insurer requirements, NRRA provisions, and E&S coverages relevant to Arkansas risks including agriculture, poultry, and severe weather.

Questions

50 scored questions

Time Limit

2 hours (120 minutes)

Passing Score

70%

Exam Fee

$50 (Arkansas Insurance Department (AID) / PSI Services)

Arkansas Surplus Lines Exam Content Outline

30%

Surplus Lines Markets

Lloyd's of London syndicates, London Market, alien insurers, managing general agents, wholesale brokers, binding authority, and E&S market operations

25%

Arkansas Surplus Lines Law

AID regulation, 3-year P&C requirement, $50,000 surety bond, broker licensing, eligible insurer list, and state-specific compliance

20%

Diligent Search & Eligibility

Diligent search documentation, admitted market declinations, export lists, NAIC IID listing, and non-admitted insurer financial standards

25%

Taxation & Compliance

Arkansas 4.0% surplus lines premium tax, NRRA home-state taxation, recordkeeping, fiduciary duties, reporting requirements, and penalties

How to Pass the Arkansas Surplus Lines Exam

What You Need to Know

Passing score: 70%
Exam length: 50 questions
Time limit: 2 hours (120 minutes)
Exam fee: $50

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

Arkansas Surplus Lines Study Tips from Top Performers

1Master the Arkansas surplus lines tax rate of 4.0% and practice calculating tax amounts on various premium levels

2Know the unique Arkansas requirements: 3 years P&C experience, $50,000 surety bond, and $1,035 application fee

3Study Lloyd's of London structure: syndicates, managing agents, coverholders, slips, and binding authority thoroughly

4Understand NRRA provisions including home-state taxation and regulation of surplus lines transactions

5Review Arkansas-specific surplus lines risks: poultry/agriculture, natural gas extraction, timber, and tornado/severe weather

6Learn the diligent search documentation requirements and when export list exemptions apply

Frequently Asked Questions

How many questions are on the Arkansas surplus lines broker exam?

The Arkansas surplus lines broker exam contains 50 questions with a 2-hour time limit. You must score at least 70% (35 correct) to pass.

What are the unique prerequisites for Arkansas surplus lines brokers?

Arkansas requires 3 years of active P&C license experience, a $50,000 surety bond, and a $1,035 application fee. These requirements are more stringent than most other states.

What is Arkansas's surplus lines premium tax rate?

Arkansas imposes a 4.0% surplus lines premium tax on gross premiums. The broker collects this from the insured and remits it to the Arkansas Insurance Department (AID).

Why does Arkansas require a $50,000 surety bond?

The $50,000 surety bond protects the state and consumers by guaranteeing the broker will comply with surplus lines laws, including proper tax remittance. If the broker violates regulations, the bond can be claimed against.

How much does the Arkansas surplus lines broker exam cost?

The exam fee is approximately $50 through PSI Services. However, the total licensing cost includes the $1,035 application fee and the $50,000 surety bond premium (typically 1-5% of the bond amount).

What topics should I focus on for the Arkansas surplus lines exam?

Focus on surplus lines market structure, AID regulations, the 3-year P&C requirement, surety bond obligations, diligent search procedures, the 4.0% premium tax, non-admitted insurer eligibility, NRRA provisions, and Arkansas agricultural/severe weather risks.