Virginia's public entities must manage distressed, unique, large capacity, and/or emerging risks as part of the services they provide to the citizens of the Commonwealth. The liability insurance coverages required to manage these types of risks are not fully available through Virginia-admitted insurers, which requires public entities to obtain some coverages via the surplus lines insurance market. While technically a tax on non-Virginia insurance companies, the companies charge agencies for the cost of those taxes. This means that the ultimate burden of paying surplus lines taxes falls to the agencies themselves. As a result, Virginia's agencies and authorities spend hundreds of thousands of dollars each year in taxes on surplus lines premiums We believe that it would be advisable to exempt agencies and authorities from the surplus lines tax. Doing so would decrease their overall expenses, and it would also put Virginia's surplus lines premium tax policy in line with several peer states.