|
Year Following Enactment |
Trust Fund Requirement |
| 1 | 15% of U.S. surplus lines liabilities, excluding aviation, wet marine and transportation insurance, with a maximum of $30,000,000. |
| 2 | 30% of U.S. surplus lines liabilities, excluding aviation, wet marine and transportation insurance, with a maximum of $60,000,000. |
(G) The commissioner shall have the authority to adjust, in
response to inflation, the trust fund amounts required by paragraph
(E) of this subdivision.(3) In addition to all of the other requirements of this
subsection, an insurer not domiciled in the United States or its
territories shall be listed on the NAIC's quarterly listing of
alien insurers. The commissioner may waive the requirement in
subdivision (3) of this paragraph or the requirements of
subparagraph (ii), paragraph (E), subdivision (2), subsection (c)
of this section may be satisfied by an insurer's possessing less
than the trust fund amount specified in subparagraph (ii),
paragraph (E), subdivision (2), subsection (c) of this section upon
an affirmative finding of acceptability by the commissioner if the
commissioner is satisfied that the placement of insurance with the
insurer is necessary and will not be detrimental to the public and
the policyholder. In determining whether business may be placed
with the insurer, the commissioner may consider such factors as:(A) The interests of the public and policyholders; (B) The length of time the insurer has been authorized in its
domiciliary jurisdiction and elsewhere;(C) Unavailability of particular coverages from authorized
insurers or unauthorized insurers meeting the requirements of this
section;(D) The size of the company as measured by its assets, capital
and surplus, reserves, premium writings, insurance in force or
other appropriate criteria;(E) The kinds of business the company writes, its net exposure
and the extent to which the company's business is diversified among
several lines of insurance and geographic locations; and(F) The past and projected trend in the size of the company's
capital and surplus considering such factors as premium growth,
operating history, loss and expense ratios, or other appropriate
criteria; and(4) Has caused to be provided to the commissioner a copy of
its current annual statement certified by the insurer and an
actuarial opinion as to the adequacy of, and methodology used to
determine, the insurer's loss reserves. The statement shall be
provided at the same time it is provided to the insurer's domicile,
but in no event more than eight months after the close of the
period reported upon, and shall be certified as a true and correct
copy by an accounting or auditing firm licensed in the jurisdiction
of the insurer's domicile and certified by a senior officer of the nonadmitted insurer as a true and correct copy of the statement
filed with the regulatory authority in the domicile of the
nonadmitted insurer. In the case of an insurance exchange
qualifying under paragraph (B), subdivision (2) of this subsection,
the statement may be an aggregate combined statement of all
underwriting syndicates operating during the period reported; and(5) In addition to meeting the requirements in subdivisions
(1) to (4) of this subsection an insurer shall be an eligible
surplus lines insurer if it appears on the most recent list of
eligible surplus lines insurers published by the commissioner from
time to time but at least annually. Nothing in this subdivision
shall require the commissioner to place or maintain the name of any
nonadmitted insurer on the list of eligible surplus lines insurers.(6) Notwithstanding subsection (a) of this section, only that
portion of any risk eligible for export for which the full amount
of coverage is not procurable from listed eligible surplus lines
insurers may be placed with any other nonadmitted insurer which
does not appear on the list of eligible surplus lines insurers
published by the commissioner pursuant to subdivision (5) of this
subsection but nonetheless meets the requirements set forth in
subdivisions (1) and (2), subsection (c) of this section and any
regulations of the commissioner. The surplus lines licensee
seeking to provide coverage through an unlisted nonadmitted insurer
shall make a filing specifying the amounts and percentages of each risk to be placed, and naming the nonadmitted insurers with which
placement is intended. Within thirty days after placing the
coverage, the surplus lines licensee shall also send written notice
to the insured that the insurance, or a portion thereof, has been
placed with the nonadmitted insurer.(d) Insurance procured under this section shall be valid and
enforceable as to all parties.(e) Withdrawal of eligibility as a surplus lines insurer.If at any time the commissioner has reason to believe that a
surplus lines insurer:(1) Is in unsound financial condition or has acted in an
untrustworthy manner;(2) No longer meets standards set forth in subsection (c) of
this section;(3) Has willfully violated the laws of this state; or(4) Does not conduct a proper claims practice; the
commissioner may declare it ineligible. The commissioner shall
promptly mail notice of all such declarations to each surplus lines
licensee.(f) Surplus lines tax.(1) In addition to the full amount of gross premiums charged
by the insurer for the insurance, every person licensed pursuant to
subsection (h), section five of this article shall collect and pay
to the commissioner a sum equal to four percent of the gross premiums and gross fees charged, less any return premiums, for
surplus lines insurance provided by the licensee pursuant to the
license. Where the insurance covers properties, risks or exposures
located or to be performed both in and out of this state, the sum
payable shall be computed on that portion of the gross premiums
allocated to this state pursuant to subdivision (4) of this
subsection less the amount of gross premiums allocated to this
state and returned to the insured due to cancellation of policy.
The tax on any portion of the premium unearned at termination of
insurance having been credited by the state to the licensee shall
be returned to the policyholder directly by the surplus lines
licensee or through the producing broker, if any. (2) The surplus lines broker may not:(A) Pay directly or indirectly the tax or any portion thereof,
either as an inducement to the policyholder to purchase the
insurance or for any other reason; or(B) Rebate all or part of the tax or the surplus lines
licensee's commission, either as an inducement to the policyholder
to purchase the insurance or for any reason.(3) The surplus lines licensee may charge the prospective
policyholder a fee for the cost of underwriting, issuing,
processing, inspecting, service or auditing the policy for
placement with the surplus lines insurer if:(A) The service is required by the surplus lines insurer;(B) The service is actually provided by the surplus lines
broker or the cost of the service is actually incurred by the
surplus lines licensee; and(C) The provision or cost of the service is reasonable,
documented and verifiable.(4) The surplus lines licensee shall make a clear and
conspicuous written disclosure to the policyholder of:(A) The total amount of premium for the policy;(B) Any fee charged;(C) The total amount of any fee charged; and(D) The total amount of tax on the premium and fee.(5) The clear and conspicuous written disclosure required by
subdivision (4) of this subsection is subject to the record
maintenance requirements of section eight of this article.(6) This tax is imposed for the purpose of providing
additional revenue for municipal policemen's and firemen's pension
and relief funds and additional revenue for volunteer and part
volunteer fire companies and departments. This tax is required to
be paid and remitted, on a calendar year basis and in quarterly
estimated installments due and payable on or before the
twenty-fifth day of the month succeeding the close of the quarter
in which they accrued, except for the fourth quarter, in respect of
which taxes shall be due and payable and final computation of
actual total liability for the prior calendar year shall be made, less credit for the three quarterly estimated payments prior made,
and filed with the annual return to be made on or before the first
day of March of the succeeding year. Provisions of this chapter
relating to the levy, imposition and collection of the regular
premium tax are applicable to the levy, imposition and collection
of this tax to the extent that the provisions are not in conflict
with this section.All taxes remitted to the commissioner pursuant to this
subsection shall be paid by him or her into a special account in
the state treasury, designated "municipal pensions and protection
fund," and after appropriation by the Legislature, shall be
distributed in accordance with the provisions of subsection (c),
section fourteen-d, article three of this chapter. The surplus
lines licensee shall return to the policyholder the tax on any
unearned portion of the premium returned to the policyholder
because of cancellation of policy.(7) If a surplus lines policy procured through a surplus lines
licensee covers properties, risks or exposures only partially
located or to be performed in this state, the tax due shall be
computed on the portions of the premiums which are attributable to
the properties, risks or exposures located or to be performed in
this state. In determining the amount of premiums taxable in this
state, all premiums written, procured or received in this state
shall be considered written on properties, risks or exposures located or to be performed in this state, except premiums which are
properly allocated or apportioned and reported as taxable premiums
of a reciprocal state. In no event shall the tax payable to this
state be less than the tax due pursuant to subdivision (8) of this
subsection; provided, however, in the event that the amount of tax
due under this provision is less than fifty dollars in any
jurisdiction, it shall be payable in the jurisdiction in which the
affidavit required in subsection (k) of this section is filed. The
commissioner shall, at least annually furnish to the commissioner
of a reciprocal state, as defined in subsection (l), section three
of this article, a copy of all filings reporting an allocation of
taxes as required by this subsection.(8) In determining the amount of gross premiums taxable in
this state for a placement of surplus lines insurance covering
properties, risks or exposures only partially located or to be
performed in this state, the tax due shall be computed on the
portions of the premiums which are attributable to properties,
risks or exposures located or to be performed in this state and
which relates to the kinds of insurance being placed as determined
by reference to the model allocation schedule and reporting form. (A) If a policy covers more than one classification:(i) For any portion of the coverage identified by a
classification on the allocation schedule, the tax shall be
computed by using the allocation schedule for the corresponding portion of the premium;(ii) For any portion of the coverage not identified by a
classification on the allocation schedule, the tax shall be
computed by using an alternative equitable method of allocation for
the property or risk;(iii) For any portion of the coverage where the premium is
indivisible, the tax shall be computed by using the method of
allocation which pertains to the classification describing the
predominant coverage.(B) If the information provided by the surplus lines licensee
is insufficient to substantiate the method of allocation used by
the surplus lines licensee, or if the commissioner determines that
the licensee's method is incorrect, the commissioner shall
determine the equitable and appropriate amount of tax due to this
state as follows:(i) By use of the allocation schedule where the risk is
appropriately identified in the schedule;(ii) Where the allocation schedule does not identify a
classification appropriate to the coverage, the commissioner may
give significant weight to documented evidence of the underwriting
bases and other criteria used by the insurer. The commissioner may
also consider other available information to the extent sufficient
and relevant, including the percentage of the insured's physical
assets in this state, the percentage of the insured's sales in this state, the percentage of income or resources derived from this
state, and the amount of premium tax paid to another jurisdiction
for the policy.(g) Collection of tax.If the tax owed by a surplus lines licensee under this section
has been collected and is not paid within the time prescribed, the
same shall be recoverable in a suit brought by the commissioner
against the surplus lines licensee. The commissioner may charge
interest for any unpaid tax, fee, financial assessment or penalty,
or portion thereof: Provided, That interest may not be charged on
interest. Interest shall be calculated using the annual rates
which are established by the tax commissioner pursuant to section
seventeen-a of article ten, chapter eleven of this code, and shall
accrue daily.(h) Surplus lines licenses:(1) A person shall not procure a contract of surplus lines
insurance with a nonadmitted insurer unless the person possesses a
current surplus lines insurance license issued by the commissioner;(2) The commissioner may issue a surplus lines license to a
qualified holder of a current property and casualty individual
insurance producer's license but only when the individual insurance
producer has:(A) Remitted the two hundred dollar annual fee to the
commissioner, of which all fees so collected are to be used for the purposes set forth in section thirteen, article three of this
chapter;(B) Submitted a completed license application on a form
supplied by the commissioner;(C) Passed a qualifying examination approved by the
commissioner, except that all holders of a license prior to the
effective date of this article shall be considered to have passed
such an examination; and(D) If a resident, established and continues to maintain an
office in this state. (3) If the commissioner determines that a surplus lines
licensee of another state is competent, trustworthy and meets the
licensing requirements of this state, the commissioner may, in his
or her discretion, issue a nonresident surplus lines license. A
license shall not be issued unless the prospective licensee
furnishes the commissioner with the name and address of a resident
of this state upon whom notices or orders of the commissioner or
process affecting the nonresident surplus lines licensee may be
served. The licensee shall promptly notify the commissioner in
writing of every change in its designated agent for service of
process, and the change shall not become effective until
acknowledged by the commissioner.(4) Each surplus lines license shall expire at midnight on the
thirty-first day of May next following the date of issuance, and an application for renewal shall be filed before the first day of May
of each year upon payment of the annual fee and compliance with
other provisions of this section. A surplus lines licensee who
fails to apply for renewal of the license before the first day of
May shall pay a penalty of one hundred dollars and be subject to
penalties provided by law before the license will be renewed.(i) Suspension, revocation or nonrenewal of surplus lines
licensee's license.(1) The commissioner may examine and investigate the business
affairs of every individual applying for or holding a surplus lines
insurance license to determine whether such individual has been or
is engaged in unfair or deceptive practices in any state.(2) The commissioner may place on probation, suspend, revoke
or refuse to issue or renew the license of a surplus lines licensee
or may levy a civil penalty in a sum not to exceed five thousand
dollars or any combination of actions after notice and hearing
pursuant to section thirteen, article two of this chapter upon one
or more of the following grounds:(A) Removal of the resident surplus lines licensee's office
from this state;(B) Removal of the resident surplus lines licensee's office
accounts and records from this state during the period during which
the accounts and records are required to be maintained under
subsection (q) of this section;(C) Closing of the surplus lines licensee's office for a
period of more than thirty business days, unless permission is
granted by the commissioner;(D) Failure to make and file required reports;(E) Failure to transmit required tax on surplus lines premiums
to this state or a reciprocal state to which a tax is owing;(F) Violation of any provision of this article; or(G) For any cause for which an insurance license could be
denied, revoked, suspended or renewal refused pursuant to section
twenty-four, article twelve of this chapter. (j) Actions against eligible surplus lines insurers
transacting surplus lines business.(1) An eligible surplus lines insurer may be sued upon a cause
of action arising in this state under a surplus lines insurance
contract made by it or evidence of insurance issued or delivered by
the surplus lines licensee. A policy issued by the eligible
surplus lines insurer shall contain a provision stating the
substance of this section and designating the person to whom the
commissioner shall mail process.(2) The remedies provided in this section are in addition to
any other methods provided by law for service of process upon
insurers.(k) Duty to file evidence of insurance and affidavits.Within thirty days after the placing of any surplus lines insurance, each producing broker shall execute and each surplus
lines licensee shall execute where appropriate, and file a written
report regarding the insurance which shall be kept confidential by
the commissioner, including the following:(1) The name and address of the insured;(2) The identity of the insurer or insurers;(3) A description of the subject and location of the risk and
the risk insured against;(4) Return premium paid, if any;(5) The amount of gross premium charged for the insurance;(6) The amount of the insurance;(7) Such other pertinent information as the commissioner may
reasonably require; and(8) An affidavit on a standardized form promulgated by the
commissioner, as to the diligent efforts to place the coverage with
admitted insurers and the results of that effort. The affidavit
shall be open to public inspection. The affidavit shall affirm
that the insured was expressly advised in writing prior to
placement of the insurance that:(A) The surplus lines insurer with whom the insurance was to
be placed is not licensed in this state and is not subject to its
supervision; and(B) In the event of the insolvency of the surplus lines
insurer, losses will not be paid by the state insurance guaranty fund.(l) Evidence of the insurance and subsequent changes to the
insurance.(1) Upon placing surplus lines insurance, the surplus lines
licensee shall promptly deliver to the insured the policy, or if
the policy is not then available, a certificate as described in
subdivision (4) of this subsection, cover note, binder or other
evidence of insurance. The certificate described in subdivision
(4) of this subsection, cover note, binder or other evidence of
insurance shall be executed by the surplus lines licensee and shall
show the description and location of the subject of the insurance,
coverages including any material limitations other than those in
standard forms, a general description of the coverages of the
insurance, the premium and rate charged and taxes to be collected
from the insured, and the name and address of the insured and
surplus lines insurer or insurers and proportion of the entire risk
assumed by each, and the name of the surplus lines licensee and the
licensee's license number.(2) A surplus lines licensee shall not issue or deliver any
evidence of insurance or purport to insure or represent that
insurance will be or has been written by any eligible surplus lines
insurer, or a nonadmitted insurer pursuant to subdivision (4),
subsection (c) of this section, unless the licensee has authority
from the insurer to cause the risk to be insured, or has received information from the insurer in the regular course of business that
the insurance has been granted.(3) If, after delivery of any evidence of insurance, there is
any change in the identity of the insurers, or the proportion of
the risk assumed by any insurer, or any other material change in
coverage as stated in the surplus lines licensee's original
evidence of insurance, or in any other material as to the insurance
coverage so evidenced, the surplus lines licensee shall promptly
issue and deliver to the insured or the original producing broker
an appropriate substitute for, or endorsement of the original
document, accurately showing the current status of the coverage and
the insurers responsible for the coverage.(4) As soon as reasonably possible after the placement of the
insurance, the surplus lines licensee shall deliver a copy of the
policy or, if not available, a certificate of insurance to the
insured to replace any evidence of insurance previously issued.
Each certificate or policy of insurance shall contain or have
attached a complete record of all policy insuring agreements,
conditions, exclusions, clauses, endorsements or any other material
facts that would regularly be included in the policy.(5) A surplus lines licensee who fails to comply with the
requirements of this subsection shall be subject to the penalties
provided in this article.(6) The surplus lines licensee shall give the following consumer notice to every person applying for insurance with a
nonadmitted insurer. The notice shall be printed in sixteen-point
type on a separate document affixed to the application. The
applicant shall sign and date a copy of the notice to acknowledge
receiving it. The surplus lines licensee shall maintain the signed
notice in its file for a period of ten years from expiration of the
policy. The surplus lines licensee shall tender a copy of the
signed notice to the insured at the time of delivery of each policy
the licensee transacts with a nonadmitted insurer. The copy shall
be a separate document affixed to the policy."Notice: 1. An insurer that is not licensed in this state is
issuing the insurance policy that you have applied to purchase.
These companies are called "nonadmitted" or "surplus lines"
insurers. 2. The insurer is not subject to the financial solvency
regulation and enforcement that applies to licensed insurers in
this state. 3. These insurers generally do not participate in
insurance guaranty funds created by state law. These guaranty
funds will not pay your claims or protect your assets if the
insurer becomes insolvent and is unable to make payments as
promised. 4. Some states maintain lists of approved or eligible
surplus lines insurers and surplus lines brokers may use only
insurers on the lists. Some states issue orders that particular
surplus lines insurers cannot be used. 5. For additional
information about the above matters and about the insurer, you should ask questions of your insurance agent or surplus lines
broker. You may also contact your insurance department consumer
help line."(m) Licensee's duty to notify insured.No contract of insurance placed by a surplus lines licensee
under this article shall be binding upon the insured and no premium
or fee charged shall be due and payable until the surplus lines
licensee shall have notified the insured in writing, in a form
acceptable to the commissioner, a copy of which shall be maintained
by the licensee with the records of the contract and available for
possible examination, that:(1) The insurer with which the licensee places the insurance
is not licensed by this state and is not subject to its
supervision; and(2) In the event of the insolvency of the surplus lines
insurer, losses will not be paid by the state insurance guaranty
fund.Nothing herein contained shall nullify any agreement by any
insurer to provide insurance.(n) Effect of payment to surplus lines licensee.A payment of premium to a surplus lines licensee acting for a
person other than itself in procuring, continuing or renewing any
policy of insurance procured under this section shall be considered
to be payment to the insurer, whatever conditions or stipulations may be inserted in the policy or contract notwithstanding.(o) Surplus lines licensees may accept business from other
producers.A surplus lines licensee may originate surplus lines insurance
or accept such insurance from any other individual insurance
producer duly licensed as to the kinds of insurance involved, and
the surplus lines licensee may compensate the individual insurance
producer for the business. The surplus lines license shall have
the right to receive from the insurer the customary commission.(p) Records of surplus lines licensee.Each surplus lines licensee shall keep in this state a full
and true record of each surplus lines insurance contract placed by
or through the licensee, including a copy of the policy,
certificate, cover note or other evidence of insurance showing each
of the following items applicable:(1) Amount of the insurance, risks and perils insured;(2) Brief description of the property insured and its
location;(3) Gross premium charged;(4) Any return premium paid;(5) Rate of premium charged upon the several items of
property;(6) Effective date and terms of the contract;(7) Name and address of the insured;(8) Name and address of the insurer;(9) Amount of tax and other sums to be collected from the
insured;(10) Allocation of taxes by state as referred to in subsection
(f) of this section; and (11) Identity of the producing broker, any confirming
correspondence from the insurer or its representative, and the
application.The record of each contract shall be kept open at all
reasonable times to examination by the commissioner without notice
for a period not less than ten years following termination of the
contract. In lieu of maintaining offices in this state, each
nonresident surplus lines licensee shall make available to the
commissioner any and all records that the commissioner deems
necessary for examination.(q) Reports - summary of exported business.On or before the first day of May, two thousand four, and on
or before the first day of May thereafter, the end of the month
following each year, each surplus lines licensee shall file with
the commissioner, on forms prescribed by the commissioner, a
verified report in duplicate of all surplus lines insurance
transacted during the preceding period, showing:(1) Aggregate gross premiums written;(2) Aggregate return premiums;(3) Amount of aggregate tax remitted to this state; and(4) Amount of aggregate tax due or remitted to each other
state for which an allocation is made pursuant to subsection (f) of
this section.(a) A person who in this state represents or aids a
nonadmitted insurer in violation of this article is guilty of a
felony and, upon conviction thereof, may be fined not more than
twenty thousand dollars per each act or sentenced to not less than
one nor more than five years in a state correctional facility, or
both fined and imprisoned. (b) In addition to any other penalty provided herein or
otherwise provided by law, including any suspension, revocation or
refusal to renew a license, any person, firm, association or
corporation violating any provision of this article shall be liable
to a civil penalty not exceeding ten thousand dollars for the first
offense, and not exceeding twenty thousand dollars for each
succeeding offense.(c) The above penalties are not exclusive remedies. Penalties
may also be assessed under article eleven of this chapter. Whenever the commissioner believes, from evidence satisfactory
to him or her, that a person is violating or about to violate the
provisions of this article, the commissioner may cause a complaint to be filed in the circuit court of Kanawha County for restitution
and to enjoin and restrain the person from continuing the violation
or engaging in or doing any act in furtherance thereof. The court
shall have jurisdiction of the proceeding and shall have the power
to make and enter an order of judgment awarding such preliminary or
final injunctive relief and restitution as in its judgment is
proper.(a) Any act of transacting insurance by an unauthorized person
or a nonadmitted insurer is equivalent to and shall constitute an
irrevocable appointment by the unauthorized person or insurer,
binding upon it, its executor or administrator, or successor in
interest of the secretary of state or his or her successor in
office, to be the true and lawful attorney of the unauthorized
person or insurer upon whom may be served all lawful process in any
action, suit or proceeding in any court by the commissioner or by
the state and upon whom may be served any notice, order, pleading
or process in any proceeding before the commissioner and which
arises out of transacting insurance in this state by the
unauthorized person or insurer. Any act of transacting insurance
in this state by a nonadmitted insurer shall signify its acceptance
of its agreement that any lawful process in such court action, suit
or proceeding and any notice, order, pleading or process in such
administrative proceeding before the commissioner so served shall be of the same legal force and validity as personal service of
process in this state upon the unauthorized person or insurer.(b) Service of process in the action shall be made by
delivering to and leaving with the secretary of state, or some
person in apparent charge of the office, two copies thereof and by
payment to the secretary of state of the fee prescribed by law.
Service upon the secretary of state as attorney shall be service
upon the principal.(c) The secretary of state shall forward by certified mail one
of the copies of the process or notice, order, pleading or process
in proceedings before the commissioner to the defendant in the
court proceeding or to whom the notice, order, pleading or process
in the administrative proceeding is addressed or directed at its
last known principal place of business and shall keep a record of
all process so served on the commissioner which shall show the day
and hour of service. Service is sufficient, provided:(1) Notice of service and a copy of the court process or the
notice, order, pleading or process in the administrative proceeding
are sent within fifteen days by certified mail by the plaintiff or
the plaintiff's attorney in the court proceeding or by the
commissioner in the administrative proceeding to the defendant in
the court proceeding or to whom the notice, order, pleading or
process in the administrative proceeding is addressed or directed
at the last known principal place of business of the defendant in the court or administrative proceeding; and(2) The defendant's receipt or receipts issued by the post
office with which the letter is registered, showing the name of the
sender of the letter and the name and address of the person or
insurer to whom the letter is addressed, and an affidavit of the
plaintiff or the plaintiff's attorney in a court proceeding or of
the commissioner in an administrative proceeding, showing
compliance are filed with the clerk of the court in which the
action, suit or proceeding is pending or with the commissioner in
administrative proceedings, on or before the date the defendant in
the court or administrative proceeding is required to appear or
respond, or within such further time as the court or commissioner
may allow.(d) A plaintiff shall not be entitled to a judgment or a
determination by default in any court or administrative proceeding
in which court process or notice, order, pleading or process in
proceedings before the commissioner is served under this section
until the expiration of forty-five days from the date of filing of
the affidavit of compliance.(e) Nothing in this section shall limit or affect the right to
serve any process, notice, order or demand upon any person or
insurer in any other manner now or hereafter permitted by law.(f) Each nonadmitted insurer assuming insurance in this state,
or relative to property, risks or exposures located or to be performed in this state, shall be considered to have subjected
itself to this article.(g) Notwithstanding conditions or stipulations in the policy
or contract, a nonadmitted insurer may be sued upon any cause of
action arising in this state, or relative to property, risks or
exposures located or to be performed in this state, under any
insurance contract made by it.(h) Notwithstanding conditions or stipulations in the policy
or contract, a nonadmitted insurer subject to arbitration or other
alternative dispute resolution mechanism arising in this state or
relative to property, risks or exposures located or to be performed
in this state under an insurance contract made by it shall conduct
the arbitration or other alternative dispute resolution mechanism
in this state.(i) A policy or contract issued by the nonadmitted insurer or
one which is otherwise valid and contains a condition or provision
not in compliance with the requirements of this article is not
thereby rendered invalid but shall be construed and applied in
accordance with the conditions and provisions which would have
applied had the policy or contract been issued or delivered in full
compliance with this article.(a) Before any nonadmitted insurer files or causes to be filed
any pleading in any court action, suit or proceeding or in any notice, order, pleading or process in an administrative proceeding
before the commissioner instituted against the person or insurer,
by services made as provided in this article, the insurer shall
either:(1) Deposit with the clerk of the court in which the action,
suit or proceeding is pending, or with the commissioner of
insurance in administrative proceedings before the commissioner,
cash or securities, or file with the clerk or commissioner a bond
with good and sufficient sureties, to be approved by the clerk or
commissioner in an amount to be fixed by the court or commissioner
sufficient to secure the payment of any final judgment which may be
rendered in the action or administrative proceeding; or(2) Procure a certificate of authority to transact the
business of insurance in this state. In considering the
application of an insurer for a certificate of authority, for the
purposes of this paragraph the commissioner need not assert the
provisions of section sixteen, article three of this chapter
against the insurer with respect to its application if the
commissioner determines that the company would otherwise comply
with the requirements for a certificate of authority.(b) The commissioner of insurance, in any administrative
proceeding in which service is made as provided in this article,
may in the commissioner's discretion, order such postponement as
may be necessary to afford the defendant reasonable opportunity to comply with the provisions of subsection (a) of this section and to
defend the action.(c) Nothing in subsection (a) of this section shall be
construed to prevent a nonadmitted insurer from filing a motion to
quash a writ or to set aside service thereof made in the manner
provided in this article, on the ground that the nonadmitted
insurer has not done any of the acts enumerated in the pleadings.(d) Nothing in subsection (a) of this section shall apply to
placements of insurance which were lawful in the state in which the
placement took place and which were not unlawful placements under
the laws of this state. Without limiting the generality of the
foregoing, nothing in subsection (a) of this section shall apply to
a placement made pursuant to section five of this article.The commissioner shall have the authority to proceed in the
courts of this state or any other United States jurisdiction to
enforce an order or decision in any court proceeding or in any
administrative proceeding before the commissioner of insurance.(a) Filing and status of foreign decrees.A copy of a foreign decree authenticated in accordance with
the statutes of this state may be filed in the office of the clerk
of any circuit court of this state. The clerk, upon verifying with
the commissioner that the decree or order qualifies as a "foreign
decree" shall treat the foreign decree in the same manner as a decree of a circuit court of this state. A foreign decree so filed
has the same effect and shall be deemed a decree of a Circuit Court
of this state, and is subject to the same procedures, defenses and
proceedings for reopening, vacating or staying as a decree of a
circuit court of this state and may be enforced or satisfied in
like manner.(b) Notice of filing.(1) At the time of the filing of the foreign decree, the
plaintiff shall make and file with the clerk of the court an
affidavit setting forth the name and last known post-office address
of the defendant.(2) Promptly upon the filing of the foreign decree and the
affidavit, the clerk shall mail notice of the filing of the foreign
decree to the defendant at the address given and to the
commissioner of this state and shall make a note of the mailing in
the docket. In addition, the plaintiff may mail a notice of the
filing of the foreign decree to the defendant and to the
commissioner of this state and may file proof of mailing with the
clerk. Lack of mailing notice of filing by the clerk shall not
affect the enforcement proceedings if proof of mailing by the
plaintiff has been filed.(3) No execution or other process for enforcement of a foreign
decree filed hereunder may issue until thirty days after the date
the decree is filed.(c) Stay of the foreign decree.(1) If the defendant shows the circuit court that an appeal
from the foreign decree is pending or will be taken, or that a stay
of execution has been granted, the court shall stay enforcement of
the foreign decree until the appeal is concluded, the time for
appeal expires, or the stay of execution expires or is vacated,
upon proof that the defendant has furnished the security for the
satisfaction of the decree required by the state in which it was
rendered.(2) If the defendant shows the circuit court any ground upon
which enforcement of a decree of any circuit court of this state
would be stayed, the court shall stay enforcement of the foreign
decree for an appropriate period, upon requiring the same security
for satisfaction of the decree which is required in this state.(d) It shall be the policy of this state that the insurance
commissioner shall cooperate with regulatory officials in other
United States jurisdictions to the greatest degree reasonably
practicable in enforcing lawfully issued orders of such other
officials subject to public policy and the insurance laws of the
state. Without limiting the generality of the foregoing, the
commissioner may enforce an order lawfully issued by other
officials provided the order does not violate the laws or public
policy of this state.A nonadmitted insurer may not commence or maintain an action
in law or equity, including arbitration or any other dispute
resolution mechanism, in this state to enforce any right arising
out of any insurance transaction except with respect to:(a) Claims under policies lawfully written in this state;(b) Liquidation of assets and liabilities of the insurer
(other than collection of new premium), resulting from its former
authorized operations in this state;(c) Transactions subsequent to issuance of a policy not
covering domestic risks at the time of issuance, and lawfully
procured under the laws of the jurisdiction where the transaction
took place;(d) Surplus lines insurance placed by a licensee under
authority of section five of this article;(e) Reinsurance placed under the authority of article
thirty-eight of this chapter;(f) The continuation and servicing of life insurance, health
insurance policies or annuity contracts remaining in force as to
residents of this state where the formerly authorized insurer has
withdrawn from the state and is not transacting new insurance in
the state;(g) Servicing of policies written by an admitted insurer in a
state to which the insured has moved but in which the company does
not have a certificate of authority until the term expires; (h) Claims under policies covering wet marine and
transportation insurance;(i) Placements of insurance which were lawful in the
jurisdiction in which the transaction took place and which were not
unlawful placements under the laws of this state.Surplus lines insurance shall be countersigned by a duly
licensed resident surplus lines licensee.The commissioner shall receive the following fees from surplus
lines licensees: For letters of certification, five dollars; for
letters of clearance, ten dollars; for duplicate license, five
dollars. All fees and moneys so collected shall be used for the
purposes set forth in section thirteen, article three of this
chapter.No surplus lines licensee may knowingly place any coverage in
an insolvent insurer.A surplus lines licensee shall notify the commissioner of any
change in his or her mailing address within thirty days of such
change. The commissioner shall maintain the mailing address of
each surplus lines licensee on file. Failure to timely inform the
insurance commissioner of a change in legal name or address may result in a penalty pursuant to section twenty-four, article twelve
of this chapter.If any provisions of this article, or the application of the
provision to any person or circumstance, shall be held invalid, the
remainder of the article and the application of the provision to
persons or circumstances other than those as to which it is held
invalid, shall not be affected thereby.(a) When conducting any hearing authorized by section
thirteen, article two of this chapter which concerns any surplus
lines licensee, the commissioner shall give notice of the hearing
and the matters to be determined therein to the surplus lines
licensee by certified mail, return receipt requested, sent to the
last address filed by a person or entity pursuant to subsection
(h), section five of this article.(b) If a surplus lines licensee fails to appear at the
hearing, the hearing may proceed, at which time the commissioner
shall establish that notice was sent to the person pursuant to this
section prior to the entry of any orders adverse to the interests
of a surplus lines licensee based upon the allegations against the
person which were set forth in the notice of hearing. Certified
copies of all orders entered by the commissioner shall be sent to
the person affected therein by certified mail, return receipt requested, at the last address filed by a person with the
commissioner.(c) A surplus lines licensee who fails to appear at a hearing
of which notice has been provided pursuant to this section, and who
has had an adverse order entered by the commissioner against them
as a result of their failure to so appear may, within thirty
calendar days of the entry of an adverse order, file with the
commissioner a written verified appeal with any relevant documents
attached thereto, which demonstrates good and reasonable cause for
the person's failure to appear, and may request reconsideration of
the matter and a new hearing. The commissioner in his or her
discretion, and upon a finding that the surplus lines licensee has
shown good and reasonable cause for his or her failure to appear,
shall issue an order that the previous order be rescinded, that the
matter be reconsidered, and that a new hearing be set.(d) Orders entered pursuant to this section are subject to the
judicial review provisions of section fourteen, article two of this
chapter.NOTE: The purpose of this bill is to amend article twelve-c,
chapter thirty-three to modernize the regulation of surplus lines
insurers by enactment of the NAIC nonadmitted insurance model act.
The insurance commission is concerned that there is currently no
limitation of access to this state by nonadmitted insurers to the
surplus lines market and no financial responsibility requirements
for nonadmitted insurers.This article is entirely rewritten, therefore, strike-throughs
and underscoring have been omitted.