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| PRIOR PRINTER'S NO. 1278 | PRINTER'S NO. 1291 |
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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY D. WHITE, STACK, ERICKSON AND RAFFERTY, JUNE 6, 2011 |
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| SENATOR D. WHITE, BANKING AND INSURANCE, AS AMENDED, JUNE 7, 2011 |
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| AN ACT |
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1 | Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An |
2 | act relating to insurance; amending, revising, and |
3 | consolidating the law providing for the incorporation of |
4 | insurance companies, and the regulation, supervision, and |
5 | protection of home and foreign insurance companies, Lloyds |
6 | associations, reciprocal and inter-insurance exchanges, and |
7 | fire insurance rating bureaus, and the regulation and |
8 | supervision of insurance carried by such companies, |
9 | associations, and exchanges, including insurance carried by |
10 | the State Workmen's Insurance Fund; providing penalties; and |
11 | repealing existing laws," further providing for purpose, for |
12 | definitions, for acting for or aiding nonadmitted insurers, |
13 | for requirements for eligible surplus lines insurers, for |
14 | surplus lines licensee's duty to notify insured, for exempt |
15 | risks, for surplus lines advisory organizations, for |
16 | licensing of surplus lines licensee, for surplus lines |
17 | licensees may accept business from insurance producer, for |
18 | surplus lines tax, for tax on independently procured |
19 | insurance and for suspension, revocation or nonrenewal of |
20 | surplus lines licensee's license. |
21 | The General Assembly of the Commonwealth of Pennsylvania |
22 | hereby enacts as follows: |
23 | Section 1. Section 1601 of the act of May 17, 1921 (P.L.682, |
24 | No.284), known as The Insurance Company Law of 1921, added |
25 | December 18, 1992 (P.L.1519, No.178), is amended to read: |
26 | Section 1601. Purpose and scope.--(a) The purpose of this |
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1 | article is to protect the public interest by: |
2 | (1) Protecting persons seeking insurance in this |
3 | Commonwealth. |
4 | (2) Permitting surplus lines insurance to be placed with |
5 | reputable and financially sound nonadmitted insurers and |
6 | exported from this Commonwealth pursuant to this article. |
7 | (3) Establishing a system of regulation which will permit |
8 | orderly access to surplus lines insurance in this Commonwealth |
9 | and encouraging insurers to make new and innovative types of |
10 | insurance available to consumers in this Commonwealth. |
11 | (4) Protecting revenues of this Commonwealth. |
12 | (b) (1) The provisions of this article, in so far as they |
13 | relate to the placement of surplus lines insurance and |
14 | independently procured insurance, shall apply when this |
15 | Commonwealth is the home state of the insured. |
16 | (2) The provisions of this article, in so far as they relate |
17 | to the imposition of surplus lines and independently procured |
18 | premium tax and penalties for policies placed after June 30, |
19 | 2011, shall apply when this Commonwealth is the home state of |
20 | the insured. |
21 | (3) The provisions of this article, in so far as they relate |
22 | to the collection, reporting and remittance of surplus lines |
23 | insurance and independently procured insurance premium tax for |
24 | policies placed after June 30, 2011, shall apply when this |
25 | Commonwealth is the home state of the insured. |
26 | Section 2. Sections 1602, 1603(c)(6), 1605(a) and 1608 of |
27 | the act, amended March 22, 2010 (P.L.147, No.14), are amended to |
28 | read: |
29 | Section 1602. Definitions.--As used in this article the |
30 | following words and phrases shall have the meanings given to |
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1 | them in this section: |
2 | "Admitted insurer." An insurer licensed to do an insurance |
3 | business in this Commonwealth. |
4 | "Affiliate." With respect to an insured, any entity that |
5 | controls, is controlled by or is under common control with the |
6 | insured. |
7 | "Affiliated group." Any group of entities that are all |
8 | affiliated. |
9 | "Business entity." A corporation, a partnership, a limited |
10 | liability company, a limited liability partnership, a business |
11 | trust or any other entity doing business other than as a natural |
12 | person. |
13 | "Capital." The term, as used in the financial requirements |
14 | of section 1605, means funds paid for stock or other evidence of |
15 | ownership. |
16 | "Commissioner." The Insurance Commissioner of the |
17 | Commonwealth. |
18 | "Control." An entity has control over another entity if: |
19 | (1) the entity directly or indirectly or acting through one |
20 | or more other persons owns, controls or has the power to vote |
21 | twenty-five per centum (25%) or more of any class of voting |
22 | securities of the other entity; or |
23 | (2) the entity controls in any manner the election of a |
24 | majority of the directors or trustees of the other entity. |
25 | "Department." The Insurance Department of the Commonwealth. |
26 | "Eligible surplus lines insurer." A nonadmitted insurer with |
27 | which a surplus lines licensee may place surplus lines insurance |
28 | under section 1604. |
29 | "Export." To place surplus lines insurance with either a |
30 | nonadmitted insurer or an eligible surplus lines insurer in |
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1 | accordance with this article. |
2 | "Home state." |
3 | (1) (i) Except as provided under paragraph (2), with | <-- |
4 | respect to an insured: |
5 | (A) (i) the state in which an insured maintains its | <-- |
6 | principal place of business or, in the case of an individual, |
7 | the individual's principal residence; or |
8 | (B) (ii) if one hundred per centum (100%) of the insured | <-- |
9 | risk is located out of the state referred to under clause (A) | <-- |
10 | subparagraph (i), the state to which the greatest percentage of | <-- |
11 | the insured's taxable premium for that insurance contract is |
12 | allocated. |
13 | (ii) (2) If more than one insured from an affiliated group | <-- |
14 | are named insureds on a single nonadmitted insurance contract, |
15 | the term means the home state, as determined under subparagraph | <-- |
16 | (i) paragraph (1), of the member of the affiliated group that | <-- |
17 | has the largest percentage of premium attributed to it under the |
18 | insurance contract. |
19 | (2) (3) This definition shall not apply to section 1615(g). | <-- |
20 | "Independently procured insurance." Any insurance [which a |
21 | resident of this Commonwealth directly negotiates with and |
22 | purchases, continues or renews from a nonadmitted insurer |
23 | without securing the services of an insurance producer or |
24 | surplus lines licensee] directly procured by an insured from a |
25 | nonadmitted insurer. |
26 | "Insurance producer." A person that is licensed to sell, |
27 | solicit or negotiate contracts of insurance with admitted |
28 | insurers. |
29 | "Kind of insurance." One of the types of insurance required |
30 | to be reported in the annual statement which must be filed with |
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1 | the department by admitted insurers. |
2 | "Nonadmitted insurer." An insurer not authorized and not |
3 | licensed to do an insurance business in this Commonwealth. The |
4 | term includes insurance exchanges as authorized under the laws |
5 | of various states. The term does not include a risk retention |
6 | group. |
7 | "Person." A natural person or business entity. |
8 | "Purchasing group." An entity formed to purchase liability |
9 | insurance under the Risk Retention Amendments of 1986 (Public |
10 | Law 99-563, 100 Stat. 3170). |
11 | "Risk retention group." An insurer organized to do business |
12 | under the Risk Retention Amendments of 1986 (Public Law 99-563, |
13 | 100 Stat. 3170). |
14 | "State." Any state of the United States, the District of |
15 | Columbia, the Commonwealth of Puerto Rico, Guam, the Northern |
16 | Mariana Islands, the Virgin Islands and American Samoa. |
17 | "Surplus." The term, as used in the financial requirements |
18 | of section 1605, means funds over and above liabilities and |
19 | capital of the company for the protection of its policyholders. |
20 | "Surplus lines insurance." Any insurance [of risks resident, |
21 | located or to be performed in this Commonwealth,] permitted to |
22 | be placed through a surplus lines licensee with a nonadmitted |
23 | insurer eligible to accept such insurance, other than |
24 | reinsurance, wet marine and transportation insurance, |
25 | independently procured insurance, life insurance and annuities |
26 | and coverage obtained from risk retention groups under the Risk |
27 | Retention Amendments of 1986 (Public Law 99-563, 100 Stat. |
28 | 3170). |
29 | "Surplus lines licensee." A person licensed as a surplus |
30 | lines producer under section 1615 to place surplus lines |
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1 | insurance with nonadmitted insurers eligible to accept such |
2 | insurance. |
3 | "Type of insurance." Coverage afforded under the particular |
4 | policy that is being placed. |
5 | "Wet marine and transportation insurance." Any of the |
6 | following: |
7 | (1) Insurance upon vessels, crafts or hulls and of interests |
8 | therein or with relation thereto. |
9 | (2) Insurance of marine builder's risks, marine war risks |
10 | and contracts of marine protection and indemnity insurance. |
11 | (3) Insurance of freights and disbursements pertaining to a |
12 | subject of insurance coming within this definition. |
13 | (4) Insurance of personal property and interest therein, in |
14 | the course of exportation from or importation into any country, |
15 | or in the course of transportation coastwise or on inland |
16 | waters, including transportation by land, water or air from |
17 | point of origin to final destination, in connection with any and |
18 | all risks or perils of navigation, transit or transportation, |
19 | and while being prepared for and while awaiting shipment, and |
20 | during any delays, transshipment or reshipment. Insurance of |
21 | personal property and interests therein shall not be considered |
22 | wet marine and transportation insurance if: |
23 | (i) the property has been transported solely by land; |
24 | (ii) the property has reached its final destination as |
25 | specified in the bill of lading or other shipping document; or |
26 | (iii) the insured no longer has an insurable interest in the |
27 | property. |
28 | (5) Any insurance associated with transportation of property |
29 | listed under this definition. |
30 | "Writing producer." The insurance producer which brings |
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1 | about or negotiates contracts of insurance directly on behalf of |
2 | the consumer seeking insurance. |
3 | Section 1603. Acting for or Aiding Nonadmitted Insurers.--* |
4 | * * |
5 | (c) This section does not apply to any of the following: |
6 | * * * |
7 | (6) Transactions subsequent to issuance of a policy [not |
8 | covering domestic risks at time of issuance and lawfully |
9 | solicited, written or delivered outside of this Commonwealth] in |
10 | which this Commonwealth becomes the home state. |
11 | * * * |
12 | Section 1605. Requirements for Eligible Surplus Lines |
13 | Insurers.--(a) No surplus lines licensee shall place any |
14 | coverage with a nonadmitted insurer unless, at the time of |
15 | placement, such nonadmitted insurer[: |
16 | (1) Is of good repute and financial integrity. |
17 | (2) Qualifies under any of the following subparagraphs: |
18 | (i) Has policyholder surplus equal to or greater than two |
19 | times the minimum capital and surplus required to be fully |
20 | licensed in this Commonwealth. Two (2) years from the effective |
21 | date of this article is granted to allow those nonadmitted |
22 | insurers which are eligible surplus lines insurers on the |
23 | effective date of this article to achieve this capital and |
24 | surplus requirement. If an alien insurer, as defined by the act |
25 | of December 10, 1974 (P.L.804, No.266), referred to as the Alien |
26 | Insurer Domestication Law, it shall maintain in the United |
27 | States an irrevocable trust fund in either a national bank or a |
28 | member of the Federal Reserve System, in an amount not less than |
29 | that currently required by the National Association of Insurance |
30 | Commissioners' International Insurers Department or its |
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1 | successor for the protection of all of its policyholders in the |
2 | United States, and such trust fund consists of cash, securities, |
3 | letters of credit or investments of substantially the same |
4 | character and quality as those which are eligible investments |
5 | for admitted insurers authorized to write like kinds of |
6 | insurance in this Commonwealth. Such trust fund will be in |
7 | addition to the capital and surplus required in this |
8 | subparagraph and shall have an expiration date which at no time |
9 | shall be less than five (5) years. |
10 | (ii) Is any Lloyd's or other similar group of insurers which |
11 | includes unincorporated individual insurers that maintains a |
12 | trust fund of not less than fifty million ($50,000,000) dollars |
13 | as security to the full amount thereof for all policyholders and |
14 | creditors in the United States of each member of the group. Such |
15 | trust funds shall likewise comply with the terms and conditions |
16 | established in subparagraph (i) for alien insurers. |
17 | (iii) Is an insurance exchange created by the laws of |
18 | individual states that maintains capital and surplus or the |
19 | substantial equivalent thereof of not less than fifteen million |
20 | ($15,000,000) dollars in the aggregate. For insurance exchanges |
21 | which maintain funds for the protection of all insurance |
22 | exchange policyholders, each individual syndicate shall maintain |
23 | minimum capital and surplus or the substantial equivalent |
24 | thereof of not less than one million five hundred thousand |
25 | ($1,500,000) dollars. In the event the insurance exchange does |
26 | not maintain funds for the protection of all insurance exchange |
27 | policyholders, each individual syndicate shall meet the minimum |
28 | capital and surplus requirements of subparagraph (i). |
29 | (3) Has provided to the department a copy of its current |
30 | annual financial statement certified by such insurer, such |
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1 | statement to be provided no more than thirty (30) days after the |
2 | date required for filing an annual financial statement in its |
3 | domiciliary jurisdiction and which is either: |
4 | (i) certified by the regulatory authority in the domicile of |
5 | the insurer; or |
6 | (ii) certified by an accounting or auditing firm licensed in |
7 | the jurisdiction of the insurer's domicile. |
8 | In the case of an insurance exchange, the statement may be an |
9 | aggregate statement of all underwriting syndicates operating |
10 | during the period reported.] qualifies under one of the |
11 | following: |
12 | (1) (i) is authorized to write the type of insurance in its |
13 | domiciliary jurisdiction; and |
14 | (ii) has capital and surplus or its equivalent under the |
15 | laws of its domiciliary jurisdiction which is greater than or |
16 | equal to fifteen million ($15,000,000) dollars. The requirement |
17 | of this subparagraph may be satisfied by an insurer's possessing |
18 | less than the minimum capital and surplus upon an affirmative |
19 | finding of acceptability by the commissioner. The finding shall |
20 | be based upon such factors as quality of management, capital and |
21 | surplus of any parent company, company underwriting profit and |
22 | investment income trends, market availability and company record |
23 | and reputation within the industry. In no event shall the |
24 | commissioner make an affirmative finding of acceptability when |
25 | the nonadmitted insurer's capital and surplus is less than four |
26 | million five hundred thousand ($4,500,000) dollars. |
27 | (2) If domiciled outside the United States, is listed on the |
28 | Quarterly Listing of Alien Insurers maintained by the |
29 | International Insurers Department of the National Association of |
30 | Insurance Commissioners. |
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1 | * * * |
2 | Section 1608. Surplus Lines Licensee's Duty to Notify |
3 | Insured.--At the time of presenting a quotation to the insured, |
4 | the surplus lines licensee shall present to the insured or to |
5 | the writing producer written notice that the insurance or a |
6 | portion thereof involves placement with nonadmitted insurers. |
7 | The surplus lines licensee shall, either directly or through the |
8 | writing producer, give notice to the insured that: |
9 | (1) the insurer with which the licensee places the insurance |
10 | is not licensed by the [Pennsylvania Insurance Department] |
11 | department and is subject to its limited regulation; and |
12 | (2) in the event of the insolvency of an eligible surplus |
13 | lines insurer, losses will not be paid by the Pennsylvania |
14 | Property and Casualty Insurance Guaranty Association. |
15 | Section 3. Section 1610(a) of the act, added December 18, |
16 | 1992 (P.L.1519, No.178), is amended and the section is amended |
17 | by adding subsections to read: |
18 | Section 1610. Exempt Risks.--[(a) The diligent search |
19 | requirements of section 1604(2), the reporting requirements of |
20 | section 1609(a) and the twenty-five per centum (25%) limitation |
21 | of section 1606 are not applicable to placements of insurance |
22 | with nonadmitted insurers for risks of an insured which meets at |
23 | least three of the following requirements: |
24 | (1) The insured employs a full-time risk manager or |
25 | contracts for services from a qualified risk management service. |
26 | (2) The insured has gross sales in excess of one hundred |
27 | million ($100,000,000) dollars. |
28 | (3) The insured regularly employs in excess of two hundred |
29 | fifty (250) full-time employes. |
30 | (4) The insured has assets in excess of one hundred million |
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1 | ($100,000,000) dollars. |
2 | (5) The insured has insurance premiums for property and |
3 | casualty insurance, excluding employe benefits, in excess of two |
4 | hundred fifty thousand ($250,000) dollars. |
5 | (6) The insured is seeking insurance for risks resident, |
6 | located or to be performed in one or more states other than this |
7 | Commonwealth and the portion of the total risk ascribable to |
8 | states other than this Commonwealth exceeds fifty per centum |
9 | (50%).] |
10 | (a.1) The diligent search requirements of section 1604(2), |
11 | the reporting requirements of section 1609(a) and the twenty- |
12 | five per centum (25%) limitation of section 1606 shall not apply |
13 | to placements of insurance with nonadmitted insurers for an |
14 | exempt commercial purchaser if: |
15 | (1) the surplus lines licensee procuring or placing the |
16 | surplus lines insurance has disclosed to the exempt commercial |
17 | purchaser that the insurance may be available from the admitted |
18 | market that may provide greater protection with more regulatory |
19 | oversight; and |
20 | (2) the exempt commercial purchaser has subsequently |
21 | requested in writing the surplus lines licensee to procure or |
22 | place the insurance from a nonadmitted insurer. |
23 | * * * |
24 | (c) The following words and phrases when used in this |
25 | section shall have the meanings given to them in this subsection |
26 | unless the context clearly indicates otherwise: |
27 | "Exempt commercial purchaser." Any person purchasing |
28 | commercial insurance that, at the time of placement, meets the |
29 | following requirements: |
30 | (1) The person employs or retains a qualified risk manager |
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1 | to negotiate insurance coverage. |
2 | (2) The person has paid aggregate nationwide commercial |
3 | property and casualty insurance premiums in excess of one |
4 | hundred thousand ($100,000) dollars in the immediately preceding |
5 | twelve (12) months. |
6 | (3) (i) The person meets at least one of the following |
7 | criteria: |
8 | (A) The person possesses a net worth in excess of twenty |
9 | million ($20,000,000) dollars, as adjusted under subparagraph |
10 | (ii). |
11 | (B) The person generates annual revenues in excess of fifty |
12 | million ($50,000,000) dollars, as adjusted under subparagraph |
13 | (ii). |
14 | (C) The person employs more than five hundred (500) full- |
15 | time or full-time equivalent employees per individual insured or |
16 | is a member of an affiliated group employing more than one |
17 | thousand (1,000) employees in the aggregate. |
18 | (D) The person is a not-for-profit organization or public |
19 | entity generating annual budgeted expenditures of at least |
20 | thirty million ($30,000,000) dollars, as adjusted under |
21 | subparagraph (ii). |
22 | (E) The person is a municipality with a population in excess |
23 | of fifty thousand (50,000) persons. |
24 | (ii) Beginning January 1, 2015 and every five years |
25 | thereafter, the amounts under clauses (A), (B) and (D) shall be |
26 | adjusted to reflect the percentage change for the five-year |
27 | period in the Consumer Price Index for All Urban Consumers |
28 | published by the Bureau of Labor Statistics of the Department of |
29 | Labor and Industry. |
30 | "Qualified risk manager." With respect to a policyholder of |
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1 | commercial insurance, a person who meets all of the following |
2 | requirements: |
3 | (1) The person is an employee of, or third-party consultant |
4 | retained by, the commercial policyholder. |
5 | (2) The person provides skilled services in loss prevention, |
6 | loss reduction or risk and insurance coverage analysis and |
7 | purchase of insurance. |
8 | (3) The person: |
9 | (i) (A) has a bachelor's degree or higher from an |
10 | accredited college or university in risk management, business |
11 | administration, finance, economics or any other field determined |
12 | by the commissioner to demonstrate minimum competence in risk |
13 | management; and |
14 | (B) (I) has three (3) years of experience in risk |
15 | financing, claims administration, loss prevention, risk and |
16 | insurance analysis or purchasing commercial lines of insurance; |
17 | or |
18 | (II) has: |
19 | (a) a designation as a Chartered Property and Casualty |
20 | Underwriter issued by the American Institute for Chartered |
21 | Property and Casualty Underwriter/Insurance Institute of |
22 | America; |
23 | (b) a designation as an Associate in Risk Management issued |
24 | by the American Institute for Chartered Property and Casualty |
25 | Underwriter/Insurance Institute of America; |
26 | (c) a designation as Certified Risk Manager issued by the |
27 | National Alliance for Insurance Education & Research; |
28 | (d) a designation as a RIMS Fellow issued by the Global Risk |
29 | Management Institute; or |
30 | (e) any other designation, certification or license |
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1 | determined by the commissioner to demonstrate minimum competency |
2 | in risk management; |
3 | (ii) (A) has at least seven (7) years of experience in risk |
4 | financing, claims administration, loss prevention, risk and |
5 | insurance coverage analysis or purchasing commercial lines of |
6 | insurance; and |
7 | (B) has any one of the designations specified under clauses |
8 | (a), (b), (c), (d) and (e); |
9 | (iii) has at least ten (10) years of experience in risk |
10 | financing, claims administration, loss prevention, risk and |
11 | insurance coverage analysis or purchasing commercial lines of |
12 | insurance; or |
13 | (iv) has a graduate degree from an accredited college or |
14 | university in risk management, business administration, finance, |
15 | economics or any other field determined by the commissioner to |
16 | demonstrate minimum competence in risk management. |
17 | Section 4. Section 1611(f) of the act, amended March 22, |
18 | 2010 (P.L.147, No.14), is amended to read: |
19 | Section 1611. Surplus Lines Advisory Organizations.--* * * |
20 | (f) The advisory organization may submit reports and make |
21 | recommendations to the department regarding the financial |
22 | condition of any eligible surplus lines insurer. These reports |
23 | and recommendations shall not be considered to be public |
24 | information or subject to any Federal or [State] state freedom |
25 | of information law. There shall be no liability on the part of |
26 | nor shall any cause of action of any nature be sustained against |
27 | eligible surplus lines insurers, the advisory organization or |
28 | its members, agents, employes, officers or directors or the |
29 | department or authorized representatives of the department for |
30 | statements and any reports or recommendations made by them in |
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1 | good faith under this section. |
2 | * * * |
3 | Section 5. Section 1615(a) of the act, amended March 22, |
4 | 2010 (P.L.147, No.14), is amended and the section is amended by |
5 | adding subsections to read: |
6 | Section 1615. Licensing of Surplus Lines Licensee.--(a) |
7 | [No] For insureds whose home state is this Commonwealth, no |
8 | insurance producer licensed by the department shall transact |
9 | surplus lines insurance with any nonadmitted insurer unless the |
10 | insurance producer possesses a valid surplus lines producer's |
11 | license issued by the department. |
12 | * * * |
13 | (c.2) The commissioner may participate with the National |
14 | Association of Insurance Commissioners or its affiliates in a |
15 | centralized insurance producer registry for the purpose of |
16 | submitting or obtaining information on insurance producers, |
17 | surplus lines producers and other licensees, including licensing |
18 | history, lines of authority and regulatory actions. |
19 | * * * |
20 | (g) As used in subsection (c.1), the term "home state" for |
21 | an insurance producer or surplus lines producer shall be as |
22 | defined as in section 601-A of the act of May 17, 1921 (P.L.789, |
23 | No.285), known as "The Insurance Department Act of 1921." |
24 | Section 6. Sections 1616, 1621, 1622 and 1623 of the act, |
25 | amended March 22, 2010 (P.L.147, No.14), are amended to read: |
26 | Section 1616. Surplus Lines Licensees May Accept Business |
27 | from Insurance [Producer] Producers.--A surplus lines licensee |
28 | may originate surplus lines insurance or accept such insurance |
29 | from an insurance producer duly licensed as to the kind or kinds |
30 | of insurance involved, and the surplus lines licensee may |
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1 | compensate the insurance producer. |
2 | Section 1621. Surplus Lines Tax.--(a) (1) There is hereby |
3 | levied a tax of three per centum (3%) on all premiums charged |
4 | for insurance which is placed with either an eligible surplus |
5 | lines insurer, other than a risk retention group, or other |
6 | nonadmitted insurer in accordance with this article, such taxes |
7 | to be based on the gross premiums charged less any return |
8 | premiums. This tax shall be in addition to the full amount of |
9 | the gross premium charged by the insurer for the insurance. The |
10 | tax on any unearned portion of the premium shall be returned to |
11 | the insured. |
12 | [(b) Neither the surplus lines licensee nor the writing |
13 | producer shall pay directly or indirectly such tax or any |
14 | portion thereof, either as an inducement to the insured to |
15 | purchase the insurance or for any other reason. |
16 | (c) The surplus lines licensee shall collect from the |
17 | insured or the writing producer the amount of the tax at the |
18 | time of delivery of the initial policy, cover note or other |
19 | evidence of insurance or at such time thereafter as is |
20 | reasonably consistent with normal credit terms customary in the |
21 | business. Each surplus lines licensee shall, on or before |
22 | January 31 of each year, file with the Department of Revenue a |
23 | report of all transactions involving the placement of insurance |
24 | with either an eligible surplus lines insurer or other |
25 | nonadmitted insurers during the previous calendar year. The |
26 | report shall set forth the name of the insured, identification |
27 | of the insurer, the type of insurance, gross premiums charged |
28 | less any return premiums allowed and the tax due as provided in |
29 | this section. The remittance for the taxes due shall accompany |
30 | this report. Such report shall be made on forms prescribed and |
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1 | furnished by the Department of Revenue. A copy of the report |
2 | shall be filed with the department by the surplus lines |
3 | licensee. A surplus lines licensee that is a business entity |
4 | licensee which files the annual premium tax return with the |
5 | Department of Revenue shall include in its return the premium |
6 | taxes generated during the year subject to reporting by all |
7 | licensees associated with said business entity during the |
8 | reporting period.] |
9 | [(d)] (2) In the event that a placement of insurance |
10 | involves subjects of insurance resident, located or to be |
11 | performed in one or more states other than this Commonwealth, |
12 | then the premium taxes provided for in this section shall be |
13 | levied: |
14 | (i) For policies placed before July 1, 2011, only on that |
15 | portion of the premium reasonably ascribable to that portion of |
16 | the risk situated in this Commonwealth. |
17 | (ii) For policies placed after June 30, 2011, upon the gross |
18 | premium charged less any return premiums where this Commonwealth |
19 | is the home state of the insured. |
20 | (d.1) (1) Each surplus lines licensee shall, on or before |
21 | January 31 of each year, file a report of all premiums |
22 | transacted from the placement of insurance with either an |
23 | eligible surplus lines insurer or other nonadmitted insurers |
24 | during the previous calendar year. The report shall be filed as |
25 | prescribed by the Department of Revenue with any payment. A full |
26 | copy of the report shall be filed with the department by the |
27 | surplus lines licensee. |
28 | (2) The report described under this subsection shall set |
29 | forth the name of the insured, the home state of the insured, if |
30 | required by the department, identification of the insurer, the |
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1 | type of insurance, gross premiums charged less any return |
2 | premiums allowed, the tax due as provided in this section and |
3 | any other information as required by the Department of Revenue. |
4 | A surplus lines licensee that is a business entity licensee |
5 | which files the annual premium tax return with the Department of |
6 | Revenue shall include in its return the premium taxes generated |
7 | during the year subject to reporting by all licensees associated |
8 | with said business entity during the reporting period. The |
9 | report shall be made on forms prescribed by the Department of |
10 | Revenue. |
11 | (3) The remittance for the taxes due shall accompany the |
12 | report described under this subsection. Neither the surplus |
13 | lines licensee nor the writing producer shall pay directly or |
14 | indirectly the tax or any portion of the tax, either as an |
15 | inducement to the insured to purchase the insurance or for any |
16 | other reason. The surplus lines licensee shall collect from the |
17 | insured or the writing producer the amount of the tax at the |
18 | time of delivery of the initial policy, cover note or other |
19 | evidence of insurance or at the time thereafter as is reasonably |
20 | consistent with normal credit terms customary in the business. |
21 | (4) A penalty shall be imposed for failure to file the |
22 | report required under this subsection on or before the due date |
23 | in accordance with the rules of section 403(d) of the act of |
24 | March 4, 1971 (P.L.6, No.2), known as the "Tax Reform Code of |
25 | 1971." |
26 | (e) With respect to insurance placed with or issued by a |
27 | risk retention group which is an eligible surplus lines insurer, |
28 | there is hereby levied a tax of two per centum (2%) on all |
29 | premiums charged for risks resident, located or to be performed |
30 | in this Commonwealth. The risk retention group shall be |
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1 | responsible for the payment of the taxes levied in this article |
2 | in accordance with procedures set forth in Article XV. |
3 | (f) The [settlement and resettlement] assessment of taxes |
4 | imposed by this article, including the granting of extensions of |
5 | time to file reports and the rights of the taxpayers to present |
6 | and prosecute a petition for [resettlement] assessment, a |
7 | petition for review or an appeal to court or to file a petition |
8 | for refund and the imposition of interest and penalties, shall |
9 | be governed by the provisions of the act of March 4, 1971 |
10 | (P.L.6, No.2), known as the "Tax Reform Code of 1971," as |
11 | approved in the case of [capital stock and franchise taxes] |
12 | corporate net income tax. |
13 | Section 1622. Tax on Independently Procured Insurance.--(a) |
14 | (1) The tax provided by section 1621(a) is imposed upon an |
15 | insured whose home state is this Commonwealth who independently |
16 | procures insurance [on a subject of insurance resident, located |
17 | or to be performed in this Commonwealth] from a nonadmitted |
18 | insurer or continues or renews such independently procured |
19 | insurance. [The insured shall, within thirty (30) days after the |
20 | date when such insurance was independently procured, continued |
21 | or renewed, report such transaction on forms prescribed by the |
22 | Department of Revenue. This report shall set forth the |
23 | information required of surplus lines licensees as required in |
24 | section 1621(c). The tax of three per centum (3%) shall be paid |
25 | on the date the report is due as provided in this section. If |
26 | the independently procured insurance covers risks resident, |
27 | located or to be performed in one or more states other than this |
28 | Commonwealth, the premium taxes shall be prorated in accordance |
29 | with provisions in section 1621(d). A copy of such report shall |
30 | be filed with the department by the insured.] |
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1 | (2) If the independently procured insurance covers risks |
2 | resident, located or to be performed in one or more states other |
3 | than this Commonwealth, the premium taxes shall be payable as |
4 | computed in accordance with section 1621(a). |
5 | (b) The insured shall, within thirty (30) days after the |
6 | last day of the month in which the insurance was independently |
7 | procured, continued or renewed, report the transaction on the |
8 | forms and in the manner prescribed by the Department of Revenue. |
9 | The report shall set forth the information required of surplus |
10 | lines licensees as required in any report described under |
11 | section 1621. The tax of three per centum (3%) shall be paid on |
12 | the date the report is due as provided under this section. The |
13 | insured shall file a copy of the report with the department upon |
14 | its request. |
15 | (c) A penalty shall be imposed for failure to file the |
16 | report required under this section on or before the due date in |
17 | accordance with the rules of section 403(d) of the act of March |
18 | 4, 1971 (P.L.6, No.2), known as the "Tax Reform Code of 1971." |
19 | Section 1623. Suspension, Revocation or Nonrenewal of |
20 | Surplus Lines Licensee's License.--The department may suspend, |
21 | revoke or refuse to renew the license of a surplus lines |
22 | licensee after notice and a hearing, as provided under the |
23 | applicable provision of the laws of this Commonwealth, upon any |
24 | one or more of the following grounds: |
25 | (3) Closing of the surplus lines licensee's office for a |
26 | period of more than thirty (30) business days, unless permission |
27 | is granted by the department. |
28 | (4) Failure to make and file required reports. |
29 | (5) Failure to collect or transmit required tax on surplus |
30 | lines premiums. |
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1 | (7) Failure to remit premiums due insurers or return |
2 | premiums due insureds in the normal course of business and |
3 | within reasonable time limits. |
4 | (8) Violation of any provision of this [article] act. |
5 | (9) For any other cause for which an insurance producer's |
6 | license could be denied, revoked or suspended or refused upon |
7 | renewal. |
8 | Section 7. This act shall take effect immediately. |
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