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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY BOYLE, DeLUCA, JOSEPHS AND MURPHY, MAY 4, 2009 |
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| REFERRED TO COMMITTEE ON INSURANCE, MAY 4, 2009 |
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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 definitions, |
12 | for acting for or aiding nonadmitted insurers, for |
13 | requirements for eligible surplus lines insurers, for other |
14 | nonadmitted insurers, for surplus lines licensee's duty to |
15 | notify insured, for declarations, for surplus lines advisory |
16 | organizations, for evidence of insurance, for licensing of |
17 | surplus lines licensee, for surplus lines licensee's |
18 | acceptance of business from brokers, for records of surplus |
19 | lines licensees, for monthly reports, for surplus lines tax, |
20 | for tax on independently procured insurance, for suspension, |
21 | revocation or nonrenewal of surplus lines licensee's license |
22 | and for penalties; and providing for compliance. |
23 | The General Assembly of the Commonwealth of Pennsylvania |
24 | hereby enacts as follows: |
25 | Section 1. Section 1602 of the act of May 17, 1921 (P.L.682, |
26 | No.284), known as The Insurance Company Law of 1921, amended or |
27 | added December 18, 1992 (P.L.1519, No.178) and July 10, 2002 |
28 | (P.L.749, No.110), is amended to read: |
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1 | Section 1602. Definitions.--As used in this article the |
2 | following words and phrases shall have the meanings given to |
3 | them in this section: |
4 | "Admitted insurer." An insurer licensed to do an insurance |
5 | business in this Commonwealth. |
6 | "Business entity." A corporation, a partnership, a limited |
7 | liability company, a limited liability partnership, a business |
8 | trust or any other entity doing business other than as a natural |
9 | person. |
10 | "Capital." The term, as used in the financial requirements |
11 | of section 1605, means funds paid for stock or other evidence of |
12 | ownership. |
13 | "Commissioner." The Insurance Commissioner of the |
14 | Commonwealth. |
15 | "Department." The Insurance Department of the Commonwealth. |
16 | "Eligible surplus lines insurer." A nonadmitted insurer with |
17 | which a surplus lines licensee may place surplus lines insurance |
18 | under section 1604. |
19 | "Export." To place surplus lines insurance with either a |
20 | nonadmitted insurer or an eligible surplus lines insurer in |
21 | accordance with this article. |
22 | "Independently procured insurance." Any insurance which a |
23 | resident of this Commonwealth directly negotiates with and |
24 | purchases, continues or renews from a nonadmitted insurer |
25 | without securing the services of an insurance [agent, broker] |
26 | producer or surplus lines licensee[, whether the agent or broker |
27 | holds a resident or nonresident license issued by the |
28 | department]. |
29 | "Insurance producer." A person that is licensed to sell, |
30 | solicit or negotiate contracts of insurance with admitted |
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1 | insurers. |
2 | "Kind of insurance." One of the types of insurance required |
3 | to be reported in the annual statement which must be filed with |
4 | the department by admitted insurers. |
5 | "Nonadmitted insurer." An insurer not authorized and not |
6 | licensed to do an insurance business in this Commonwealth. The |
7 | term includes insurance exchanges as authorized under the laws |
8 | of various states. |
9 | "Person." A natural person or business entity. |
10 | ["Producing broker." The broker dealing directly with the |
11 | party seeking insurance.] |
12 | "Purchasing group." An entity formed to purchase liability |
13 | insurance under the Risk Retention Amendments of 1986 (Public |
14 | Law 99-563, 100 Stat. 3170). |
15 | "Risk retention group." An insurer organized to do business |
16 | under the Risk Retention Amendments of 1986 (Public Law 99-563, |
17 | 100 Stat. 3170). |
18 | "Surplus." The term, as used in the financial requirements |
19 | of section 1605, means funds over and above liabilities and |
20 | capital of the company for the protection of its policyholders. |
21 | "Surplus lines insurance." Any insurance of risks resident, |
22 | located or to be performed in this Commonwealth, permitted to be |
23 | placed through a surplus lines licensee with a nonadmitted |
24 | insurer eligible to accept such insurance, other than |
25 | reinsurance, wet marine and transportation insurance, |
26 | independently procured insurance, life [and health] insurance |
27 | and annuities and coverage obtained from risk retention groups |
28 | under the Risk Retention Amendments of 1986 (Public Law 99-563, |
29 | 100 Stat. 3170). |
30 | "Surplus lines licensee." [An individual, partnership or |
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1 | corporation] A person licensed as a surplus lines producer under |
2 | section 1615 to place surplus lines insurance with nonadmitted |
3 | insurers eligible to accept such insurance. |
4 | "Wet marine and transportation insurance." Any of the |
5 | following: |
6 | (1) Insurance upon vessels, crafts or hulls and of interests |
7 | therein or with relation thereto. |
8 | (2) Insurance of marine builder's risks, marine war risks |
9 | and contracts of marine protection and indemnity insurance. |
10 | (3) Insurance of freights and disbursements pertaining to a |
11 | subject of insurance coming within this definition. |
12 | (4) Insurance of personal property and interest therein, in |
13 | the course of exportation from or importation into any country, |
14 | or in the course of transportation coastwise or on inland |
15 | waters, including transportation by land, water or air from |
16 | point of origin to final destination, in connection with any and |
17 | all risks or perils of navigation, transit or transportation, |
18 | and while being prepared for and while awaiting shipment, and |
19 | during any delays, transshipment or reshipment. Insurance of |
20 | personal property and interests therein shall not be considered |
21 | wet marine and transportation insurance if: |
22 | (i) the property has been transported solely by land; |
23 | (ii) the property has reached its final destination as |
24 | specified in the bill of lading or other shipping document; or |
25 | (iii) the insured no longer has an insurable interest in the |
26 | property. |
27 | (5) Any insurance associated with transportation of property |
28 | listed under this definition. |
29 | "Writing producer." The insurance producer which brings |
30 | about or negotiates contracts of insurance directly on behalf of |
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1 | the consumer seeking insurance. |
2 | Section 2. Section 1603 of the act, added December 18, 1992 |
3 | (P.L.1519, No.178), is amended to read: |
4 | Section 1603. Acting for or Aiding Nonadmitted Insurers.-- |
5 | (a) No person in this Commonwealth shall directly or indirectly |
6 | act as [agent] a producer for, or otherwise represent or aid on |
7 | behalf of another, any nonadmitted insurer in the solicitation, |
8 | negotiation, procurement or effectuation of insurance, or |
9 | renewals thereof, or forwarding of applications, or delivery of |
10 | policies or contracts or inspection of risks, or fixing of |
11 | rates, or investigation or adjustment of claims or losses, or |
12 | collection or forwarding of premiums, or in any other manner |
13 | represent or assist such insurer in the transaction of |
14 | insurance. |
15 | (b) If the nonadmitted insurer is not an eligible surplus |
16 | lines insurer and fails to pay a claim or loss within the |
17 | provisions of the insurance contract, a person who assisted or |
18 | in any manner aided, directly or indirectly, in the procurement |
19 | of the insurance contract shall be liable to the insured for the |
20 | full amount payable under the provisions of the insurance |
21 | contract. |
22 | (c) This section does not apply to any of the following: |
23 | (1) Surplus lines insurance if it is effected and written |
24 | pursuant to this article. |
25 | (2) Insurance effected with a nonadmitted insurer pursuant |
26 | to sections 1606 and 1610. |
27 | (3) Transactions for which a certificate of authority to do |
28 | business is not required of an insurer under the insurance laws |
29 | of this Commonwealth. |
30 | (4) Reinsurance. |
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1 | (5) Wet marine and transportation insurance. |
2 | (6) Transactions subsequent to issuance of a policy not |
3 | covering domestic risks at time of issuance and lawfully |
4 | solicited, written or delivered outside of this Commonwealth. |
5 | (7) Transactions involving risk retention groups chartered |
6 | and licensed outside of this Commonwealth. |
7 | Section 3. Section 1605 of the act, amended July 10, 2002 |
8 | (P.L.749, No.110), is amended to read: |
9 | Section 1605. Requirements for Eligible Surplus Lines |
10 | Insurers.--(a) No surplus lines licensee shall place any |
11 | coverage with a nonadmitted insurer unless, at the time of |
12 | placement, such nonadmitted insurer: |
13 | (1) Is of good repute and financial integrity. |
14 | (2) Qualifies under any of the following subparagraphs: |
15 | (i) Has policyholder surplus equal to or greater than two |
16 | times the minimum capital and surplus required to be fully |
17 | licensed in this Commonwealth. Two (2) years from the effective |
18 | date of this article is granted to allow those nonadmitted |
19 | insurers which are eligible surplus lines insurers on the |
20 | effective date of this article to achieve this capital and |
21 | surplus requirement. If an alien insurer, as defined by the act |
22 | of December 10, 1974 (P.L.804, No.266), referred to as the Alien |
23 | Insurer Domestication Law, it shall maintain in the United |
24 | States an irrevocable trust fund in either a national bank or a |
25 | member of the Federal Reserve System, in an amount not less than |
26 | that currently required by the National Association of Insurance |
27 | Commissioners' International Insurers Department or its |
28 | successor for the protection of all of its policyholders in the |
29 | United States, and such trust fund consists of cash, securities, |
30 | letters of credit or investments of substantially the same |
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1 | character and quality as those which are eligible investments |
2 | for admitted insurers authorized to write like kinds of |
3 | insurance in this Commonwealth. Such trust fund will be in |
4 | addition to the capital and surplus required in this |
5 | subparagraph and shall have an expiration date which at no time |
6 | shall be less than five (5) years. |
7 | (ii) Is any Lloyd's or other similar group of insurers which |
8 | includes unincorporated individual insurers that maintains a |
9 | trust fund of not less than fifty million ($50,000,000) dollars |
10 | as security to the full amount thereof for all policyholders and |
11 | creditors in the United States of each member of the group. Such |
12 | trust funds shall likewise comply with the terms and conditions |
13 | established in subparagraph (i) for alien insurers. |
14 | (iii) Is an insurance exchange created by the laws of |
15 | individual states that maintains capital and surplus or the |
16 | substantial equivalent thereof of not less than fifteen million |
17 | ($15,000,000) dollars in the aggregate. For insurance exchanges |
18 | which maintain funds for the protection of all insurance |
19 | exchange policyholders, each individual syndicate shall maintain |
20 | minimum capital and surplus or the substantial equivalent |
21 | thereof of not less than one million five hundred thousand |
22 | ($1,500,000) dollars. In the event the insurance exchange does |
23 | not maintain funds for the protection of all insurance exchange |
24 | policyholders, each individual syndicate shall meet the minimum |
25 | capital and surplus requirements of subparagraph (i). |
26 | (3) Has provided to the department a copy of its current |
27 | annual financial statement certified by such insurer, such |
28 | statement to be provided no more than thirty (30) days after the |
29 | date required for filing an annual financial statement in its |
30 | domiciliary jurisdiction and which is either: |
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1 | (i) certified by the regulatory authority in the domicile of |
2 | the insurer; or |
3 | (ii) certified by an accounting or auditing firm licensed in |
4 | the jurisdiction of the insurer's domicile. |
5 | In the case of an insurance exchange, the statement may be an |
6 | aggregate statement of all underwriting syndicates operating |
7 | during the period reported. |
8 | (b) In addition to meeting the requirements in subsection |
9 | (a), a nonadmitted insurer shall be an eligible surplus lines |
10 | insurer if it appears on the most recent list of eligible |
11 | surplus lines insurers published by the department from time to |
12 | time but at least [semiannually] annually. Nothing in this |
13 | section shall require the department to place or maintain the |
14 | name of any nonadmitted insurer on the list of eligible surplus |
15 | lines insurers. |
16 | Section 4. Section 1606 of the act, added December 18, 1992 |
17 | (P.L.1519, No.178), is amended to read: |
18 | Section 1606. Other Nonadmitted Insurers.--Only that |
19 | portion, not to exceed twenty-five per centum (25%), of any risk |
20 | eligible for export for which the full amount of coverage is not |
21 | procurable from either admitted insurers or eligible surplus |
22 | lines insurers may be placed with any other nonadmitted insurer |
23 | which does not appear on the list of eligible surplus lines |
24 | insurers published by the department pursuant to section 1605(b) |
25 | but nonetheless meets the requirements set forth in section |
26 | 1605(a) and any regulations of the department. The surplus lines |
27 | licensee [seeking to provide] providing coverage through a |
28 | nonadmitted insurer which is not an eligible surplus lines |
29 | insurer shall make a filing specifying the amount and percentage |
30 | of each risk along with a full explanation of why the risk could |
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1 | not be placed with admitted or eligible surplus lines insurers |
2 | and naming the nonadmitted insurer with which placement [is |
3 | intended] was made. At the time of presenting a quotation to the |
4 | insured, the surplus lines licensee shall present to the insured |
5 | or to the [producing broker] writing producer written notice |
6 | that a portion of the insurance will be placed with such |
7 | nonadmitted insurer. |
8 | Section 5. Sections 1608 and 1609 of the act, amended July |
9 | 10, 2002 (P.L.749, No.110), are amended to read: |
10 | Section 1608. Surplus Lines Licensee's Duty to Notify |
11 | Insured.--At the time of presenting a quotation to the insured, |
12 | the surplus lines licensee shall present to the insured or to |
13 | the [producing broker] writing producer written notice that the |
14 | insurance or a portion thereof involves placement with |
15 | nonadmitted insurers. The surplus lines licensee shall, either |
16 | directly or through the [producing broker] writing producer, |
17 | give notice to the insured that: |
18 | (1) the insurer with which the licensee places the insurance |
19 | is not licensed by the Pennsylvania Insurance Department and is |
20 | subject to its limited regulation; and |
21 | (2) in the event of the insolvency of an eligible surplus |
22 | lines insurer, losses will not be paid by the Pennsylvania |
23 | Property and Casualty Insurance Guaranty Association. |
24 | Section 1609. Declarations.--(a) In the case of each |
25 | placement of insurance in accordance with this article: |
26 | (1) Within thirty (30) days after the surplus lines licensee |
27 | has placed insurance with an eligible surplus lines insurer, the |
28 | [producing broker] writing producer must execute and forward to |
29 | the surplus lines licensee a written statement, in a form |
30 | prescribed by the department, declaring that: |
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1 | (i) A diligent effort to procure the desired coverage from |
2 | admitted insurers was made. |
3 | (ii) The insured was expressly advised in writing prior to |
4 | placement of the insurance that: |
5 | (A) the insurer with whom the insurance is to be placed is |
6 | not admitted to transact business in this Commonwealth and is |
7 | subject to limited regulation by the department; and |
8 | (B) in the event of the insolvency of the insurer, losses |
9 | will not be paid by the Pennsylvania Property and Casualty |
10 | Insurance Guaranty Association. |
11 | This written declaration shall be open to public inspection. |
12 | (2) Within forty-five (45) days after insurance has been |
13 | placed in an eligible surplus lines insurer, the surplus lines |
14 | licensee shall file with the department a written declaration of |
15 | his lack of knowledge of how the coverage could have been |
16 | procured from admitted insurers. The surplus lines licensee |
17 | shall simultaneously file the written declaration of the |
18 | [producing broker] writing producer, as set forth in paragraph |
19 | (1). |
20 | (3) In a particular transaction where the [producing broker] |
21 | writing producer and surplus lines licensee are one in the same |
22 | entity, [he] the writing producer or surplus lines licensee |
23 | shall execute both declarations. |
24 | (b) Subsection (a) shall not apply to any insurance which |
25 | has been placed continuously with an eligible surplus lines |
26 | insurer for a period of at least three (3) consecutive years |
27 | immediately preceding the current placement. However, within |
28 | forty-five (45) days after insurance has been placed with an |
29 | eligible surplus lines insurer, the surplus lines licensee shall |
30 | file with the department his written declaration on a form |
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1 | prescribed by the department. |
2 | Section 6. Sections 1611, 1612 and 1614 of the act, added |
3 | December 18, 1992 (P.L.1519, No.178), are amended to read: |
4 | Section 1611. Surplus Lines Advisory Organizations.--(a) A |
5 | surplus lines advisory organization of surplus lines licensees |
6 | may be formed to: |
7 | (1) Facilitate and encourage compliance by [its members] |
8 | surplus lines licensees with the laws of this Commonwealth and |
9 | the rules and regulations of the department relative to surplus |
10 | lines insurance. |
11 | (2) Provide means for the examination, which shall remain |
12 | confidential, of all surplus lines coverages written by [its |
13 | members] surplus lines licensees to determine whether such |
14 | coverages comply with such laws and regulations. |
15 | (3) Communicate with organizations of admitted insurers with |
16 | respect to the proper use of the surplus lines market. |
17 | (4) Receive and disseminate to [its members] surplus lines |
18 | licensees information relative to surplus lines insurance. |
19 | (b) The functions of the organization shall in no way |
20 | supplant or delegate current regulatory authority of the |
21 | department to administer the provisions of this article. |
22 | (c) [Each such] An advisory organization shall file with the |
23 | department for approval: |
24 | (1) A copy of its constitution, its articles of agreement or |
25 | association or its certificate of incorporation. |
26 | (2) A copy of its bylaws, rules and regulations governing |
27 | its activities. |
28 | [(3) A current list of its members.] |
29 | (4) The name and address of a resident of this Commonwealth |
30 | upon whom notices or orders of the department or processes |
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1 | issued at its direction may be served. |
2 | (5) An agreement that the department may examine such |
3 | advisory organization in accordance with the provisions of this |
4 | section. |
5 | (d) The department [shall, at least once every four (4) |
6 | years] may, as necessary, make or cause to be made an |
7 | examination of each such advisory organization. The reasonable |
8 | cost of any such examination shall be paid by the advisory |
9 | organization upon presentation to it by the department of a |
10 | detailed account of each cost. The officers, directors, |
11 | managers, agents and employes of such advisory organization may |
12 | be examined at any time, under oath, and shall exhibit all |
13 | books, records, accounts, documents or agreements governing its |
14 | method of operation. The department shall furnish two copies of |
15 | the examination report to the advisory organization examined and |
16 | shall notify such organization that it may, within twenty (20) |
17 | days thereof, request a hearing on the report or on any facts or |
18 | recommendations therein. If the department finds such advisory |
19 | organization or any member thereof to be in violation of this |
20 | article, it may issue a cease and desist order requiring the |
21 | discontinuance of such violation and may impose any other |
22 | penalties as set forth in this article. |
23 | (e) The department may contract with a surplus lines |
24 | advisory organization to render advice and assistance in |
25 | carrying out the purposes of this article. The services |
26 | performed by the advisory organization pursuant to such contract |
27 | may be funded by a stamping fee assessed on each surplus lines |
28 | policyholder whose policy is submitted to the advisory |
29 | organization. The stamping fee shall be established by the board |
30 | of governors of the advisory organization, from time to time, |
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1 | and shall be subject to approval by the department. |
2 | (f) The advisory organization may submit reports and make |
3 | recommendations to the department regarding the financial |
4 | condition of any eligible surplus lines insurer. These reports |
5 | and recommendations shall not be considered to be public |
6 | information or subject to any Federal or State freedom of |
7 | information law. There shall be no liability on the part of nor |
8 | shall any cause of action of any nature be sustained against |
9 | eligible surplus lines insurers, the advisory organization or |
10 | its members, agents, employes, officers or directors or the |
11 | department or authorized representatives of the department for |
12 | statements and any reports or recommendations made by them in |
13 | good faith under this section. |
14 | (g) By order of the department, a surplus lines licensee may |
15 | be compelled to join the membership division of an advisory |
16 | organization and attend educational seminars as a condition of |
17 | continued licensure under this article. |
18 | Section 1612. Evidence of Insurance.--(a) Upon placing |
19 | surplus lines insurance, the surplus lines licensee shall |
20 | deliver to the insured or the [producing broker] writing |
21 | producer the contract of insurance. If the contract of insurance |
22 | is not immediately available, a cover note, binder or other |
23 | evidence of insurance shall be delivered by the surplus lines |
24 | licensee to the insured or the [producing broker] writing |
25 | producer and shall, at a minimum, show the description and |
26 | location of the subject of insurance, coverages, including any |
27 | material limitations other than those in standard forms, the |
28 | premium and rate charged and taxes to be collected from the |
29 | insured, the name and address of the insured and the eligible |
30 | surplus lines insurer and other nonadmitted insurer involved |
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1 | under section 1606 and proportion of the risk assumed by each, |
2 | and the name of the surplus lines licensee. |
3 | (b) No surplus lines licensee shall bind or provide evidence |
4 | of insurance unless he has authority from the eligible surplus |
5 | lines insurer or other nonadmitted insurer to bind the risk or |
6 | has received information from the insurer in the regular course |
7 | of business that it has assumed the risk. |
8 | (c) If, after delivery of any such evidence of insurance, |
9 | there is any change in the identity of the eligible surplus |
10 | lines insurer, or the proportion of the risk assumed by any |
11 | nonadmitted insurer, or any other material change in coverage as |
12 | stated in the surplus lines licensee's original evidence of |
13 | insurance, or any other material change as to the insurance |
14 | coverage so evidenced, the surplus lines licensee shall promptly |
15 | issue and deliver to the insured or to the original [producing |
16 | broker] writing producer an appropriate substitute for or |
17 | endorsement of the original document accurately showing the |
18 | current status of the coverage and the insurer responsible |
19 | thereunder. |
20 | (d) Every evidence of insurance negotiated, placed or |
21 | procured under the provisions of this article issued by the |
22 | surplus lines licensee shall bear the name of the licensee and |
23 | the following legend in 10-point type: "The insurer which has |
24 | issued this insurance is not licensed by the Pennsylvania |
25 | Insurance Department and is subject to limited regulation. This |
26 | insurance is NOT covered by the Pennsylvania Property and |
27 | Casualty Insurance Guaranty Association." |
28 | Section 1614. Effect of Payment to Surplus Lines Licensee.-- |
29 | A payment of premium to the [producing broker] writing producer |
30 | or to a surplus lines licensee acting for a person other than |
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1 | himself in negotiating, continuing or reviewing any contract of |
2 | insurance under this article shall be deemed to be payment to |
3 | the insurer, whatever conditions or stipulations may be inserted |
4 | in the contract notwithstanding. |
5 | Section 7. Section 1615 of the act, amended July 10, 2002 |
6 | (P.L.749, No.110), is amended to read: |
7 | Section 1615. Licensing of Surplus Lines Licensee.--(a) No |
8 | [agent or broker] insurance producer licensed by the department |
9 | shall transact surplus lines insurance with any nonadmitted |
10 | insurer unless [such agent or broker] the insurance producer |
11 | possesses a valid surplus lines [agent's] producer's license |
12 | issued by the department. |
13 | (b) The department shall issue a surplus lines [agent's] |
14 | producer's license to any resident [or nonresident] of this |
15 | Commonwealth or to a nonresident who is a qualified holder of a |
16 | current Pennsylvania property and casualty [broker's] insurance |
17 | producer's license, but only when the [broker] insurance |
18 | producer has complied with the following: |
19 | (1) Remitted the surplus lines producer license fee to the |
20 | department. |
21 | (2) Submitted a properly completed surplus lines producer |
22 | license application on a form supplied by the department. |
23 | (3) Passed a qualifying examination approved by the |
24 | department, except that all holders of a license prior to the |
25 | effective date of this article shall be deemed to have passed |
26 | such an examination. |
27 | (c) [Corporations and partnerships shall be eligible to be |
28 | resident or nonresident surplus lines licensees, upon the |
29 | following conditions: |
30 | (1) The corporation or partnership licensee shall list all |
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1 | employes, including at least one active officer or partner, who |
2 | have satisfied the requirements of this article to become |
3 | surplus lines licensees. |
4 | (2) Only those employes holding a certificate of eligibility |
5 | may transact surplus lines insurance.] Business entities that |
6 | are licensed as Pennsylvania insurance producers shall be |
7 | eligible to be surplus lines licensees, if the business entities |
8 | do all of the following: |
9 | (1) Designate one or more officers or partners licensed |
10 | under this article to be responsible for compliance with all |
11 | reporting and recordkeeping required by this article. |
12 | (2) Provide to the department a list of all surplus lines |
13 | licensees associated with and placing surplus lines business |
14 | through the business entity. The business entity shall provide |
15 | to the department an updated list of licensees within five (5) |
16 | business days of a change in association of any licensee. The |
17 | list shall be available at all times for inspection by the |
18 | department. |
19 | (c.1) A nonresident person whose home state issues surplus |
20 | lines licenses to residents of Pennsylvania on the same basis |
21 | and who is licensed in Pennsylvania as a property and casualty |
22 | producer may be licensed as a surplus lines producer if the |
23 | person does all of the following: |
24 | (1) Is currently licensed as a surplus lines producer and is |
25 | in good standing in its home state. |
26 | (2) Has submitted a complete application for a surplus lines |
27 | license and has paid the required fees. |
28 | (3) Has submitted or transmitted to the department the |
29 | application for a surplus lines license submitted in its home |
30 | state or a completed uniform application that complies with |
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1 | section 610-A of the act of May 17, 1921 (P.L.789, No.285), |
2 | known as "The Insurance Department Act of 1921." |
3 | (4) Has complied with all of the provisions of Article VI-A |
4 | of "The Insurance Department Act of 1921." |
5 | (d) Each surplus lines license shall [expire on the last day |
6 | of February of each year and shall be renewed before March 1 of |
7 | each year upon payment of the annual fee, in compliance with |
8 | other provisions of this section. Any surplus lines licensee who |
9 | fails to apply for renewal of a license before expiration of the |
10 | current license shall pay a penalty of two times the license fee |
11 | and be subject to other penalties as provided by law before his |
12 | license will be renewed.] be: |
13 | (1) Issued as follows: |
14 | (i) Only in the name of the individual applicant or business |
15 | entity. A licensee doing business under a fictitious name other |
16 | than the name appearing on the license shall be required to |
17 | notify the department in writing prior to use of the fictitious |
18 | name for the department's consent to use of the name. |
19 | (ii) In paper or electronic form. |
20 | (iii) For a period not to exceed two (2) years. The |
21 | following shall apply: |
22 | (A) The surplus lines license of a natural person shall |
23 | expire on the last day of the birth month of the licensee. The |
24 | initial license cycle may vary to coincide with the expiration |
25 | cycle of the birth month. |
26 | (B) The surplus lines license of a business entity shall |
27 | expire on the last day of the month in which the license was |
28 | originally issued. |
29 | (2) Nontransferable. |
30 | (e) A nonrefundable two hundred dollar ($200) fee shall |
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1 | accompany an application or renewal for a surplus lines license, |
2 | unless modified by the department by regulation. |
3 | (f) The following shall apply: |
4 | (1) A surplus lines licensee that allows the licensee's |
5 | license to lapse by failing to timely renew the license or by |
6 | failing to pay the fee required by this act may, within one year |
7 | of the license renewal date, request the department to reinstate |
8 | the license. Persons requesting reinstatement shall pay a fee of |
9 | two times the fee required by this act and may be subject to |
10 | other penalties as provided by law before the license will be |
11 | renewed. |
12 | (2) Persons requesting reinstatement of a lapsed license |
13 | shall submit a completed renewal form and the fee required by |
14 | this act. |
15 | (3) The department shall reinstate a license under this |
16 | subsection retroactively, with the reinstatement effective on |
17 | the date the license lapsed, if the department receives a |
18 | request for reinstatement together with a completed renewal |
19 | application and payment of the lapsed license fee within sixty |
20 | (60) days after the license lapsed. |
21 | (4) The department shall reinstate a license under this |
22 | subsection prospectively, with reinstatement effective on the |
23 | date that the license is reinstated, if the department receives |
24 | a request for reinstatement of a lapsed license more than sixty |
25 | (60) days after the license lapsed but within one year after the |
26 | license lapsed. |
27 | (5) If a person applies for reinstatement more than one year |
28 | after the lapse date, the person must reapply for the license |
29 | under this act. |
30 | Section 8. Section 1616 of the act, added December 18, 1992 |
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1 | (P.L.1519, No.178), is amended to read: |
2 | Section 1616. Surplus Lines Licensees May Accept Business |
3 | from [Brokers] Insurance Producer.--A surplus lines licensee may |
4 | originate surplus lines insurance or accept such insurance from |
5 | [any broker] an insurance producer duly licensed as to the kind |
6 | or kinds of insurance involved, and the surplus lines licensee |
7 | may compensate [such broker therefor] the insurance producer. |
8 | Section 9. Section 1619 of the act, amended July 10, 2002 |
9 | (P.L.749, No.110), is amended to read: |
10 | Section 1619. Records of Surplus Lines Licensee.--(a) Each |
11 | surplus lines licensee shall keep in its office a full and true |
12 | record of each surplus lines insurance contract placed by or |
13 | through it, including a copy of the policy, certificate, cover |
14 | note or other evidence of insurance, showing such of the |
15 | following items as may be applicable: |
16 | (1) Amount of the insurance and perils insured. |
17 | (2) Brief description of the risk insured and its location. |
18 | (3) Gross premium charged. |
19 | (4) Any return premium paid. |
20 | (5) Rate of premium charged for each risk insured. |
21 | (6) Effective date and terms of the contract. |
22 | (7) Name and address of the insured. |
23 | (8) Name and address of the eligible surplus lines insurer |
24 | and any nonadmitted insured involved pursuant to section 1606. |
25 | (9) Amount of tax and other sums to be collected from the |
26 | insured. |
27 | (10) Identity of the [producing broker] writing producer, |
28 | any confirming correspondence from the insurer or its |
29 | representative and the application. |
30 | (11) A copy of the written notice required by section [1408] |
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1 | 1608. |
2 | (b) The record of each contract shall be kept open at all |
3 | reasonable times to examination by the department without notice |
4 | for a period of not less than five (5) years following |
5 | termination of the contract. |
6 | (c) If the surplus lines licensee is a natural person who is |
7 | associated with a business entity which is a valid surplus lines |
8 | licensee, the business entity with which the licensee is |
9 | associated shall retain the records which are required by this |
10 | section to be kept by each surplus lines licensee. |
11 | Section 10. Sections 1620, 1621 and 1622 of the act, added |
12 | December 18, 1992 (P.L.1519, No.178), are amended to read: |
13 | Section 1620. Monthly Reports.--Within thirty (30) days |
14 | following the end of each month, each surplus lines licensee |
15 | shall file with the department, on forms prescribed by the |
16 | department, a verified report [in duplicate] of all surplus |
17 | lines insurance transacted during the preceding month. |
18 | Section 1621. Surplus Lines Tax.--(a) There is hereby |
19 | levied a tax of three per centum (3%) on all premiums charged |
20 | for insurance which is placed with either an eligible surplus |
21 | lines insurer, other than a risk retention group, or other |
22 | nonadmitted insurer in accordance with this article, such taxes |
23 | to be based on the gross premiums charged less any return |
24 | premiums. This tax shall be in addition to the full amount of |
25 | the gross premium charged by the insurer for the insurance. The |
26 | tax on any unearned portion of the premium shall be returned to |
27 | the insured. |
28 | (b) Neither the surplus lines licensee nor the [producing |
29 | broker] writing producer shall pay directly or indirectly such |
30 | tax or any portion thereof, either as an inducement to the |
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1 | insured to purchase the insurance or for any other reason. |
2 | (c) The surplus lines licensee shall collect from the |
3 | insured or the [producing broker] writing producer the amount of |
4 | the tax at the time of delivery of the initial policy, cover |
5 | note or other evidence of insurance or at such time thereafter |
6 | as is reasonably consistent with normal credit terms customary |
7 | in the business. Each surplus lines licensee shall, on or before |
8 | January 31 of each year, file with the Department of Revenue a |
9 | report of all transactions involving the placement of insurance |
10 | with either an eligible surplus lines insurer or other |
11 | nonadmitted insurers during the previous calendar year. The |
12 | report shall set forth the name of the insured, identification |
13 | of the insurer, the type of insurance, gross premiums charged |
14 | less any return premiums allowed and the tax due as provided in |
15 | this section. The remittance for the taxes due shall accompany |
16 | this report. Such report shall be made on forms prescribed and |
17 | furnished by the Department of Revenue. A copy of the report |
18 | shall be filed with the [commissioner] department by the surplus |
19 | lines licensee. A surplus lines licensee that is a business |
20 | entity licensee which files the annual premium tax return with |
21 | the Department of Revenue shall include in its return the |
22 | premium taxes generated during the year subject to reporting by |
23 | all licensees associated with said business entity during the |
24 | reporting period. |
25 | (d) In the event that a placement of insurance involves |
26 | subjects of insurance resident, located or to be performed in |
27 | one or more states other than this Commonwealth, then the |
28 | premium taxes provided for in this section shall be levied only |
29 | on that portion of the premium reasonably ascribable to that |
30 | portion of the risk situated in this Commonwealth. |
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1 | (e) With respect to insurance placed with or issued by a |
2 | risk retention group which is an eligible surplus lines insurer, |
3 | there is hereby levied a tax of two per centum (2%) on all |
4 | premiums charged for risks resident, located or to be performed |
5 | in this Commonwealth. The risk retention group shall be |
6 | responsible for the payment of the taxes levied in this article |
7 | in accordance with procedures set forth in Article XV. |
8 | (f) The settlement and resettlement of taxes imposed by this |
9 | article, including the granting of extensions of time to file |
10 | reports and the rights of the taxpayers to present and prosecute |
11 | a petition for resettlement, a petition for review or an appeal |
12 | to court or to file a petition for refund and the imposition of |
13 | interest and penalties, shall be governed by the provisions of |
14 | the act of March 4, 1971 (P.L.6, No.2), known as the "Tax Reform |
15 | Code of 1971," as approved in the case of capital stock and |
16 | franchise taxes. |
17 | Section 1622. Tax on Independently Procured Insurance.--The |
18 | tax provided by section 1621(a) is imposed upon an insured who |
19 | independently procures insurance on a subject of insurance |
20 | resident, located or to be performed in this Commonwealth from a |
21 | nonadmitted insurer or continues or renews such independently |
22 | procured insurance. The insured shall, within thirty (30) days |
23 | after the date when such insurance was independently procured, |
24 | continued or renewed, report such transaction on forms |
25 | prescribed by the Department of Revenue. This report shall set |
26 | forth the information required of surplus lines licensees as |
27 | required in section 1621(c). The tax of three per centum (3%) |
28 | shall be paid on the date the report is due as provided in this |
29 | section. If the independently procured insurance covers risks |
30 | resident, located or to be performed in one or more states other |
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1 | than this Commonwealth, the premium taxes shall be prorated in |
2 | accordance with provisions in section 1621(d). A copy of such |
3 | report shall be filed with the [commissioner] department by the |
4 | insured. |
5 | Section 11. Section 1623 of the act, amended July 10, 2002 |
6 | (P.L.749, No.110), is amended to read: |
7 | Section 1623. Suspension, Revocation or Nonrenewal of |
8 | Surplus Lines Licensee's License.--The department may suspend, |
9 | revoke or refuse to renew the license of a surplus lines |
10 | licensee after notice and a hearing, as provided under the |
11 | applicable provision of the laws of this Commonwealth, upon any |
12 | one or more of the following grounds: |
13 | (3) Closing of the surplus lines licensee's office for a |
14 | period of more than thirty (30) business days, unless permission |
15 | is granted by the department. |
16 | (4) Failure to make and file required reports. |
17 | (5) Failure to transmit required tax on surplus lines |
18 | premiums. |
19 | (7) Failure to remit premiums due insurers or return |
20 | premiums due insureds in the normal course of business and |
21 | within reasonable time limits. |
22 | (8) Violation of any provision of this article. |
23 | (9) For any other cause for which an insurance [agent's or |
24 | broker's] producer's license could be denied, revoked or |
25 | suspended or refused upon renewal. |
26 | Section 12. Section 1625 of the act, added December 18, 1992 |
27 | (P.L.1519, No.178), is amended to read: |
28 | Section 1625. Penalties.--(a) Any surplus lines licensee |
29 | who, in this Commonwealth, represents or aids a nonadmitted |
30 | insurer in violation of this article commits a misdemeanor of |
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1 | the third degree and shall, upon conviction, be sentenced to pay |
2 | a fine of not more than [one thousand ($1,000)] two thousand |
3 | ($2,000) dollars. |
4 | (b) In addition to any other penalty provided for in |
5 | subsection (a) or otherwise provided by law, including any |
6 | suspension, revocation or refusal to renew a license, any |
7 | person[, firm, association or corporation] violating any |
8 | provision of this article shall be liable to a civil penalty not |
9 | exceeding [one thousand ($1,000)] two thousand ($2,000) dollars |
10 | for the first offense and not exceeding [two thousand ($2,000)] |
11 | four thousand ($4,000) dollars for each succeeding offense. |
12 | (c) The penalties in this section are not exclusive |
13 | remedies. Penalties may also be assessed under the act of July |
14 | 22, 1974 (P.L.589, No.205), known as the "Unfair Insurance |
15 | Practices Act," and any other applicable statute. |
16 | Section 13. The act is amended by adding a section to read: |
17 | Section 1626. Compliance.--Nothing in this act shall relieve |
18 | a surplus lines licensee involved in any transaction from |
19 | compliance with this act or its predecessor acts. |
20 | Section 14. This act shall take effect in 60 days. |
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