ENROLLED
Senate Bill No. 435
(By Senator Minard)
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[Passed March 12, 2011; to take effect July 1, 2011.]
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AN ACT to amend and reenact §33-12C-3, §33-12C-5, §33-12C-7 and
§33-12C-8 of the Code of West Virginia, 1931, as amended, all
relating to surplus lines insurance; defining terms; providing
for compliance with the federal Nonadmitted and Reinsurance
Reform Act of 2010; authorizing Insurance Commissioner to
enter into multistate agreements regarding taxation of surplus
lines insurance; establishing a blended taxation rate;
authorizing participation in clearinghouse or other process
for allocation of taxes; specifying disbursement and
distribution of moneys; restricting certain provisions to
transactions in which West Virginia is the home state of the
insurer; and exempting certain large entities from compliance
with due diligence requirements.
Be it enacted by the Legislature of West Virginia:
That §33-12C-3, §33-12C-5, §33-12C-7 and §33-12C-8 of the Code of West Virginia, 1931, as amended, be amended and reenacted, all
to read as follows:
ARTICLE 12C. SURPLUS LINE - NONADMITTED INSURANCE ACT.
§33-12C-3. Definitions.
As used in this article:
(a) "Admitted insurer" means an insurer licensed to do an
insurance business in this state.
(b) "Business entity" means a corporation, association,
partnership, limited liability company, or other legal entity.
(c) "Capital", as used in the financial requirements of
section five of this article, means funds paid in for stock or
other evidence of ownership.
(d) "Commissioner" means the Insurance Commissioner of West
Virginia, or the commissioner's deputies or staff, or the
commissioner, director or superintendent of insurance in any other
state.
(e) "Eligible surplus lines insurer" means a nonadmitted
insurer with which a surplus lines licensee may place surplus lines
insurance pursuant to section five of this article.
(f) "Exempt commercial purchaser" means any person purchasing
commercial insurance that, at the time of placement, employs or
retains a qualified risk manager to negotiate insurance coverage,
has paid aggregate nationwide commercial property and casualty
insurance premiums in excess of $100,000 in the immediately preceding twelve months, and meets at least one of the following
criteria:
(1) Has a net worth in excess of $20 million;
(2) Generates annual revenues in excess of $50 million;
(3) Employs more than five hundred full-time or full-time
equivalent employees per individual insured or is a member of an
affiliated group employing more than one thousand employees in the
aggregate;
(4) Is a not-for-profit organization or public entity
generating annual budgeted expenditures of at least $30 million; or
(5) Is a municipality with a population in excess of fifty
thousand persons: Provided, That on January 1, 2015 and every five
years thereafter, the amounts in subdivisions (1), (2) and (4) of
this subsection shall be adjusted to reflect the percentage change
for such five-year period in the Consumer Price Index for All Urban
Consumers published by the Bureau of Labor Statistics of the
federal Department of Labor.
(g) "Export" means to place surplus lines insurance with a
nonadmitted insurer.
(h) "Foreign decree" means any decree or order in equity of a
court located in any United States jurisdiction, including a
federal court of the United States, against any person engaging in
the transaction of insurance in this state.
(i) "Home state" means, with respect to an insured:
(1) The
s
tate in which an insured maintains its principal
place of business or, in the case of an individual, the
individual's principal residence; or
(2) If one-hundred percent of the insured risk is located out
of the state referred to in subdivision one of this subsection, the
state to which the greatest percentage of the insured's taxable
premium for that insurance contract is allocated.
(j) "Individual" means any private or natural person as
distinguished from a partnership, corporation, limited liability
company or other legal entity.
(k) "Insurance" means any of the lines of authority in section
ten, article one of this chapter.
(l) "Insurance producer" means a person required to be
licensed under the laws of this state to sell, solicit or negotiate
insurance. Wherever the word "agent" appears in this chapter, it
shall mean an individual insurance producer.
(m) "Insurer" means any person, corporation, association,
partnership, reciprocal exchange, interinsurer, Lloyds insurer,
insurance exchange syndicate, fraternal benefit society, and any
other legal entity engaged in the business of making contracts of
insurance under section two, article one of this chapter.
(n) "Kind of insurance" means one of the types of insurance
required to be reported in the annual statement which must be filed
with the commissioner by admitted insurers.
(o) "License" means a document issued by this state's
Insurance Commissioner authorizing an individual to act as a
surplus lines licensee for the lines of authority specified in the
document. The license itself does not create any authority,
actual, apparent or inherent, in the holder to represent or commit
an insurer.
(p) "Nonadmitted insurer" means an insurer not licensed to do
an insurance business in this state.
(q) "Nonadmitted and Reinsurance Reform Act of 2010" or "NRRA"
means those provisions incorporated as Subtitle B of the Dodd-Frank
Wall Street Reform and Consumer Protection Act, P.L. 111-517.
(r) "Nonadmitted Insurance Multi-State Agreement" or "NIMA"
means the model agreement adopted by the National Association of
Insurance Commissioners on December 16, 2010, to facilitate the
collection, allocation and disbursement of premium taxes
attributable to the placement of nonadmitted insurance, provide for
uniform methods of allocation and reporting among nonadmitted
insurance risk classifications, and share information among states
relating to nonadmitted insurance premium taxes; such term includes
the agreements' allocation tables and any changes made thereto in
response to changes to the laws of signatory states.
(s) "Person" means any natural person or other entity,
including, but not limited to, individuals, partnerships,
associations, trusts or corporations.
(t) "Policy" or "contract" means any contract of insurance
including, but not limited to, annuities, indemnity, medical or
hospital service, workers' compensation, fidelity or suretyship.
(u) " Signatory state" means a state that has entered into
NIMA or a similar allocation procedure with this state.
(v) "Surplus", as used in the financial requirements of
section five of this article, means funds over and above
liabilities and capital of the company for the protection of
policyholders.
(w) "Surplus lines insurance" means any property and casualty
insurance in this state on properties, risks or exposures, located
or to be performed in this state, permitted to be placed through a
surplus lines licensee with a nonadmitted insurer eligible to
accept such insurance, pursuant to section seven of this article.
Wherever the term "excess line" appears in this chapter, it shall
mean surplus lines insurance.
(x) "Surplus lines licensee" means an individual licensed
under section five of this article to place insurance on
properties, risks or exposures located or to be performed in this
state with nonadmitted insurers eligible to accept such insurance.
Wherever the term "excess line broker" appears in this chapter, it
shall mean surplus lines licensee.
(y) "Transaction of insurance" -
(1) For purposes of this article, any of the following acts in this state effected by mail or otherwise by a nonadmitted insurer
or by any person acting with the actual or apparent authority of
the insurer, on behalf of the insurer, is deemed to constitute the
transaction of an insurance business in or from this state:
(A) The making of or proposing to make, as an insurer, an
insurance contract;
(B) The making of or proposing to make, as guarantor or
surety, any contract of guaranty or suretyship as a vocation and
not merely incidental to any other legitimate business or activity
of the guarantor or surety;
(C) The taking or receiving of an application for insurance;
(D) The receiving or collection of any premium, commission,
membership fees, assessments, dues or other consideration for
insurance or any part thereof;
(E) The issuance or delivery in this state of contracts of
insurance to residents of this state or to persons authorized to do
business in this state;
(F) The solicitation, negotiation, procurement or effectuation
of insurance or renewals thereof;
(G) The dissemination of information as to coverage or rates,
or forwarding of applications, or delivery of policies or
contracts, or inspection of risks, the fixing of rates or
investigation or adjustment of claims or losses or the transaction
of matters subsequent to effectuation of the contract and arising out of it, or any other manner of representing or assisting a
person or insurer in the transaction of risks with respect to
properties, risks or exposures located or to be performed in this
state;
(H) The transaction of any kind of insurance business
specifically recognized as transacting an insurance business within
the meaning of the statutes relating to insurance;
(I) The offering of insurance or the transacting of insurance
business; or
(J) Offering an agreement or contract which purports to alter,
amend or void coverage of an insurance contract.
(2) The provisions of this subsection shall not operate to
prohibit employees, officers, directors or partners of a commercial
insured from acting in the capacity of an insurance manager or
buyer in placing insurance on behalf of the employer, provided that
the person's compensation is not based on buying insurance.
(3) The venue of an act committed by mail is at the point
where the matter transmitted by mail is delivered or issued for
delivery or takes effect.
(z) "Line of insurance" means coverage afforded under the
particular policy that is being placed.
(aa) "Model allocation schedule and reporting form" means the
current version of the NAIC model allocation schedule and reporting
form for surplus lines insurers.
(bb) "Wet marine and transportation insurance" means:
(1) Insurance upon vessels, crafts, hulls and other interests
in them or with relation to them;
(2) Insurance of marine builder's risks, marine war risks and
contracts of marine protection and indemnity insurance;
(3) Insurance of freight and disbursements pertaining to a
subject of insurance within the scope of this subsection; and
(4) Insurance of personal property and interests therein, in
the course of exportation from or importation into any country, or
in the course of transportation coastwise or on inland waters,
including transportation by land, water or air from point of origin
to final destination, in connection with any and all risks or
perils of navigation, transit or transportation, and while being
prepared for and while awaiting shipment, and during any incidental
delays, transshipment, or reshipment; provided, however, that
insurance of personal property and interests therein shall not be
considered wet marine and transportation insurance if the property
has:
(A) Been transported solely by land; or
(B) Reached its final destination as specified in the bill of
lading or other shipping document; or
(C) The insured no longer has an insurable interest in the
property.
§33-12C-5. Surplus lines insurance.
(a) The placement of surplus lines insurance is subject to
this section only if this state is the insured's home state.
(b) Surplus lines insurance may be placed by a surplus lines
licensee if:
(1) Each insurer is an eligible surplus lines insurer; and
(2) Each insurer is authorized to write the type of insurance
in its domiciliary jurisdiction; and
(3) The full amount or line of insurance cannot be obtained
from insurers who are admitted to do business in this state. The
full amount or type of insurance may be procured from eligible
surplus lines insurers, provided that a diligent search is made by
the individual insurance producer among the insurers who are
admitted to transact and are actually writing the particular type
of insurance in this state if any are writing it: Provided, That
such a search is not required when the licensee is seeking to
procure or place nonadmitted insurance for an exempt commercial
purchaser if the licensee disclosed to such purchaser that such
insurance may or may not be available from the admitted market that
may provide greater protection with more regulatory oversight and
that such purchaser has subsequently requested in writing that the
licensee procure or place such insurance from a nonadmitted
insurer; and
(4) All other requirements of this article are met.
(c) Subject to subdivision (3), subsection (b) of this section, a surplus lines licensee may place any coverage with a
nonadmitted insurer eligible to accept the insurance, unless
specifically prohibited by the laws of this state.
(d) A surplus lines licensee shall not place coverage with a
nonadmitted insurer, unless, at the time of placement, the surplus
lines licensee has determined that the nonadmitted insurer:
(1) Has established satisfactory evidence of good repute and
financial integrity; and
(2) Qualifies under one of the following paragraphs:
(A) Has capital and surplus or its equivalent under the laws
of its domiciliary jurisdiction which equals the greater of:
(i)(I) The minimum capital and surplus requirements under the
law of this state; or
(II) $15 million;
(ii) The requirements of subparagraph (i), paragraph (A) of
this subdivision may be satisfied by an insurer's possessing less
than the minimum capital and surplus upon an affirmative finding of
acceptability by the commissioner. The finding shall be based upon
such factors as quality of management, capital and surplus of any
parent company, company underwriting profit and investment income
trends, market availability and company record and reputation
within the industry. In no event shall the commissioner make an
affirmative finding of acceptability when the nonadmitted insurer's
capital and surplus is less than $4,500,000; or
(B) In the case of an insurance exchange created by the laws
of a state other than this state:
(i) The syndicates of the exchange shall maintain under terms
acceptable to the commissioner capital and surplus, or its
equivalent under the laws of its domiciliary jurisdiction, of not
less than $75 million in the aggregate; and
(ii) The exchange shall maintain under terms acceptable to the
commissioner not less than fifty percent of the policyholder
surplus of each syndicate in a custodial account accessible to the
exchange or its domiciliary commissioner in the event of insolvency
or impairment of the individual syndicate; and
(iii) In addition, each individual syndicate to be eligible to
accept surplus lines insurance placements from this state shall
meet either of the following requirements:
(I) For insurance exchanges which maintain funds in an amount
of not less than $15 million for the protection of all exchange
policyholders, the syndicate shall maintain under terms acceptable
to the commissioner minimum capital and surplus, or its equivalent
under the laws of the domiciliary jurisdiction, of not less than $5
million; or
(II) For insurance exchanges which do not maintain funds in an
amount of not less than $15 million for the protection of all
exchange policyholders, the syndicate shall maintain under terms
acceptable to the commissioner minimum capital and surplus, or its equivalent under the laws of its domiciliary jurisdiction, of not
less than the minimum capital and surplus requirements under the
laws of its domiciliary jurisdiction or $15 million, whichever is
greater; or
(C) In the case of a Lloyd's plan or other similar group of
insurers, which consists of unincorporated individual insurers, or
a combination of both unincorporated and incorporated insurers:
(i) The plan or group maintains a trust fund that shall
consist of a trusteed account representing the group's liabilities
attributable to business written in the United States; and
(ii) In addition, the group shall establish and maintain in
trust a surplus in the amount of $100 million; which shall be
available for the benefit of United States surplus lines
policyholders of any member of the group.
(iii) The incorporated members of the group shall not be
engaged in any business other than underwriting as a member of the
group and shall be subject to the same level of solvency regulation
and control by the group's domiciliary regulator as are the
unincorporated members.
(iv) The trust funds shall be maintained in an irrevocable
trust account in the United States in a qualified financial
institution, consisting of cash, securities, letters of credit or
investments of substantially the same character and quality as
those which are eligible investments for the capital and statutory reserves of admitted insurers to write like kinds of insurance in
this state and, in addition, the trust required by subparagraph
(ii) of this subdivision shall satisfy the requirements of the
standard trust agreement required for listing with the National
Association of Insurance Commissioners (NAIC) International
Insurers Department or any successor thereto; or
(D) In the case of a group of incorporated insurers under
common administration, which has continuously transacted an
insurance business outside the United States for at least three
years immediately prior to this time, and which submits to this
state's authority to examine its books and records and bears the
expense of the examination:
(i) The group shall maintain an aggregate policyholders'
surplus of $10 billion; and
(ii) The group shall maintain in trust a surplus in the amount
of $10 billion; which shall be available for the benefit of United
States surplus lines policyholders of any member of the group; and
(iii) Each insurer shall individually maintain capital and
surplus of not less than $25 million per company.
(iv) The trust funds shall satisfy the requirements of the
standard trust agreement requirement for listing with the NAIC
International Insurers Department or any successor thereto, and
shall be maintained in an irrevocable trust account in the United
States in a qualified financial institution, and shall consist of cash, securities, letters of credit or investments of substantially
the same character and quality as those which are eligible
investments for the capital and statutory reserves of admitted
insurers to write like kinds of insurance in this state.
(v) Additionally, each member of the group shall make
available to the commissioner an annual certification of the
member's solvency by the member's domiciliary regulator and its
independent public accountant; or
(E) Except for an exchange or plan complying with paragraph
(B), (C) or (D) of this subdivision, an insurer not domiciled in
one of the United States or its territories shall satisfy the
capital and surplus requirements of paragraph (A), subdivision (2),
subsection (d) of this section and shall have in force a trust fund
of not less than the greater of:
(i) $5,400,000; or
(ii) Thirty percent of the United States surplus lines gross
liabilities, excluding aviation, wet marine and transportation
insurance liabilities, not to exceed $60 million, to be determined
annually on the basis of accounting practices and procedures
substantially equivalent to those promulgated by this state, as of
December 31 next preceding the date of determination, where:
(I) The liabilities are maintained in an irrevocable trust
account in the United States in a qualified financial institution,
on behalf of U.S. policyholders consisting of cash, securities, letters of credit or other investments of substantially the same
character and quality as those which are eligible investments
pursuant to article eight of this chapter for the capital and
statutory reserves of admitted insurers to write like kinds of
insurance in this state. The trust fund, which shall be included
in any calculation of capital and surplus or its equivalent, shall
satisfy the requirements of the Standard Trust Agreement required
for listing with the NAIC International Insurers Department or any
successor thereto; and
(II) The insurer may request approval from the commissioner to
use the trust fund to pay valid surplus lines claims; Provided,
however, That the balance of the trust fund is never less than the
greater of $5,400,000 or thirty percent of the insurer's current
gross U.S. surplus lines liabilities, excluding aviation, wet
marine and transportation insurance liabilities; and
(III) In calculating the trust fund amount required by this
subsection, credit shall be given for surplus lines deposits
separately required and maintained for a particular state or U.S.
territory, not to exceed the amount of the insurer's loss and loss
adjustment reserves in the particular state or territory;
(F) An insurer or group of insurers meeting the requirements
to do a surplus lines business in this state at the effective date
of this law shall have two years from the date of enactment to meet
the requirements of paragraph (E) of this subdivision, as follows:
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
million
|
2
|
30% of U.S. surplus lines liabilities,
excluding aviation, wet marine and
transportation insurance, with a maximum of $60
million
|
(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 this
subdivision or the requirements of subparagraph (ii), paragraph
(E), subdivision (2), subsection (d) 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 (d) 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 (d) 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.
(e) Insurance procured under this section shall be valid and
enforceable as to all parties.
§33-12C-7. Surplus lines tax.
(a) In addition to the full amount of gross premiums charged
by the insurer for the insurance, every person licensed pursuant to
section eight of this article shall collect and pay to the
commissioner a sum equal to four and fifty-five one-hundredths
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 and this state is the insured's home state,
the sum payable shall be computed on that portion of the gross
premiums allocated to this state, plus an amount equal to the
portion of the gross premiums allocated to other states or
territories on the basis of the tax rates and fees applicable to
properties, risks or exposures located or to be performed outside
of this state, and less the amount of gross premiums allocated to
this state and returned to the insured due to cancellation of policy:
Provided, That the surcharge imposed by section thirty-
three, article three of this chapter on surplus lines policies
shall no longer be effective with respect to premium attributable
to coverage under such policies for periods after June 30, 2011:
Provided, however, That twelve per cent of taxes collected under
this subsection with respect to premium attributable to coverage
under such policies after June 30, 2011, shall be disbursed and
distributed in accordance with subsection (d), section thirty-
three, article three of this chapter and eighty-eight per cent in
accordance with subdivision two, subsection (f) of this section.
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.
(b) The individual insurance producer may not:
(1) 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
(2) 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.
(c) 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:
(1) The service is required by the surplus lines insurer;
(2) The service is actually provided by the individual
insurance producer or the cost of the service is actually incurred
by the surplus lines licensee; and
(3) The provision or cost of the service is reasonable,
documented and verifiable.
(d) The surplus lines licensee shall make a clear and
conspicuous written disclosure to the policyholder of:
(1) The total amount of premium for the policy;
(2) Any fee charged;
(3) The total amount of any fee charged; and
(4) The total amount of tax on the premium and fee.
(e) 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.
(f)(1) 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 March 1 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.
(2) Except as provided in subsection (a) of this section, all
taxes remitted to the commissioner pursuant to subdivision one of
this subsection shall be paid by him or her into a special account
in the State Treasury, designated Municipal Pensions and Protection
Fund, or pursuant to section eighteen-b, article twenty-two,
chapter eight of this code, the Municipal Pensions Security 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.
(g) 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 an appropriate allocation table.
(1) If a policy covers more than one classification:
(A) 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;
(B) 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;
(C) 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.
(2) 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:
(A) By use of the allocation schedule where the risk is appropriately identified in the schedule;
(B) 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.
(h) The commissioner is authorized to participate in a
clearinghouse established through NIMA or in a similar allocation
procedure for the purpose of collecting and disbursing to signatory
states any funds collected pursuant to this section that are
allocable to properties, risks or exposures located or to be
performed outside of this state: Provided, That twelve per cent of
any moneys received from a clearinghouse or through a similar
allocation procedure is subject to the provisions of subsection
(d), section thirty-three, article three of this chapter and
eighty-eight per cent of such moneys is subject to the provisions
of subdivision (2), subsection (f) of this section: Provided,
however, That to the extent other states where portions of the
properties, risks or exposures reside have failed to enter into NIMA or a similar allocation procedure with this state, the net
premium tax collected shall be retained by this state and shall be
disbursed and distributed in the same manner as moneys received
through a clearinghouse or similar allocation procedure.
(i) 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.
§33-12C-8. Surplus lines licenses.
(a) No person shall procure a contract of surplus lines
insurance with a nonadmitted insurer for an insured whose home
state is West Virginia unless the person possesses a current
surplus lines insurance license issued by the commissioner.
(b) 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:
(1) Remitted the $200 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;
(2) Submitted a completed license application on a form
supplied by the commissioner;
(3) 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 deemed to have passed such
an examination; and
(4) If a resident, established and continues to maintain an
office in this state.
(c) 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.
(d) Each surplus lines license shall expire at midnight on May 31 next following the date of issuance, and an application for
renewal shall be filed before May 1 of each year upon payment of
the annual fee and compliance with other provisions of this
article. A surplus lines licensee who fails to apply for renewal
of the license before May 1 shall pay a penalty of $100 and be
subject to penalties provided by law before the license will be
renewed.