COMMITTEE SUBSTITUTE
FOR
H. B. 2715
(By Delegates H. White, Hrutkay and R. M. Thompson)
(Originating in the Committee on Finance)
[February 24, 2003]
A BILL to amend and reenact article twelve-c, chapter thirty-three
of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, relating to nonadmitted insurers and
the regulation of surplus lines insurance; defining terms for
implementation of the NAIC nonadmitted insurers model act;
establishing consistency among states; providing specific
provisions from the model; liberalizing reciprocity for
licensing nonresident surplus lines licensees; providing
grounds upon which the commission may deny a nonadmitted
insurer access to the state; providing for the regulation of
surplus lines; enforcement; violations; penalties; service of
process; and eliminating certain conflicting excess line
related provisions.
Be it enacted by the Legislature of West Virginia:
That article twelve-c, chapter thirty-three of the code of
West Virginia, one thousand nine hundred thirty-one, as amended, be
amended and reenacted to read as follows:
ARTICLE 12C. SURPLUS LINE.
§33-12C-1. Short title.
This article shall be known and may be cited as "The
Nonadmitted Insurance Act".
§33-12C-2. Purpose - necessity for regulation.
This article shall be liberally construed and applied to
promote its underlying purposes which include:
(a) Protecting persons seeking insurance in this state;
(b) Permitting surplus lines insurance to be placed with
reputable and financially sound nonadmitted insurers and exported
from this state pursuant to this article;
(c) Establishing a system of regulation which will permit
orderly access to surplus lines insurance in this state and
encourage admitted insurers to provide new and innovative types of
insurance available to consumers in this state;
(d) Providing a system through which persons may purchase
insurance other than surplus lines insurance, from nonadmitted
insurers pursuant to this article;
(e) Protecting revenues of this state; and
(f) Providing a system pursuant to this article which subjects
nonadmitted insurance activities in this state to the jurisdiction
of the insurance commissioner and state and federal courts in suits
by or on behalf of the state.
§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) "Export" means to place surplus lines insurance with a
nonadmitted insurer.
(g) "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.
(h) "Individual" means any private or natural person as
distinguished from a partnership, corporation, limited liability
company or other legal entity.
(i) "Insurance" means any of the lines of authority in section
ten, article one of this chapter.
(j) "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.
(k) "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.
(l) "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.
(m) "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.
(n) "Nonadmitted insurer" means an insurer not licensed to do
an insurance business in this state.
(o) "Person" means any natural person or other entity,
including, but not limited to, individuals, partnerships,
associations, trusts or corporations.
(p) "Policy" or "contract" means any contract of insurance,
including, but not limited to, annuities, indemnity, medical or
hospital service, workers' compensation, fidelity or suretyship.
(q) "Reciprocal state" means a state that has enacted provisions substantially similar to:
(1) Section seven, subdivision (5) of subsection (b) of
section nine, subsection (j) of section sixteen, and subsection (d)
of section seventeen of this article; and
(2) The NAIC model allocation schedule and reporting form.
(r) "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.
(s) "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.
(t) "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.
(u) "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.
(v) "Line of insurance" means coverage afforded under the
particular policy that is being placed.
(w) "Model allocation schedule and reporting form" means the
current version of the NAIC model allocation schedule and reporting
form for surplus lines insurers.
(x) "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-4. Placement of insurance business.
(a) An insurer shall not engage in the transaction of
insurance unless authorized by a license in force pursuant to the
laws of this state, or exempted by this article or otherwise
exempted by the insurance laws of this state.
(b) A person shall not engage in a transaction of insurance or
shall in this state directly or indirectly act as agent for, or
otherwise represent or aid on behalf of another, a nonadmitted
insurer in the solicitation, negotiation, procurement or effectuation of insurance, or renewals thereof, or forwarding of
applications, or delivery of policies or contracts or inspection of
risks, or fixing of rates, or investigation or adjustment of claims
or losses, or collection or forwarding of premiums, or in any other
manner represent or assist the insurer in the transaction of
insurance.
(c) A person who represents or aids a nonadmitted insurer in
violation of this section shall be subject to the penalties set
forth in section eighteen of this article. No insurance contract
entered into in violation of this section shall preclude the
insured from enforcing his rights under the contract in accordance
with the terms and provisions of the contract of insurance and the
laws of this state, to the same degree those rights would have been
enforceable had the contract been lawfully procured.
(d) If the nonadmitted insurer fails to pay a claim or loss
within the provisions of the insurance contract and the laws of
this state, a person who assisted or in any manner aided directly
or indirectly in the procurement of the insurance contract, shall
be liable to the insured for the full amount under the provisions
of the insurance contract.
(e) This section shall not apply to a person, properly
licensed as an agent in this state who, for a fee and pursuant to
a written agreement, is engaged solely to offer to the insured
advice, counsel or opinion, or service with respect to the
benefits, advantages or disadvantages promised under any proposed
or in-force policy of insurance if the person does not, directly or indirectly, participate in the solicitation, negotiation or
procurement of insurance on behalf of the insured;
(f) The insurance must be procured only through an individual
licensed surplus lines licensee;
(g) This section shall not apply to a person acting in
material compliance with the insurance laws of this state in the
placement of the types of insurance identified in subdivisions (1),
(2), (3) and (4) below:
(1) Surplus lines insurance as provided in section five of
this article. For the purposes of this subsection, a licensee
shall be deemed to be in material compliance with the insurance
laws of this state, unless the licensee committed a violation of
section five of this article that proximately caused loss to the
insured;
(2) Transactions for which a license to do business is not
required of an insurer under the insurance laws of this state;
(3) Reinsurance provided that, unless the commissioner waives
the requirements of this subsection:
(A) The assuming insurer is authorized to do an insurance or
reinsurance business by its domiciliary jurisdiction and is
authorized to write the type of reinsurance in its domiciliary
jurisdiction; and
(B) The assuming insurer satisfies all legal requirements for
such reinsurance in the state of domicile of the ceding insurer;
(4) The property and operation of railroads or aircraft
engaged in interstate or foreign commerce, wet marine and transportation insurance;
(5) Transactions subsequent to issuance of a policy not
covering properties, risks or exposures located, or to be performed
in this state at the time of issuance, and lawfully solicited,
written or delivered outside this state.
§33-12C-5. Surplus lines insurance.
(a) 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; and
(4) All other requirements of this article are met.
(b) Subject to subdivision (3), subsection (a) 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.
(c) 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) Fifteen million dollars;
(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 four million five hundred thousand
dollars; 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 seventy-five million dollars 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 fifteen million dollars 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 five million dollars; or
(II) For insurance exchanges which do not maintain funds in an
amount of not less than fifteen million dollars 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 fifteen million
dollars, 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 one hundred million dollars; 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 ten billion dollars; and
(ii) The group shall maintain in trust a surplus in the amount
of ten billion dollars; 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 twenty-five million dollars 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 (c) of this section and shall have in force a trust fund
of not less than the greater of:
(i) Five million four hundred thousand dollars; or
(ii) Thirty percent of the United States surplus lines gross
liabilities, excluding aviation, wet marine and transportation
insurance liabilities, not to exceed sixty million dollars, to be
determined annually on the basis of accounting practices and
procedures substantially equivalent to those promulgated by this
state, as of the thirty-first day of December 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 five million four hundred thousand dollars 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
$30,000,000.
|
2
|
30% of U.S. surplus lines liabilities,
excluding aviation, wet marine and
transportation insurance, with a maximum of
$60,000,000.
|
(G) The commissioner shall have the authority to adjust, in
response to inflation, the trust fund amounts required by paragraph
(E) of this subdivision.
(3) In addition to all of the other requirements of this
subsection, an insurer not domiciled in the United States or its
territories shall be listed on the NAIC's quarterly listing of alien insurers. The commissioner may waive the requirement in this
subdivision or the requirements of subparagraph (ii), paragraph
(E), subdivision (2), subsection (c) of this section may be
satisfied by an insurer's possessing less than the trust fund
amount specified in subparagraph (ii), paragraph (E), subdivision
(2), subsection (c) of this section upon an affirmative finding of
acceptability by the commissioner if the commissioner is satisfied
that the placement of insurance with the insurer is necessary and
will not be detrimental to the public and the policyholder. In
determining whether business may be placed with the insurer, the
commissioner may consider such factors as:
(A) The interests of the public and policyholders;
(B) The length of time the insurer has been authorized in its
domiciliary jurisdiction and elsewhere;
(C) Unavailability of particular coverages from authorized
insurers or unauthorized insurers meeting the requirements of this
section;
(D) The size of the company as measured by its assets, capital
and surplus, reserves, premium writings, insurance in force or
other appropriate criteria;
(E) The kinds of business the company writes, its net exposure
and the extent to which the company's business is diversified among
several lines of insurance and geographic locations; and
(F) The past and projected trend in the size of the company's
capital and surplus considering such factors as premium growth,
operating history, loss and expense ratios, or other appropriate criteria; and
(4) Has caused to be provided to the commissioner a copy of
its current annual statement certified by the insurer and an
actuarial opinion as to the adequacy of, and methodology used to
determine, the insurer's loss reserves. The statement shall be
provided at the same time it is provided to the insurer's domicile,
but in no event more than eight months after the close of the
period reported upon, and shall be certified as a true and correct
copy by an accounting or auditing firm licensed in the jurisdiction
of the insurer's domicile and certified by a senior officer of the
nonadmitted insurer as a true and correct copy of the statement
filed with the regulatory authority in the domicile of the
nonadmitted insurer. In the case of an insurance exchange
qualifying under paragraph (B), subdivision (2) of this subsection,
the statement may be an aggregate combined statement of all
underwriting syndicates operating during the period reported; and
(5) In addition to meeting the requirements in subdivisions
(1) to (4) of this subsection an insurer shall be an eligible
surplus lines insurer if it appears on the most recent list of
eligible surplus lines insurers published by the commissioner from
time to time but at least annually. Nothing in this subdivision
shall require the commissioner to place or maintain the name of any
nonadmitted insurer on the list of eligible surplus lines insurers.
(6) Notwithstanding subsection (a) of this section, only that
portion of any risk eligible for export for which the full amount
of coverage is not procurable from listed eligible surplus lines insurers may be placed with any other nonadmitted insurer which
does not appear on the list of eligible surplus lines insurers
published by the commissioner pursuant to subdivision (5) of this
subsection but nonetheless meets the requirements set forth in
subdivisions (1) and (2), subsection (c) of this section and any
regulations of the commissioner. The surplus lines licensee
seeking to provide coverage through an unlisted nonadmitted insurer
shall make a filing specifying the amounts and percentages of each
risk to be placed, and naming the nonadmitted insurers with which
placement is intended. Within thirty days after placing the
coverage, the surplus lines licensee shall also send written notice
to the insured that the insurance, or a portion thereof, has been
placed with the nonadmitted insurer.
(d) Insurance procured under this section shall be valid and
enforceable as to all parties.
§33-12C-6. Withdrawal of eligibility as a surplus lines insurer.
(a) The commissioner may declare a surplus lines insurer
ineligible if the commissioner has reason to believe that:
(1) Is in unsound financial condition or has acted in an
untrustworthy manner;
(2) No longer meets standards set forth in subsection (c) of
this section;
(3) Has willfully violated the laws of this state; or
(4) Does not conduct a proper claims practice;
(b) The commissioner shall promptly mail notice of all such
declarations to each surplus lines licensee.
§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 percent of the gross premiums and
gross fees charged, less any return premiums, for surplus lines
insurance provided by the licensee pursuant to the license. Where
the insurance covers properties, risks or exposures located or to
be performed both in and out of this state, the sum payable shall
be computed on that portion of the gross premiums allocated to this
state pursuant to subsection (g) of this section less the amount of
gross premiums allocated to this state and returned to the insured
due to cancellation of policy. The tax on any portion of the
premium unearned at termination of insurance having been credited
by the state to the licensee shall be returned to the policyholder
directly by the surplus lines licensee or through the producing
broker, if any.
(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 line insurer if:
(1) The service is required by the surplus line 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) This tax is imposed for the purpose of providing
additional revenue for municipal policemen's and firemen's pension
and relief funds and additional revenue for volunteer and part
volunteer fire companies and departments. This tax is required to
be paid and remitted, on a calendar year basis and in quarterly
estimated installments due and payable on or before the twenty-
fifth day of the month succeeding the close of the quarter in which
they accrued, except for the fourth quarter, in respect of which
taxes shall be due and payable and final computation of actual total liability for the prior calendar year shall be made, less
credit for the three quarterly estimated payments prior made, and
filed with the annual return to be made on or before the first day
of March of the succeeding year. Provisions of this chapter
relating to the levy, imposition and collection of the regular
premium tax are applicable to the levy, imposition and collection
of this tax to the extent that the provisions are not in conflict
with this section.
All taxes remitted to the commissioner pursuant to this
subsection shall be paid by him or her into a special account in
the state treasury, designated "municipal pensions and protection
fund," and after appropriation by the Legislature, shall be
distributed in accordance with the provisions of subsection (c),
section fourteen-d, article three of this chapter. The surplus
lines licensee shall return to the policyholder the tax on any
unearned portion of the premium returned to the policyholder
because of cancellation of policy.
(g) If a surplus lines policy procured through a surplus lines
licensee covers properties, risks or exposures only partially
located or to be performed in this state, the tax due shall be
computed on the portions of the premiums which are attributable to
the properties, risks or exposures located or to be performed in
this state. In determining the amount of premiums taxable in this
state, all premiums written, procured or received in this state
shall be considered written on properties, risks or exposures
located or to be performed in this state, except premiums which are properly allocated or apportioned and reported as taxable premiums
of a reciprocal state. In no event shall the tax payable to this
state be less than the tax due pursuant to subsection (h) of this
section; provided, however, in the event that the amount of tax due
under this provision is less than fifty dollars in any
jurisdiction, it shall be payable in the jurisdiction in which the
affidavit required in section eleven is filed. The commissioner
may, at least annually furnish to the commissioner of a reciprocal
state, as defined in subsection (q), section three of this article,
a copy of all filings reporting an allocation of taxes as required
by this subsection.
(h) In determining the amount of gross premiums taxable in
this state for a placement of surplus lines insurance covering
properties, risks or exposures only partially located or to be
performed in this state, the tax due shall be computed on the
portions of the premiums which are attributable to properties,
risks or exposures located or to be performed in this state and
which relates to the kinds of insurance being placed as determined
by reference to the model allocation schedule and reporting form.
(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.
(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) A person shall not procure a contract of surplus lines
insurance with a nonadmitted insurer unless the person possesses a
current surplus lines insurance license issued by the commissioner.
(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 two hundred dollar annual fee to the
commissioner, of which all fees so collected are to be used for the
purposes set forth in section thirteen, article three of this
chapter;
(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 the
thirty-first day of May next following the date of issuance, and an
application for renewal shall be filed before the first day of May
of each year upon payment of the annual fee and compliance with
other provisions of this article. A surplus lines licensee who
fails to apply for renewal of the license before the first day of
May shall pay a penalty of one hundred dollars and be subject to
penalties provided by law before the license will be renewed.
§33-12C-9
.
Suspension, revocation or nonrenewal of surplus lines
licensee's license.
(a) The commissioner may examine and investigate the business affairs of every individual applying for or holding a surplus lines
insurance license to determine whether such individual has been or
is engaged in unfair or deceptive practices in any state.
(b) The commissioner may place on probation, suspend, revoke
or refuse to issue or renew the license of a surplus lines licensee
or may levy a civil penalty in a sum not to exceed five thousand
dollars or any combination of actions after notice and hearing
pursuant to section thirteen, article two of this chapter upon one
or more of the following grounds:
(1) Removal of the resident surplus lines licensee's office
from this state;
(2) Removal of the resident surplus lines licensee's office
accounts and records from this state during the period during which
the accounts and records are required to be maintained under
section sixteen of this article;
(3) Closing of the surplus lines licensee's office for a
period of more than thirty business days, unless permission is
granted by the commissioner;
(4) Failure to make and file required reports;
(5) Failure to transmit required tax on surplus lines premiums
to this state or a reciprocal state to which a tax is owing;
(6) Violation of any provision of this article; or
(7) For any cause for which an insurance license could be
denied, revoked, suspended or renewal refused pursuant to section
twenty-four, article twelve of this chapter.
§33-12C-10. Actions against eligible surplus lines insurers transacting surplus lines business.
(a) An eligible surplus lines insurer may be sued upon a cause
of action arising in this state under a surplus lines insurance
contract made by it or evidence of insurance issued or delivered by
the surplus lines licensee. A policy issued by the eligible
surplus lines insurer shall contain a provision stating the
substance of this section and designating the person to whom the
commissioner shall mail process.
(b) The remedies provided in this section are in addition to
any other methods provided by law for service of process upon
insurers.
§33-12C-11. Duty to file evidence of insurance and affidavits.
(a) On or before the first day of March, two thousand four,
and on or before the first day of March thereafter, each surplus
lines licensee shall file, on a form prescribed by the
commissioner, a report under oath, setting forth facts from which
it may be determined whether the requirements of section five of
this article have been met with respect to each surplus line policy
procured by the surplus lines licensee during the preceding
calendar year.
(b) The written report shall include, but not be limited to,
the following:
(1) The name and address of the insured;
(2) The identity of the insurer or insurers;
(3) A description of the subject and location of the risk and
the risk insured against;
(4) Return premium paid, if any;
(5) The amount of gross premium charged for the insurance;
(6) The amount of the insurance;
(7) Such other pertinent information as the commissioner may
reasonably require; and
(8) An affidavit on a standardized form promulgated by the
commissioner, as to the diligent efforts to place the coverage with
admitted insurers and the results of that effort. The affidavit
shall be open to public inspection. The affidavit shall affirm
that the insured was expressly advised in writing prior to
placement of the insurance that:
(A) The surplus lines insurer with whom the insurance was to
be placed is not licensed in this state and is not subject to its
supervision; and
(B) In the event of the insolvency of the surplus lines
insurer, losses will not be paid by the state insurance guaranty
fund.
§33-12C-12. Evidence of the insurance and subsequent changes to
the insurance.
(a) Upon placing surplus lines insurance, the surplus lines
licensee shall promptly deliver to the insured the policy, or if
the policy is not then available, a certificate as described in
subsection (d) of this section, cover note, binder or other
evidence of insurance. The certificate described in subsection (d)
of this section, cover note, binder or other evidence of insurance
shall be executed by the surplus lines licensee and shall show the description and location of the subject of the insurance, coverages
including any material limitations other than those in standard
forms, a general description of the coverages of the insurance, the
premium and rate charged and taxes to be collected from the
insured, and the name and address of the insured and surplus lines
insurer or insurers and proportion of the entire risk assumed by
each, and the name of the surplus lines licensee and the licensee's
license number.
(b) A surplus lines licensee shall not issue or deliver any
evidence of insurance or purport to insure or represent that
insurance will be or has been written by any eligible surplus lines
insurer, or a nonadmitted insurer pursuant to subdivision (4),
subsection (c), section five, of this article, unless the licensee
has authority from the insurer to cause the risk to be insured, or
has received information from the insurer in the regular course of
business that the insurance has been granted.
(c) If, after delivery of any evidence of insurance, there is
any change in the identity of the insurers, or the proportion of
the risk assumed by any insurer, or any other material change in
coverage as stated in the surplus lines licensee's original
evidence of insurance, or in any other material as to the insurance
coverage so evidenced, the surplus lines licensee shall promptly
issue and deliver to the insured or the original producing
individual insurance producer appropriate substitute for, or
endorsement of the original document, accurately showing the
current status of the coverage and the insurers responsible for the coverage.
(d) As soon as reasonably possible after the placement of the
insurance, the surplus lines licensee shall deliver a copy of the
policy or, if not available, a certificate of insurance to the
insured to replace any evidence of insurance previously issued.
Each certificate or policy of insurance shall contain or have
attached a complete record of all policy insuring agreements,
conditions, exclusions, clauses, endorsements or any other material
facts that would regularly be included in the policy.
(e) A surplus lines licensee who fails to comply with the
requirements of this subsection shall be subject to the penalties
provided in this article.
(f) The surplus lines licensee shall give the following
consumer notice to every person applying for insurance with a
nonadmitted insurer. The notice shall be printed in sixteen-point
type on a separate document affixed to the application. The
applicant shall sign and date a copy of the notice to acknowledge
receiving it. The surplus lines licensee shall maintain the signed
notice in its file for a period of ten years from expiration of the
policy. The surplus lines licensee shall tender a copy of the
signed notice to the insured at the time of delivery of each policy
the licensee transacts with a nonadmitted insurer. The copy shall
be a separate document affixed to the policy.
"Notice: 1. An insurer that is not licensed in this state is
issuing the insurance policy that you have applied to purchase.
These companies are called "nonadmitted" or "surplus lines" insurers. 2. The insurer is not subject to the financial solvency
regulation and enforcement that applies to licensed insurers in
this state. 3. These insurers generally do not participate in
insurance guaranty funds created by state law. These guaranty
funds will not pay your claims or protect your assets if the
insurer becomes insolvent and is unable to make payments as
promised. 4. Some states maintain lists of approved or eligible
surplus lines insurers and surplus lines brokers may use only
insurers on the lists. Some states issue orders that particular
surplus lines insurers cannot be used. 5. For additional
information about the above matters and about the insurer, you
should ask questions of your insurance agent or surplus lines
licensee. You may also contact your insurance commission consumer
help line."
§33-12C-13. Licensee's duty to notify insured.
(a) No contract of insurance placed by a surplus lines
licensee under this article shall be binding upon the insured and
no premium or fee charged shall be due and payable until the
surplus lines licensee shall have notified the insured in writing,
in a form acceptable to the commissioner, a copy of which shall be
maintained by the licensee with the records of the contract and
available for possible examination, that:
(1) The insurer with which the licensee places the insurance
is not licensed by this state and is not subject to its
supervision; and
(2) In the event of the insolvency of the surplus lines insurer, losses will not be paid by the state insurance guaranty
fund.
(b) Nothing herein contained shall nullify any agreement by
any insurer to provide insurance.
§33-12C-14. Effect of payment to surplus lines licensee.
A payment of premium to a surplus lines licensee acting for a
person other than itself in procuring, continuing or renewing any
policy of insurance procured under this section shall be deemed to
be payment to the insurer, whatever conditions or stipulations may
be inserted in the policy or contract notwithstanding.
§33-12C-15. Surplus lines licensees may accept business from other
producers.
A surplus lines licensee may originate surplus lines insurance
or accept such insurance from any other individual insurance
producer duly licensed as to the kinds of insurance involved, and
the surplus lines licensee may compensate the individual insurance
producer for the business. The surplus lines licensee shall have
the right to receive from the insurer the customary commission.
§33-12C-16. Records of surplus lines licensee.
(a) Each surplus lines licensee shall keep in this state a
full and true record of each surplus lines insurance contract
placed by or through the licensee, including a copy of the policy,
certificate, cover note or other evidence of insurance showing each
of the following items applicable:
(1) Amount of the insurance, risks and perils insured;
(2) Brief description of the property insured and its
location;
(3) Gross premium charged;
(4) Any return premium paid;
(5) Rate of premium charged upon the several items of
property;
(6) Effective date and terms of the contract;
(7) Name and address of the insured;
(8) Name and address of the insurer;
(9) Amount of tax and other sums to be collected from the
insured;
(10) Allocation of taxes by state as referred to in subsection
(f) of this section; and
(11) Identity of the producing broker, any confirming
correspondence from the insurer or its representative, and the
application.
(b) The record of each contract shall be kept open at all
reasonable times to examination by the commissioner without notice
for a period not less than ten years following termination of the
contract. In lieu of maintaining offices in this state, each
nonresident surplus lines licensee shall make available to the
commissioner any and all records that the commissioner deems
necessary for examination.
§33-2C-17. Reports - summary of exported business.
(a) On or before the first day of May, two thousand four, and
on or before the first day of May thereafter, the end of the month following each year, each surplus lines licensee shall file with
the commissioner, on forms prescribed by the commissioner, a
verified report in duplicate of all surplus lines insurance
transacted during the preceding period;
(b) The report shall show the following:
(1) Aggregate gross premiums written;
(2) Aggregate return premiums;
(3) Amount of aggregate tax remitted to this state; and
(4) Amount of aggregate tax due or remitted to each other
state for which an allocation is made pursuant to section seven of
this article.
§33-12C-18. Penalties.
(a) A person who in this state represents or aids a
nonadmitted insurer in violation of this article is guilty of a
misdemeanor and upon conviction thereof, may be fined not more than
ten thousand dollars per each act or sentenced to not less than ten
days nor more than one year, or both fined and imprisoned.
(b) In addition to any other penalty provided herein or
otherwise provided by law, including any suspension, revocation or
refusal to renew a license, any person, firm, association or
corporation violating any provision of this article shall be liable
to a civil penalty not exceeding ten thousand dollars for the first
offense, and not exceeding twenty thousand dollars for each
succeeding offense.
(c) The above penalties are not exclusive remedies. Penalties
may also be assessed under article eleven of this chapter.
§33-12C-19. Violations.
Whenever the commissioner believes, from evidence satisfactory
to him or her, that a person is violating or about to violate the
provisions of this article, the commissioner may cause a complaint
to be filed in the circuit court of Kanawha County for restitution
and to enjoin and restrain the person from continuing the violation
or engaging in or doing any act in furtherance thereof. The court
shall have jurisdiction of the proceeding and shall have the power
to make and enter an order of judgment awarding such preliminary or
final injunctive relief and restitution as in its judgment is
proper.
§33-12C-20. Service of process.
(a) Any act of transacting insurance by an unauthorized person
or a nonadmitted insurer is equivalent to and shall constitute an
irrevocable appointment by the unauthorized person or insurer,
binding upon it, its executor or administrator, or successor in
interest of the secretary of state or his or her successor in
office, to be the true and lawful attorney of the unauthorized
person or insurer upon whom may be served all lawful process in any
action, suit or proceeding in any court by the commissioner or by
the state and upon whom may be served any notice, order, pleading
or process in any proceeding before the commissioner and which
arises out of transacting insurance in this state by the
unauthorized person or insurer. Any act of transacting insurance
in this state by a nonadmitted insurer shall signify its acceptance
of its agreement that any lawful process in such court action, suit or proceeding and any notice, order, pleading or process in such
administrative proceeding before the commissioner so served shall
be of the same legal force and validity as personal service of
process in this state upon the unauthorized person or insurer.
(b) Service of process in the action shall be made by
delivering to and leaving with the secretary of state, or some
person in apparent charge of the office, two copies thereof and by
payment to the secretary of state of the fee prescribed by law.
Service upon the secretary of state as attorney shall be service
upon the principal.
(c) The secretary of state shall forward by certified mail one
of the copies of the process or notice, order, pleading or process
in proceedings before the commissioner to the defendant in the
court proceeding or to whom the notice, order, pleading or process
in the administrative proceeding is addressed or directed at its
last known principal place of business and shall keep a record of
all process so served on the commissioner which shall show the day
and hour of service. Service is sufficient, provided:
(1) Notice of service and a copy of the court process or the
notice, order, pleading or process in the administrative proceeding
are sent within fifteen days by certified mail by the plaintiff or
the plaintiff's attorney in the court proceeding or by the
commissioner in the administrative proceeding to the defendant in
the court proceeding or to whom the notice, order, pleading or
process in the administrative proceeding is addressed or directed
at the last known principal place of business of the defendant in the court or administrative proceeding; and
(2) The defendant's receipt or receipts issued by the post
office with which the letter is registered, showing the name of the
sender of the letter and the name and address of the person or
insurer to whom the letter is addressed, and an affidavit of the
plaintiff or the plaintiff's attorney in a court proceeding or of
the commissioner in an administrative proceeding, showing
compliance are filed with the clerk of the court in which the
action, suit or proceeding is pending or with the commissioner in
administrative proceedings, on or before the date the defendant in
the court or administrative proceeding is required to appear or
respond, or within such further time as the court or commissioner
may allow.
(d) A plaintiff shall not be entitled to a judgment or a
determination by default in any court or administrative proceeding
in which court process or notice, order, pleading or process in
proceedings before the commissioner is served under this section
until the expiration of forty-five days from the date of filing of
the affidavit of compliance.
(e) Nothing in this section shall limit or affect the right to
serve any process, notice, order or demand upon any person or
insurer in any other manner now or hereafter permitted by law.
(f) Each nonadmitted insurer assuming insurance in this state,
or relative to property, risks or exposures located or to be
performed in this state, shall be deemed to have subjected itself
to this article.
(g) Not withstanding conditions or stipulations in the policy
or contract, a nonadmitted insurer may be sued upon any cause of
action arising in this state, or relative to property, risks or
exposures located or to be performed in this state, under any
insurance contract made by it.
(h) Not withstanding conditions or stipulations in the policy
or contract, a nonadmitted insurer subject to arbitration or other
alternative dispute resolution mechanism arising in this state or
relative to property, risks or exposures located or to be performed
in this state under an insurance contract made by it shall conduct
the arbitration or other alternative dispute resolution mechanism
in this state.
(i) A policy or contract issued by the nonadmitted insurer or
one which is otherwise valid and contains a condition or provision
not in compliance with the requirements of this article is not
thereby rendered invalid but shall be construed and applied in
accordance with the conditions and provisions which would have
applied had the policy or contract been issued or delivered in full
compliance with this article.
§33-12C-21. Legal or administrative procedures.
(a) Before any nonadmitted insurer files or causes to be filed
any pleading in any court action, suit or proceeding or in any
notice, order, pleading or process in an administrative proceeding
before the commissioner instituted against the person or insurer,
by services made as provided in this article, the insurer shall
either:
(1) File with the clerk of the court in which the action, suit
or proceeding is pending, or with the commissioner of insurance in
administrative proceedings before the commissioner a bond with good
and sufficient sureties, to be approved by the clerk or
commissioner in an amount to be fixed by the court or commissioner
sufficient to secure the payment of any final judgment which may be
rendered in the action or administrative proceeding; or
(2) Procure a certificate of authority to transact the
business of insurance in this state. In considering the
application of an insurer for a certificate of authority, for the
purposes of this paragraph the commissioner need not assert the
provisions of section sixteen, article three of this chapter
against the insurer with respect to its application if the
commissioner determines that the company would otherwise comply
with the requirements for a certificate of authority.
(b) The commissioner of insurance, in any administrative
proceeding in which service is made as provided in this article,
may in the commissioner's discretion, order such postponement as
may be necessary to afford the defendant reasonable opportunity to
comply with the provisions of subsection (a) of this section and to
defend the action.
(c) Nothing in subsection (a) of this section shall be
construed to prevent a nonadmitted insurer from filing a motion to
quash a writ or to set aside service thereof made in the manner
provided in this article, on the ground that the nonadmitted
insurer has not done any of the acts enumerated in the pleadings.
(d) Nothing in subsection (a) of this section shall apply to
placements of insurance which were lawful in the state in which the
placement took place and which were not unlawful placements under
the laws of this state. Without limiting the generality of the
foregoing, nothing in subsection (a) of this section shall apply to
a placement made pursuant to section five of this article.
§33-12C-22. Enforcement.
(a) The commissioner shall have the authority to proceed in
the courts of this state or any other United States jurisdiction to
enforce an order or decision in any court proceeding or in any
administrative proceeding before the commissioner of insurance.
(b) Filing and status of foreign decrees.
A copy of a foreign decree authenticated in accordance with
the statutes of this state may be filed in the office of the clerk
of any circuit court of this state. The clerk, upon verifying with
the commissioner that the decree or order qualifies as a "foreign
decree" shall treat the foreign decree in the same manner as a
decree of a circuit court of this state. A foreign decree so filed
has the same effect and shall be deemed a decree of a circuit court
of this state, and is subject to the same procedures, defenses and
proceedings for reopening, vacating or staying as a decree of a
circuit court of this state and may be enforced or satisfied in
like manner.
(c) Notice of filing.
(1) At the time of the filing of the foreign decree, the
plaintiff shall make and file with the clerk of the court an affidavit setting forth the name and last known post office address
of the defendant.
(2) Promptly upon the filing of the foreign decree and the
affidavit, the clerk shall mail notice of the filing of the foreign
decree to the defendant at the address given and to the
commissioner of this state and shall make a note of the mailing in
the docket. In addition, the plaintiff may mail a notice of the
filing of the foreign decree to the defendant and to the
commissioner of this state and may file proof of mailing with the
clerk. Lack of mailing notice of filing by the clerk shall not
affect the enforcement proceedings if proof of mailing by the
plaintiff has been filed.
(3) No execution or other process for enforcement of a foreign
decree filed hereunder may issue until thirty days after the date
the decree is filed.
(d) Stay of the foreign decree.
(1) If the defendant shows the circuit court that an appeal
from the foreign decree is pending or will be taken, or that a stay
of execution has been granted, the court shall stay enforcement of
the foreign decree until the appeal is concluded, the time for
appeal expires, or the stay of execution expires or is vacated,
upon proof that the defendant has furnished the security for the
satisfaction of the decree required by the state in which it was
rendered.
(2) If the defendant shows the circuit court any ground upon
which enforcement of a decree of any circuit court of this state would be stayed, the court shall stay enforcement of the foreign
decree for an appropriate period, upon requiring the same security
for satisfaction of the decree which is required in this state.
(e) It shall be the policy of this state that the insurance
commissioner shall cooperate with regulatory officials in other
United States jurisdictions to the greatest degree reasonably
practicable in enforcing lawfully issued orders of such other
officials subject to public policy and the insurance laws of the
state. Without limiting the generality of the foregoing, the
commissioner may enforce an order lawfully issued by other
officials provided the order does not violate the laws or public
policy of this state.
§33-12C-23. Suits by nonadmitted insurers.
A nonadmitted insurer may not commence or maintain an action
in law or equity, including arbitration or any other dispute
resolution mechanism, in this state to enforce any right arising
out of any insurance transaction except with respect to:
(a) Claims under policies lawfully written in this state;
(b) Liquidation of assets and liabilities of the insurer
(other than collection of new premium), resulting from its former
authorized operations in this state;
(c) Transactions subsequent to issuance of a policy not
covering domestic risks at the time of issuance, and lawfully
procured under the laws of the jurisdiction where the transaction
took place;
(d) Surplus lines insurance placed by a licensee under authority of section eight of this article;
(e) Reinsurance placed under the authority of article thirty-
eight of this chapter
(f) The continuation and servicing of life insurance, health
insurance policies or annuity contracts remaining in force as to
residents of this state where the formerly authorized insurer has
withdrawn from the state and is not transacting new insurance in
the state;
(g) Servicing of policies written by an admitted insurer in a
state to which the insured has moved but in which the company does
not have a certificate of authority until the term expires;
(h) Claims under policies covering wet marine and
transportation insurance;
(i) Placements of insurance which were lawful in the
jurisdiction in which the transaction took place and which were not
unlawful placements under the laws of this state.
§33-12C-24. Countersignature requirements.
Surplus line insurance shall be countersigned by a duly
licensed resident surplus lines licensee.
§33-12C-25. Fees.
The commissioner shall receive the following fees from surplus
lines licensees: For letters of certification, five dollars; for
letters of clearance, ten dollars; for duplicate license, five
dollars. All fees and moneys so collected shall be used for the
purposes set forth in section thirteen, article three of this
chapter.
§33-12C-26. Coverage must be placed in solvent insurer.
No surplus lines licensee may knowingly place any coverage in
an insolvent insurer.
§33-12C-27. Change of address.
A surplus lines licensee shall notify the commissioner of any
change in his or her mailing address within thirty days of such
change. The commissioner shall maintain the mailing address of
each surplus lines licensee on file. Failure to timely inform the
insurance commissioner of a change in legal name or address may
result in a penalty pursuant to section twenty-four, article twelve
of this chapter.
§33-12C-28. Separability provisions.
If any provisions of this article, or the application of the
provision to any person or circumstance, shall be held invalid, the
remainder of the article and the application of the provision to
persons or circumstances other than those as to which it is held
invalid, shall not be affected thereby.
§33-12C-29. Hearings.
(a) When conducting any hearing authorized by section
thirteen, article two of this chapter which concerns any surplus
lines licensee, the commissioner shall give notice of the hearing
and the matters to be determined therein to the surplus lines
licensee by certified mail, return receipt requested, sent to the
last address filed by a person or entity pursuant to section five
eight of this article.
(b) If a surplus lines licensee fails to appear at the
hearing, the hearing may proceed, at which time the commissioner
shall establish that notice was sent to the person pursuant to this
section prior to the entry of any orders adverse to the interests
of a surplus lines licensee based upon the allegations against the
person which were set forth in the notice of hearing. Certified
copies of all orders entered by the commissioner shall be sent to
the person affected therein by certified mail, return receipt
requested, at the last address filed by a person with the
commissioner.
(c) A surplus lines licensee who fails to appear at a hearing
of which notice has been provided pursuant to this section, and who
has had an adverse order entered by the commissioner against them
as a result of their failure to so appear may, within thirty
calendar days of the entry of an adverse order, file with the
commissioner a written verified appeal with any relevant documents
attached thereto, which demonstrates good and reasonable cause for
the person's failure to appear, and may request reconsideration of
the matter and a new hearing. The commissioner in his or her
discretion, and upon a finding that the surplus lines licensee has
shown good and reasonable cause for his or her failure to appear,
shall issue an order that the previous order be rescinded, that the
matter be reconsidered, and that a new hearing be set.
(d) Orders entered pursuant to this section are subject to the
judicial review provisions of section fourteen, article two of this
chapter.
This article is entirely rewritten, therefore, strike-throughs
and underscoring have been omitted.