(1) A surplus lines licensee may not place any coverage with a nonadmitted insurer unless at the time of placement the nonadmitted insurer has done all of the following:
(a) Established satisfactory evidence of good repute and financial integrity.
(b) Qualified under one of the following subparagraphs:
(A) Has capital and surplus or its equivalent under the laws of its domiciliary jurisdiction that equals either the minimum capital and surplus requirements under the laws of this state or $5 million, except that the requirements of this paragraph may be satisfied by an insurer possessing less than $5 million capital and surplus upon an affirmative finding of acceptability by the Director of the Department of Consumer and Business Services. 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 and company record and reputation within the industry. In no event shall the director make an affirmative finding of acceptability when the surplus lines insurer’s capital and surplus is less than $3 million.
(B) Except as otherwise provided in subparagraph (C) of this paragraph, in the case of an alien insurer, maintains in the United States an irrevocable trust fund in either a national bank or a member of the Federal Reserve System, in an amount not less than $1.5 million for the protection of all its policyholders in the United States and such trust fund consists of cash, securities, irrevocable letters of credit, or of investments of substantially the same character and quality as those which are eligible investments for the capital and statutory reserves of admitted insurers authorized to write like kinds of insurance in this state. Such trust fund, which shall be included in any calculation of capital and surplus or its equivalent, shall have an expiration date which at no time shall be less than five years.
(C) In the case of a group of insurers that includes incorporated and individual unincorporated underwriters, maintains a trust fund of not less than $50 million as security to the full amount thereof for all policyholders and creditors in the United States of each member of the group, and such trust shall likewise comply with the terms and conditions established in subparagraph (B) of this paragraph for alien insurers, except that 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 regulators as are the unincorporated members.
(D) In the case of an insurance exchange created by the laws of individual states, maintains capital and surplus, or the substantial equivalent thereof, of not less than $15 million in the aggregate. For insurance exchanges that maintain funds for the protection of all insurance exchange policyholders, each individual syndicate shall maintain minimum capital and surplus, or the substantial equivalent thereof, of not less than $1.5 million. In the event the insurance exchange does not maintain funds for the protection of all insurance exchange policyholders, each individual syndicate shall meet the minimum capital and surplus requirements of subparagraph (A) of this paragraph.
(E) Is on the most current list of alien insurers approved by the National Association of Insurance Commissioners and meets additional requirements regarding the use of the list established by rule of the director.
(c) Unless qualified under paragraph (b)(E) of this subsection, provided to the director no more than six months after the close of the period reported upon a certified copy of its current annual statement that is:
(A) Filed with and approved by the regulatory authority in the domicile of the nonadmitted insurer;
(B) Certified by an accounting or auditing firm licensed in the jurisdiction of the insurer’s domicile; or
(C) In the case of an insurance exchange, an aggregate combined statement of all underwriting syndicates operating during the period reported.
(2) When a nonresident surplus lines licensee or nonresident surplus lines insurance producer who is not licensed to transact surplus lines insurance in this state places surplus lines insurance outside this state that covers a risk with exposures both in this state and outside this state, the licensee or insurance producer is not subject to the requirements of subsection (1) of this section if the nonadmitted insurer with which the coverage is placed:
(a) Meets the requirements for nonadmitted placement of insurance in the state in which the insurance is placed; or
(b) Is an authorized or admitted insurer in the state in which the insurance is placed. [1987 c.774 §120; 1995 c.99 §2; 2001 c.191 §44c; 2005 c.185 §11]
Section: Previous 735.350 735.355 735.360 735.365 735.400 735.405 735.410 735.415 735.420 735.425 735.430 735.435 735.440 735.445 735.450 NextLast modified: August 7, 2008