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Regular Session, 2013
HOUSE BILL NO. 543
BY REPRESENTATIVE PIERRE
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
INSURANCE/SURPLUS LINE: Provides relative to regulation of surplus lines insurance
AN ACT1
To amend and reenact R.S. 22:431, 432, 433, 435, 436, and 438, relative to surplus lines2
insurance; to authorize placement of insurance with a surplus lines insurer without3
regard to the availability of authorized insurance; to provide relative to capital,4
surplus, bond, and deposit requirements; to provide with respect to the list of surplus5
lines insurers maintained by the commissioner of insurance; to provide relative to6
certain notices to applicants for insurance regarding placement of personal lines7
policies with surplus lines insurers; to provide for applicability; and to provide for8
related matters.9
Be it enacted by the Legislature of Louisiana:10
Section 1. R.S. 22:431, 432, 433, 435, 436, and 438 are hereby amended and11
reenacted to read as follows:12
§431. Purpose; necessity for regulation13
This Subpart shall be liberally construed and applied to promote its14
underlying purposes which include:15
(1) Protecting persons seeking insurance in this state.16
(2) Permitting surplus lines insurance to be placed with reputable and17
financially sound unauthorized insurers under the provisions of this Subpart.18 HLS 13RS-853 ENGROSSED
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(3) Establishing a system of regulation which will permit orderly access to1
surplus lines insurance in this state and encourage authorized insurers to provide2
make new and innovative types of insurance available to consumers in this state.3
(4) Providing a system through which persons may purchase insurance other4
than surplus lines insurance, from approved unauthorized insurers pursuant to this5
Subpart. However, nothing in this Subpart shall be construed to apply to the6
provisions and requirements of R.S. 32:793(D) and contingent liability insurance in7
a rent with option-to-purchase program.8
(5) Protecting the revenues of this state.9
(6) Providing a system pursuant to this Subpart which that subjects10
unauthorized insurance activities in this state to the jurisdiction of the insurance11
commissioner of insurance and state and federal courts in suits by or on behalf of the12
state.13
§432. Surplus lines insurance from unauthorized insurers14
If certain insurance coverages cannot be procured from authorized insurers,15
such coverages, hereinafter designated as "surplus Surplus lines", insurance, as16
defined in R.S. 22:46(17), may be procured from approved unauthorized insurers,17
provided that the insurance is as defined in R.S. 22:46(2) and sometimes referred to18
in this Title as "surplus lines insurers", shall be procured through a licensed surplus19
lines broker. brokers and may be procured without regard to the availability of20
coverage from authorized insurers. However, nothing in this Subpart shall be21
construed to apply to the provisions and requirements of R.S. 32:793(D) and22
contingent liability insurance in a rent with option-to-purchase program.23
§433. Endorsement of contract24
A. Every Each insurance policy or contract procured and delivered as surplus25
lines coverage pursuant to this Subpart shall have stamped or printed upon it and be26
signed by the surplus lines broker who procured it, in bold type and the face of which27
shall not be less than ten-point type, the following: notice:28 HLS 13RS-853 ENGROSSED
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1
NOTICE2
This insurance policy is delivered as surplus lines coverage under the Louisiana3
Insurance Code. of the State of Louisiana.4
In the event of insolvency of the company issuing this contract, the policyholder5
or claimant is not covered by the Louisiana Insurance Guaranty Association which6
guarantees only specific types of policies issued by an insurance company companies7
authorized to do business in Louisiana.8
This surplus lines policy has been procured by the following licensed Louisiana9
surplus lines broker:10
Signature of Licensed Louisiana Surplus Lines Broker11
or Authorized Representative12
Printed Name of Licensed Louisiana Surplus Lines Broker13
B. The notice required under pursuant to Subsection A of this Section shall,14
whether stamped or printed, be: distinguished in either one of the following ways:15
(1) The notice shall be prominently Prominently displayed in the color red.16
or prominently offset by a black border.17
(2) If the notice is printed Printed or stamped in the color black, it shall be18
prominently offset by a black border. on the policy or contract in bold and in not less19
than ten-point type.20
(3) Signed by the surplus lines broker who procured the policy or contract.21
* * *22
§435. Surplus lines in solvent insurers; capital and surplus requirements; deposits23
and bond requirements requirement for licensure in domiciliary jurisdiction24
A.(1) A surplus lines broker shall not knowingly place surplus lines25
insurance with surplus lines insurers unsound financially. that are:26
(1) Not financially sound.27 HLS 13RS-853 ENGROSSED
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(2) Each insurer is Not authorized to write the type of insurance in its their1
domiciliary jurisdiction. jurisdictions to write the type of insurance placed.2
(3) The full amount or type of insurance cannot be obtained from insurers3
who are authorized to do business in this state. In addition to the other requirements4
of this Subpart, including but not limited to R.S. 22:432 and 438, the full amount or5
type of insurance may be procured from an approved unauthorized insurer, provided6
that a diligent search is made among the insurers who are authorized to transact7
business and are actually writing the particular type of insurance in this state if any8
are writing it.9
B. The surplus lines broker shall not so insure with any insurer unless the10
insurer has met the requirements of R.S. 22:436, unless otherwise provided by law,11
has established satisfactory evidence of good repute and financial integrity, and has12
done the following: A surplus lines broker shall not place coverage with a surplus13
lines insurer, unless, at the time of placement, the surplus lines broker has14
determined that the surplus lines insurer qualifies under one of the following15
Paragraphs:16
(1)(a) If it is a foreign insurer that it has capital and surplus or its equivalent17
under the laws of its domiciliary jurisdiction which equals the greater of:18
(a) Has capital and surplus of not less than fifteen million dollars exclusive19
of either surplus debentures or subordinated notes if a stock insurer, or surplus of not20
less than fifteen million dollars exclusive of either surplus debentures or21
subordinated notes if any other type insurer, and has on deposit with the22
commissioner of insurance a safekeeping or trust receipt from a bank or a savings23
and loan association doing business within Louisiana, indicating that one hundred24
thousand dollars in money, or approved bonds of the United States government, the25
state of Louisiana, or any political subdivision thereof, or in lieu of such deposit has26
delivered to the commissioner of insurance a bond in the amount of one hundred27
thousand dollars issued by an authorized surety company doing business in this state28
and approved by the commissioner of insurance.29 HLS 13RS-853 ENGROSSED
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(b) Such deposit or surety bond shall be conditioned for the prompt payment1
of all claims arising and accruing to any person by virtue of any policy issued by any2
such unauthorized insurer upon any property or other risk situated in this state, and3
to be held subject to any claims, liens or judgments that may be judicially obtained4
against any such company in the courts of this state, or arising from any contract of5
insurance, or indemnity, or fidelity, or guaranty entered into in this state, and shall6
be liable to seizure and sale at the instance of any judgment creditor of such insurer,7
under judgment obtained in any of the courts of this state or in any of the federal8
courts of this state.9
(c) No surety bond furnished as provided herein shall be cancelled unless a10
new bond or deposit has been substituted or satisfactory evidence has been submitted11
to the commissioner of insurance that the insurer has discharged all of its assured12
obligations and liabilities in this state, and that it has no assessed liabilities whatever13
remaining in this state. The term of these bonds shall be for one year ending March14
first, but the last bond filed shall always remain in effect until a new bond is filed or15
a deposit is made as a substitution therefor. Withdrawal of any bond or deposit16
required herein may be made only upon the approval by the commissioner of17
insurance.18
(i) The minimum capital and surplus requirements under the laws of this19
state.20
(ii) Fifteen million dollars.21
(d) (b) The requirements of Subparagraph (a) of this Paragraph, with respect22
only to capital and surplus, may be satisfied by an insurer's possessing less than the23
minimum capital and surplus upon an affirmative finding of acceptability by the24
commissioner. If the commissioner finds such acceptable, the finding shall be in25
effect for a one-year period and shall be applied for annually thereafter to be renewed26
on an annual basis, unless the finding is revoked by the commissioner. The finding27
shall be based upon such factors as quality of management, capital and surplus of28
any parent company, company underwriting profit and investment income trends,29 HLS 13RS-853 ENGROSSED
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market availability, and company record and reputation within the industry. In no1
event shall the commissioner make an affirmative finding of acceptability when the2
nonadmitted an unauthorized insurer's capital and surplus is less than four million3
five hundred thousand dollars.4
(e) In the case of an insurance exchange created by the laws of a state other5
than this state:6
(I) The syndicates of the exchange shall maintain under terms acceptable to7
the commissioner capital and surplus, or its equivalent under the laws of its8
domiciliary jurisdiction, of not less than seventy-five million dollars in the aggregate.9
(ii) The exchange shall maintain under terms acceptable to the commissioner10
not less than fifty percent of the policyholder surplus of each syndicate in a custodial11
account accessible to the exchange or its domiciliary commissioner in the event of12
insolvency or impairment of the individual syndicate.13
(iii) In addition, each individual syndicate to be eligible to accept surplus14
lines insurance placements from this state shall meet either of the following15
requirements: For insurance exchanges which maintain funds in an amount of not16
less than fifteen million dollars for the protection of all exchange policyholders, the17
syndicate shall maintain under terms acceptable to the commissioner minimum18
capital and surplus, or its equivalent under the laws of the domiciliary jurisdiction,19
of not less than five million dollars; or for insurance exchanges which do not20
maintain funds in an amount of not less than fifteen million dollars for the protection21
of all exchange policyholders, the syndicate shall maintain under terms acceptable22
to the commissioner minimum capital and surplus, or its equivalent under the laws23
of its domiciliary jurisdiction, of not less than the minimum capital and surplus24
requirements under the laws of its domiciliary jurisdiction or fifteen million dollars,25
whichever is greater.26
(2) If it is an alien Lloyd's plan or other similar group of insurers, which27
consists of unincorporated individual insurers, or a combination of both28
unincorporated and incorporated insurers:29 HLS 13RS-853 ENGROSSED
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(a) The plan or group maintains in the United States a trust or trusts equal to1
thirty percent of the group's United States surplus lines gross liabilities excluding2
those types of insurance liabilities set forth in R.S. 22:1903(C)(4), not to exceed five3
hundred million dollars; however, after notice and an opportunity to be heard, the4
commissioner may require that the trust or trusts equal an amount in excess of five5
hundred million dollars if he finds such higher amount to be reasonably necessary6
to protect the interests of the public and policyholders of this state.7
(b) In addition, the group shall maintain in trust a surplus in the amount of8
one hundred million dollars, which shall be available for the benefit of United States9
surplus lines policyholders of any member of the group.10
(c) The incorporated members of the group shall not be engaged in any11
business other than underwriting as a member of the group and shall be subject to the12
same level of solvency regulation and control by the group's domiciliary regulator13
as are the unincorporated members.14
(d) The trust funds shall be maintained in an irrevocable trust account in the15
United States in a qualified financial institution, consisting of cash, securities, letters16
of credit, or investments of substantially the same character and quality as those17
which are eligible investments for the capital and statutory reserves of authorized18
insurers to write like kinds of insurance in this state and, in addition, the trust19
required by Subparagraph (b) of this Paragraph shall satisfy the requirements of the20
standard trust agreement required for listing with the International Insurers21
Department of the National Association of Insurance Commissioners.22
(3) In the case of a group of incorporated alien insurers under common23
administration, which has continuously transacted an insurance business outside the24
United States for at least three years immediately prior to December 31, 1997, and25
which submits to this state's authority to examine its books and records and bears the26
expense of the examination:27
(a) The group shall maintain an aggregate policyholders' surplus of ten28
billion dollars.29 HLS 13RS-853 ENGROSSED
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(b) The group shall maintain in trust a surplus in the amount of one hundred1
million dollars. The surplus shall be available for the benefit of United States2
surplus lines policyholders of any member of the group.3
(c) Each insurer shall individually maintain capital and surplus of not less4
than twenty-five million dollars per company.5
(d) The trust funds shall satisfy the requirements of the Standard Trust6
Agreement requirement for listing with the International Insurers Department of the7
National Association of Insurance Commissioners and shall be maintained in an8
irrevocable trust account in the United States in a qualified financial institution, and9
shall consist of cash, securities, letters of credit, or investments of substantially the10
same character and quality as those which are eligible investments for the capital and11
statutory reserves of admitted insurers to write like kinds of insurance in this state.12
(e) Additionally, each member of the group shall make available to the13
commissioner an annual certification of the solvency of the member by the14
domiciliary regulator of the member and its independent public accountant.15
(4) Except for an exchange or plan complying with Subparagraph (B)(1)(e)16
or Paragraph (B)(2) or (B)(3) of this Section, an alien insurer shall satisfy the capital17
and surplus requirements of Subparagraphs (B)(1)(a) through (d) of this Section and18
shall have in force a trust fund of not less than the greater of:19
(a) Five million four hundred thousand dollars.20
(b) Thirty percent of the United States surplus lines gross liabilities, which21
does not include those types of insurance liabilities set forth in R.S. 22:1903(C)(4),22
not to exceed sixty million dollars, to be determined annually on the basis of23
accounting practices and procedures substantially equivalent to those promulgated24
by this state, as of December thirty-first next preceding the date of determination,25
where:26
(I) The liabilities are maintained in an irrevocable trust account in the United27
States in a qualified financial institution, on behalf of United States policyholders28
consisting of cash, securities, letters of credit, or other investments of substantially29 HLS 13RS-853 ENGROSSED
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the same character and quality as those which are eligible investments pursuant to1
R.S. 22:584 et seq. for the capital and statutory reserves of admitted insurers to write2
like kinds of insurance in this state. The trust fund, which shall be included in any3
calculation of capital and surplus or its equivalent, shall satisfy the requirements of4
the Standard Trust Agreement required for listing with the International Insurers5
Department of the National Association of Insurance Commissioners.6
(ii) The insurer may request approval from the commissioner to use the trust7
fund to pay valid surplus lines claims. The balance of the trust fund shall never be8
less than the greater of five million four hundred thousand dollars or thirty percent9
of the current gross United States surplus lines liabilities of the insurer, excluding10
those types of liabilities set forth in R.S. 22:1903(C)(4).11
(iii) In calculating the trust fund amount required by this Paragraph, credit12
shall be given for surplus lines deposits separately required and maintained for a13
particular state or United States territory, not to exceed the amount of the loss and14
loss adjustment reserves of the insurer in the particular state or territory.15
(6) (2)(a) In addition to all of the other requirements of this Section, If it is16
an alien insurer, not domiciled in the United States or its territories it shall be listed17
by the International Insurers Department of the National Association of Insurance18
Commissioners. on its Quarterly Listing of Alien Insurers.19
(b) The commissioner may waive the requirement in Subparagraph (a) of this20
Paragraph or the requirements of Subparagraph (B)(4)(b) of this Section upon an21
affirmative finding of the insurer's meeting the requirements for capital and surplus22
or acceptability by the commissioner if the commissioner is satisfied that the23
placement of insurance with the insurer is necessary and will not be detrimental to24
the public and the policyholder. In determining whether business may be placed25
with the insurer, the commissioner may consider such factors as: pursuant to26
Paragraph (1) of this Subsection.27
(a) The interests of the public and policyholders.28 HLS 13RS-853 ENGROSSED
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(b) The length of time the insurer has been authorized in its domiciliary1
jurisdiction and elsewhere.2
(c) Unavailability of particular coverages from authorized insurers or3
unauthorized insurers meeting the requirements of this Section.4
(d) The size of the company as calculated by its assets, capital and surplus,5
reserves, premium writings, insurance in force or other appropriate criteria; the kinds6
of business the company writes, its net exposure and the extent to which the business7
of the company is diversified among several lines of insurance and geographic8
locations.9
(e) The past and projected trend in the size of the company's capital and10
surplus of the company considering such factors as premium growth, operating11
history, loss and expense ratios, or other appropriate criteria.12
(7) Has caused to be provided to the commissioner a copy of its current13
annual statement certified by the insurer and an actuarial opinion as to the adequacy14
of, and methodology used to determine, the loss reserves of the insurer. The15
statement shall be provided at the same time it is provided to the insurer's domicile,16
but in no event more than eight months after the close of the period reported upon,17
and shall be certified as a true and correct copy by an accounting or auditing firm18
licensed in the jurisdiction of the insurer's domicile and certified by a senior officer19
of the unauthorized insurer as a true and correct copy of the statement filed with the20
regulatory authority in the domicile of the unauthorized insurer. In the case of an21
insurance exchange qualifying under Subparagraph (B)(1)(e) of this Section, the22
statement may be an aggregate combined statement of all underwriting syndicates23
operating during the period reported.24
D. C. In addition to any other statements or reports required by this Subpart,25
the commissioner of insurance may request from any surplus lines broker full and26
complete information respecting the financial stability, reputation, and integrity of27
any unauthorized insurer with whom any such surplus lines broker has dealt, or28
proposes to deal, in the transaction of insurance business. The surplus lines broker29 HLS 13RS-853 ENGROSSED
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shall promptly furnish in written or printed form so much of the information1
requested as he can produce. The commissioner of insurance, if he believes it to be2
in the public interest, may order such surplus lines broker in writing to place no3
further insurance business on Louisiana risks through such unauthorized company.4
H. D. (1) Notwithstanding any law to the contrary, no person shall act in this5
state as producer for or broker to any unauthorized insurer which that has not been6
approved by the Department commissioner of Insurance insurance in accordance7
with this Section and R.S. 22:436, unless the following criteria are met:8
(a) The insurance is limited to commercial property and liability, including9
commercial marine.10
(b) The insurance coverage is excess coverage and the attachment point is11
at least twenty-five million dollars for property and ten million dollars for liability12
or such other amount as the Department of Insurance commissioner in its his13
discretion shall require.14
(c) Approval from the Department of Insurance is required commissioner has15
been obtained for each policy.16
(d) The insured has been informed in writing by the agent or broker that the17
insurer has not been approved by the Department of Insurance. commissioner.18
(2) The commissioner, by regulation or directive, may require that the19
insured meet minimum financial requirements and may require certification from the20
producer or broker that the insurer meets the financial and any other requirements21
promulgated by the Department of Insurance commissioner for insurance coverage22
by an unauthorized insurer which has not been approved by the Department of23
Insurance commissioner under this Section and R.S. 22:436.24
§436. Approved unauthorized insurers; list; requirements; removal25
A. No surplus lines broker shall place surplus lines insurance with an insurer26
who is not on the list of approved unauthorized insurers as compiled and maintained27
by the commissioner of insurance.28 HLS 13RS-853 ENGROSSED
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B.(1) To obtain and maintain placement on the list of approved unauthorized1
insurers, a foreign an unauthorized insurer shall comply with the provisions of R.S.2
22:435 applicable to foreign or alien insurers, respectively, and shall annually file3
with the commissioner the following:4
(a) (1) A copy of the insurer's annual statement, signed and sworn to by its5
president and secretary as to its condition as of the preceding December thirty-first,6
evidencing that the insurer has capital and surplus of not less than fifteen million7
dollars exclusive of either surplus debentures or subordinated notes, and complied8
with the provisions of R.S. 22:435(B)(7)..9
(b) Evidence that the amount of net premiums written does not exceed four10
times the insurer's capital and surplus.11
(c) (2) Evidence that, if the insurer issues workers' compensation insurance12
in this state, it has established and maintained a workers' compensation claims office13
pursuant to R.S. 23:1161.1 or has retained a licensed claims adjuster.14
(d) (3) A copy of the producer production report in a form required by the15
commissioner listing all business placed with the company by licensed surplus lines16
brokers. The report shall be filed with the Department of Insurance commissioner17
no later than April fifteenth of each year.18
(2) An insurer that fails to file a copy of its annual statement on or before19
March first of each year shall be removed from the list of approved unauthorized20
insurers. The commissioner may grant an extension, not to exceed thirty days, if21
presented with satisfactory evidence showing the reasonableness of the extension.22
C. To obtain and maintain placement on the list of approved unauthorized23
insurers, an alien insurer shall comply with the provisions of R.S. 22:435 applicable24
to alien insurers including but not limited to the provisions of R.S. 22:435(B)(7), and25
the commissioner may require an alien insurer to file a copy of the producer26
production report in a form prescribed by the commissioner listing all business27
placed with the company by licensed surplus lines brokers. The report shall be filed28
with the Department of Insurance no later than April fifteenth of each year. The29 HLS 13RS-853 ENGROSSED
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commissioner shall remove any alien insurer from the list of approved unauthorized1
insurers if it ceases to comply with the provisions of R.S. 22:435 applicable to alien2
insurers, or if he determines that continued placement of surplus lines insurance with3
the insurer would not be in the best interest of the policyholders or citizens of4
Louisiana.5
D. The commissioner shall remove a foreign insurer from the list of6
approved unauthorized insurers if:7
(1) The insurer does not have capital and surplus of at least fifteen million8
dollars exclusive of surplus debentures and subordinated notes, as determined by his9
examiners.10
(2) It is determined that the continued placement of surplus lines insurance11
with the insurer would not be in the best interest of the policyholders or the citizens12
of Louisiana.13
E. C. The commissioner may remove a foreign insurer from the list of an14
approved unauthorized insurers insurer from the list if:15
(1) The amount of net premiums written exceeds four times the insurer's16
capital and surplus. The insurer fails to pay any required fee.17
(2) The insurer fails to deliver any information requested by the18
commissioner within thirty days.19
(3) The insurer issues workers' compensation insurance within the state, and20
fails to establish and maintain a workers' compensation claims office pursuant to21
R.S. 23:1161.1 or fails to retain a licensed claims adjuster.22
F.(1) The commissioner may declare an approved unauthorized insurer23
ineligible if at anytime he determines any of the following:24
(a) (4) The insurer is in unsound financial condition or has acted in an25
untrustworthy manner.26
(b) (5) The insurer no longer satisfies the requirements set forth in R.S.27
22:435.28
(c) (6) The insurer has willfully violated the laws of this state.29 HLS 13RS-853 ENGROSSED
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(d) (7) The insurer does not conduct a proper conducts improper claims1
practice. practices, including but not limited to unfair trade practices as defined in2
Part IV of Chapter 7 of this Title, R.S. 22:1961 et seq.3
G. D. Upon removing an insurer from the list of approved unauthorized4
insurers, the commissioner shall notify the insurer and all licensed surplus lines5
brokers of such action in writing. Such notice to licensed surplus lines brokers may,6
at the option of the surplus lines broker, be sent by the commissioner via electronic7
mail.8
H. E. The commissioner shall have the authority to adopt and promulgate such9
rules and regulations as are necessary to carry out the provisions of this Section in10
accordance with the Administrative Procedure Act.11
* * *12
§438. Proof of uninsurability; affidavit Certificate of applicant for insurance13
A. Any licensed surplus lines broker that procures a personal lines policy with14
an approved unauthorized insurer shall obtain from the duly licensed submitting15
producer or broker within thirty days of applicant for insurance no later than the date16
of binding an affidavit of coverage, a certificate on a standardized form promulgated17
by the commissioner of insurance which shall be maintained by the licensed surplus18
lines broker. that attests to the diligent efforts of the producer or broker to place19
insurance coverage with admitted insurers and the results thereof. The affidavit20
certificate shall affirm verify that:21
(1) the insured applicant for insurance The applicant for insurance was22
expressly advised prior to placement of the surplus lines insurance.23
(2) that the surplus lines insurer with whom the The insurance is being may24
be placed is with an approved unauthorized insurer. 25
(3) and that in In the event of insolvency of the insurer, losses shall not be paid26
by the state insurance guaranty fund, Louisiana Insurance Guaranty Association.27
(4) The applicant for insurance expressly authorizes the procurement of28
surplus lines insurance coverage.29 HLS 13RS-853 ENGROSSED
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(5) and that the The coverage is being procured through a duly licensed1
Louisiana surplus lines broker.2
B. As long as the personal lines policy continues to be renewed by the same3
approved unauthorized insurer, there shall not be a need for new affidavits4
certificates at each renewal. At renewal, if the personal lines policy is placed with a5
different approved unauthorized insurer, then the procurement of a new affidavit will6
certificate shall be secured obtained in the manner outlined in Subsection A of this7
Section.8
Section 2. This Act shall become effective upon signature by the governor or, if not9
signed by the governor, upon expiration of the time for bills to become law without signature10
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If11
vetoed by the governor and subsequently approved by the legislature, this Act shall become12
effective on the day following such approval.13
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Pierre HB No. 543
Abstract: Provides relative to the regulation of surplus lines insurance, including
authorizing placement of insurance with a surplus lines insurer without regard to the
availability of authorized insurance.
Proposed law provides relative to the regulation of surplus lines insurance (property and
casualty insurance coverage procured from insurers that do not have certificates of authority
to sell insurance in this state), as follows:
(1)Present law provides that the placement of insurance coverage with a surplus lines
insurer (otherwise referred to as an approved unauthorized insurer or a non-admitted
insurer) through a surplus lines broker may occur only if such coverage is not
available from an authorized insurer (otherwise known as an admitted insurer).
Proposed law removes the requirement that insurance not be available from an
authorized insurer, thus authorizing placement of insurance with a surplus lines
insurer without regard to the availability of authorized insurance.
(2)Present law provides extensive eligibility requirements for surplus lines insurers,
including specific capital, surplus, bond, and deposit requirements.
Proposed law deletes many of these eligibility requirements in order to conform to the
federal Nonadmitted and Reinsurance Reform Act (NRRA) of 2010 which preempts
numerous state laws and regulations regarding surplus lines insurance. Establishes HLS 13RS-853 ENGROSSED
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new minimum capital and surplus requirements that conform to the NRRA for foreign
surplus lines insurers, specifically requiring that they have either the minimum capital
and surplus required in this state or $15 million. Gives the commissioner of insurance
the discretion to approve a surplus lines insurer with a smaller capital and surplus but
at least $4.5 million upon a finding that the insurer is acceptable after considering
factors listed in proposed law. Further provides that alien insurers that are on the
Quarterly Listing of Alien Insurers maintained by the National Association of
Insurance Commissioners (NAIC) or that meet the requirements for foreign insurers
may be approved by the commissioner. Retains requirements for surplus lines
brokers to submit reports and information requested by the commissioner of
insurance. Retains the ability to procure certain high-dollar commercial policies from
unauthorized insurers not on the approved list when the commissioner approves of the
specific transaction.
(3)Present law requires that a list of surplus lines insurers be maintained by the
commissioner.
Proposed law retains this requirement but makes changes in the filing requirements
for such insurers. Makes such filing requirements less administratively burdensome
by eliminating certification of documents available through online systems for
regulators accessible to the Department of Insurance. Deletes provisions for
mandatory removal from the list for failure to timely file an annual statement.
Consolidates the causes for removal from the approved list and makes removal
discretionary with the commissioner.
(4)Present law requires a submitting producer (agent) to submit an affidavit to the
surplus lines broker prior to obtaining surplus lines coverage affirming that the
applicant for insurance is not able to obtain authorized personal lines insurance after
diligent efforts by the producer. Also prescribes the content of the affidavit, including
that in the event of insolvency of the surplus lines insurer, losses shall not be paid by
the La. Insurance Guaranty Assn.
Proposed law eliminates the requirement for an affidavit for personal lines policies,
including the requirement that the applicant for insurance is not able to obtain
authorized personal lines insurance after diligent efforts by the producer. Instead
requires that a producer obtain written permission from the applicant for insurance,
on a form (certificate) approved by the commissioner, prior to obtaining surplus lines
coverage. Retains contents of the certificate, but adds including a statement that the
applicant of insurance expressly authorizes the procurement of surplus lines insurance
coverage.
(5)Specifically provides that nothing in present law or proposed law shall apply to
contingent liability insurance in a rent with option-to purchase program.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 22:431, 432, 433, 435, 436, and 438) HLS 13RS-853 ENGROSSED
HB NO. 543
Page 17 of 17
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Insurance to the original bill.
1. Limited requirement for a certificate to personal lines policies.
2. Changed references to "policyholder" to "applicant for insurance" in portion of
proposed law relative to the certificate for personal lines policies.
3. Added exemption for contingent liability insurance in a rent with option-to
purchase program.