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Prepared by Cheryl Horne.
Pierre HB No. 543
(KEYWORD, SUMMARY, AND DIGEST as amended by Senate committee
amendments)
INSURANCE/SURPLUS LINE: Provides relative to regulation of surplus lines
insurance
DIGEST
Pierre HB No. 543
Proposed law provides relative to the regulation of surplus lines insurance (property and
casualty insurance coverage procured from insurers that do not have acknowledgments 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 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, Page 2 of 2
Prepared by Cheryl Horne.
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 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.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 22:46(2) and (17), 431, 432, 433, 435, 436, 438, and 439(F); adds R.S.
22:46(7.1) and (8.1))
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.
House Floor Amendments to the engrossed bill.
1. Makes technical changes.
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Insurance to the reengrossed
bill
1. Defines "eligible unauthorized insurer" and "home state".
2. Makes technical changes.
3. Requires the commissioner of insurance to maintain a list of approved
unauthorized insurers.
4. Deletes provisions that make the Subpart inapplicable to contingent liability
insurance in a rent with option-to purchase program.