Alabama House Bill HB261

Alabama 2025 Regular Session

• Introduced: 2/12/25
• Refer: 2/12/25
• Report Pass: 2/19/25
• Refer: 2/25/25
• Report Pass: 3/5/25

Caption

Department of Insurance, surplus line brokers providing insurance not readily available by licensed agents in this state

Impact

The proposed changes in HB261 are expected to have a significant impact on the ease of doing business for surplus line brokers, making it more accessible for nonresident brokers to obtain licensure in Alabama. This could enhance competition in the insurance market by attracting more brokers from other states, potentially benefiting consumers through a wider range of insurance offerings. By removing the extra bond requirement, the bill aims to lower barriers to entry, thereby encouraging out-of-state brokers to engage with the Alabama insurance market.

Summary

House Bill 261 aims to amend the licensing requirements for surplus line brokers in Alabama, particularly regarding nonresident brokers. The bill specifies that nonresident surplus line brokers must submit an application and pay a license fee, but it eliminates the requirement for an additional surety bond that was previously mandated. This adjustment is intended to align Alabama's licensing framework with reciprocal agreements that simplify the process for nonresident insurance brokers wishing to operate within the state.

Contention

While proponents of the bill are likely to argue that it promotes business opportunities and aligns Alabama with broader industry practices, there may be concerns from groups focused on consumer protection and regulatory oversight. Critics might contend that lowering licensing requirements for nonresident brokers could diminish the quality of regulation and oversight of the insurance industry in Alabama. The ongoing discussions may touch on the balance between facilitating business operations and maintaining robust consumer protections in the insurance sector.