HB 41 - Insurance; surplus line brokers; amend provisions
Georgia House of Representatives - 1995/1996 Sessions
HB 41 - Insurance; surplus line brokers; amend provisions
Page Numbers - 1/ 2/ 3/ 4/ 5/ 6/ 7/ 8
1. Williams 114th 2. Towery 30th 3. Harbin 113th
House Comm: Ins / Senate Comm: I&L /
House Vote: Yeas 161 Nays 4 Senate Vote: Yeas 52 Nays 0
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House Action Senate
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1/9/95 Read 1st Time 1/31/95
1/10/95 Read 2nd Time 2/20/95
1/26/95 Favorably Reported 2/17/95
Sub Committee Amend/Sub Sub
1/30/95 Read 3rd Time 3/9/95
1/30/95 Passed/Adopted 3/9/95
CS Comm/Floor Amend/Sub CSFA
3/13/95 Amend/Sub Agreed To
4/5/95 Sent to Governor
4/21/95 Signed by Governor
482 Act/Veto Number
4/21/95 Effective Date
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Rules Suspended to Introduce
Code Sections amended: 33-5-21, 33-5-25, 33-5-27, 33-5-29, 33-5-31, 33-6-5,
33-7-14
HB 41 HB 41/AP
H. B. No. 41 (AS PASSED HOUSE AND SENATE)
By: Representatives Williams of the 114th, Towery of the
30th and Harbin of the 113th
A BILL TO BE ENTITLED
AN ACT
1- 1 To amend Title 33 of the Official Code of Georgia Annotated,
1- 2 relating to insurance, so as to revise conditions relative
1- 3 to the placement of surplus line insurance; to revise
1- 4 penalties for violations by surplus line brokers; to allow
1- 5 surplus line insurance to be placed with certain groups
1- 6 containing corporate underwriters under certain conditions;
1- 7 to provide that surplus line brokers' certificates shall
1- 8 contain a general statement of the kind and type of
1- 9 insurance purchased; to provide that surplus line brokers
1-10 file quarterly affidavits and pay taxes on premiums paid to
1-11 such surplus line brokers during the previous quarter; to
1-12 revise requirements relating to reports of surplus line
1-13 brokers; to provide that in cases where classification,
1-14 premiums, or rates are not required to be filed with and
1-15 approved by the Commissioner, the premiums and charges shall
1-16 not be in excess of or less than those specified in the
1-17 policy and, except for those coverages written in accordance
1-18 with Chapter 5 of Title 33, relating to the regulation of
1-19 unauthorized insurers and surplus line insurance, as fixed
1-20 by the insurer; to provide for editorial revision; to allow
1-21 credit for reinsurance ceded to groups of incorporated and
1-22 individual unincorporated underwriters maintaining trust
1-23 funds under certain conditions; to provide for other matters
1-24 relative to the foregoing; to provide an effective date; to
1-25 repeal conflicting laws; and for other purposes.
1-26 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
1-27 Title 33 of the Official Code of Georgia Annotated, relating
1-28 to insurance, is amended by striking Code Section 33-5-21,
1-29 relating to the authorization of procurement of surplus line
1-30 insurance, and inserting in lieu thereof a new Code Section
1-31 33-5-21 to read as follows:
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2- 1 "33-5-21. (Index)
2- 2 Surplus line insurance If the full amount of insurance
2- 3 required to protect the interest of the insured cannot be
2- 4 obtained from insurers who are authorized to do business
2- 5 in this state, the surplus amount, designated as 'surplus
2- 6 line,' may be procured from unauthorized insurers subject
2- 7 to the following conditions:
2- 8 (1) The insurance must be procured through a licensed
2- 9 surplus line broker;
2-10 (2) The full amount or kind of insurance required to
2-11 protect the insured is not procurable, after diligent
2-12 effort has been made to do so, from among the insurers
2-13 who are authorized to transact and are actually writing
2-14 the particular kind and class of insurance in this
2-15 state, and the amount of insurance placed in an
2-16 unauthorized insurer is only the excess over the amount
2-17 procurable from authorized insurers. Submission of the
2-18 risk to not less than three such authorized insurers
2-19 shall be deemed to be diligent effort may only be
2-20 procured from insurers which meet the financial
2-21 condition requirements of Code Section 33-5-25; and
2-22 (3) The insurance must not be procured for the purpose
2-23 of securing advantages either as to: insured or the
2-24 insured's agent has made an effort to procure the
2-25 desired insurance coverage or benefits from authorized
2-26 insurers, but such effort has been unsuccessful in
2-27 obtaining insurance coverage or benefits which are
2-28 satisfactory to the insured; and (A) A lower premium rate than would be accepted by an
2-30 authorized insurer; or (B) Terms of the insurance contract.
2-32 (4) The insurance shall not be procured under this
2-33 chapter for personal passenger motor vehicle coverage or
2-34 residential dwelling property coverage unless such
2-35 insurance cannot be obtained from an authorized
2-36 insurer."
SECTION 2.
2-37 Said title is further amended by striking Code Section
2-38 33-5-25, relating to the ascertainment of the financial
2-39 condition of an unauthorized insurer by a surplus line
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HB 41/AP
3- 1 broker, and inserting in lieu thereof a new Code Section
3- 2 33-5-25 to read as follows:
3- 3 "33-5-25. (Index)
3- 4 (a) The broker shall ascertain the financial condition of
3- 5 the unauthorized insurer before placing insurance with the
3- 6 unauthorized insurer and shall not place surplus line
3- 7 insurance with any insurer who does not meet, according to
3- 8 current available reliable financial information, the
3- 9 requirements provided in subsection (b) of this Code
3-10 section.
3-11 (b) The broker shall so insure only:
3-12 (1) With a foreign insurer having capital and surplus
3-13 amounting to at least $3 million;
3-14 (2) With an alien insurer which has been established for
3-15 at least ten years and which has at least $10 million in
3-16 capital and surplus, unless the character,
3-17 trustworthiness, and financial integrity of an alien
3-18 insurer is of such a nature that it would be in the best
3-19 interests of the policyholders and the general public to
3-20 use such insurer in accordance with standards prescribed
3-21 by rules and regulations of the Commissioner; or
3-22 (3) With any group of foreign or alien individual
3-23 underwriters, including, but not limited to, any Lloyd's
3-24 group, or with any other similar unincorporated group of
3-25 foreign or alien individual insurers a group including
3-26 incorporated and individual unincorporated underwriters,
3-27 the incorporated members of which shall not be engaged
3-28 in any business other than underwriting as a member of
3-29 the group and shall be subject to the level of solvency
3-30 regulation and control by the group's domiciliary
3-31 regulator as are the unincorporated members, if such
3-32 group maintains a trust or security fund of at least ten
3-33 million United States dollars as security to the full
3-34 amount thereof for all policyholders and creditors in
3-35 the United States of each member of the group; or
3-36 (4) With an insurer described in paragraph (1) or (2) of
3-37 this subsection which annually furnishes to the broker a
3-38 copy of the insurer's current annual statement.
3-39 (c) For any violation of this Code section, in addition to
3-40 any other penalty provided by law, the broker's license
3-41 shall be revoked and the broker shall not again be so
3-42 licensed within a period of two years thereafter a
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4- 1 broker's license may be suspended or revoked as provided
4- 2 in Code Section 33-5-23."
SECTION 3.
4- 3 Said title is further amended by striking subsection (a) of
4- 4 Code Section 33-5-27, relating to issuance to insured by
4- 5 broker of evidence of insurance, and inserting in lieu
4- 6 thereof a new subsection (a) to read as follows:
4- 7 "(a) Upon placing a surplus line coverage, the broker
4- 8 shall promptly issue and deliver to the insured evidence
4- 9 of the insurance consisting either of the policy as issued
4-10 by the insurer or, if the policy is not then available,
4-11 the surplus line broker's certificate. The certificate
4-12 shall be executed by the broker and shall show the
4-13 description and location of the subject of the insurance,
4-14 coverage, conditions a general statement of the kind and
4-15 type of insurance purchased, and the term of the
4-16 insurance, the premium and date charged, taxes collected
4-17 from the insured, and the name and address of the insured
4-18 and the insurer. If the direct risk is assumed by more
4-19 than one insurer, the certificate or the policy, when
4-20 delivered, shall state the name and address and proportion
4-21 of the entire direct risk assumed by each insurer."
SECTION 4.
4-22 Said title is further amended by striking Code Section
4-23 33-5-29, relating to filing of quarterly affidavits by
4-24 surplus line brokers, and inserting in lieu thereof a new
4-25 Code Section 33-5-29 to read as follows:
4-26 "33-5-29. (Index)
4-27 (a) Each surplus line broker shall file with the
4-28 Commissioner, on a quarterly basis, an affidavit executed
4-29 by the surplus line broker setting forth the facts
4-30 referred to in Code Section 33-5-21. Such affidavit shall
4-31 furnish certificate or cover note number, name of insured,
4-32 the amount of the premium, the tax paid thereon, and any
4-33 other information as the Commissioner may require for all
4-34 surplus line transactions in which premiums were paid or
4-35 were due and payable to the surplus line broker during the
4-36 previous quarter. The quarterly affidavit shall be filed
4-37 with the Commissioner on or before the fifteenth day of
4-38 April, July, October, and January. Each surplus line
4-39 broker shall remit a 4 percent tax on direct premiums
4-40 written, as defined in Code Section 33-5-31. The tax shall
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5- 1 be remitted with the surplus line broker's quarterly
5- 2 affidavit.
5- 3 (b) In addition to the information required on the
5- 4 quarterly affidavit, each surplus line broker shall
5- 5 provide the Commissioner with such reports of its affairs
5- 6 and operations regarding insurance covering insured
5- 7 persons, resident or located in this state, for the last
5- 8 preceding calendar year ending on December 31 or for other
5- 9 such periods of time as the Commissioner may require.
5-10 These reports shall be made in such form and shall contain
5-11 any The Commissioner may require from surplus line brokers
5-12 who are the custodians of relevant records of surplus line
5-13 insurers reports containing such information as the
5-14 Commissioner may by regulation or by order from time to
5-15 time prescribe which, as to product liability insurers,
5-16 may include but shall not be required to be limited to the
5-17 following information:
5-18 (1) The total number of product liability claims, broken
5-19 down by:
5-20 (A) The type or category of claims; and
5-21 (B) Whether the claims were:
5-22 (i) Reported during a prior period and closed during
5-23 the reporting period;
5-24 (ii) Reported and closed during the reporting
5-25 period; or
5-26 (iii) Reported and not closed during the reporting
5-27 period;
5-28 (2) The total amount paid in settlement or discharge of
5-29 the claims for each type or category of claims;
5-30 (3) The total amount of reserves available to pay those
5-31 product liability claims which were reported for the
5-32 last preceding year; provided, however, the information
5-33 on reserves shall be required to be maintained by the
5-34 Commissioner in confidence, except that summaries of the
5-35 combined totals of such reserves shall be subject to
5-36 inspection by members of the General Assembly upon
5-37 request;
5-38 (4) The total amount of premiums received from insured
5-39 persons, resident or located in this state, which is
5-40 attributable to product liability insurance and which
5-41 must be classified separately with respect to
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6- 1 manufacturers, wholesalers or distributors, and
6- 2 retailers;
6- 3 (5) The total number of insured persons, resident or
6- 4 located in this state, for which the product liability
6- 5 insurance has been provided which must be classified
6- 6 separately with respect to manufacturers, wholesalers or
6- 7 distributors, and retailers;
6- 8 (6) The total number of insured persons, resident or
6- 9 located in this state, whose product liability insurance
6-10 coverage the insurer, with which the surplus line broker
6-11 placed the coverage, canceled or refused to renew and
6-12 the reasons therefor which must be classified separately
6-13 with respect to manufacturers, wholesalers or
6-14 distributors, and retailers; and
6-15 (7) The total number of insured persons, resident or
6-16 located in this state, who failed to renew their product
6-17 liability insurance policies during the reporting period
6-18 which information must be classified separately with
6-19 respect to manufacturers, wholesalers or distributors,
6-20 and retailers."
SECTION 5.
6-21 Said title is further amended by striking subsection (a) of
6-22 Code Section 33-5-31, relating to payment by broker of tax
6-23 for privilege of doing business, and inserting in lieu
6-24 thereof a new subsection (a) to read as follows:
6-25 "(a) The surplus line broker shall remit to the
6-26 Commissioner, on or before the fifteenth day of April,
6-27 July, October, and January, at the time his or her
6-28 quarterly affidavit is submitted, as a tax imposed for the
6-29 privilege of doing business as a surplus line broker in
6-30 this state, a tax of 4 percent on all premiums paid or due
6-31 and payable to the surplus line broker during the
6-32 preceding quarter, less return premiums and exclusive of
6-33 sums collected to cover state or federal taxes, on surplus
6-34 line insurance subject to tax transacted by him or her
6-35 during the preceding quarter as shown by his or her
6-36 affidavit filed with the Commissioner."
SECTION 6.
6-37 Said title is further amended by striking subparagraph (B)
6-38 of paragraph (6) of Code Section 33-6-5, relating to unfair
6-39 and deceptive practices in the business of insurance, and
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7- 1 inserting in lieu thereof a new subparagraph (B) to read as
7- 2 follows:
7- 3 "(B) No person shall knowingly collect as premium or
7- 4 charge for insurance any sum in excess of or less than
7- 5 the premium or charge applicable to such insurance,
7- 6 which sum is specified in the policy in accordance
7- 7 with the applicable classifications and rates as filed
7- 8 with and approved by the Commissioner. In or, in
7- 9 cases where classifications, premiums, or rates are
7-10 not required by this title to be filed and approved:
7-11 (i) The premiums and charges for insurance, except
7-12 insurance written in accordance with Chapter 5 of
7-13 this title, such premiums and charges shall not be
7-14 in excess of or less than those specified in the
7-15 policy and as fixed by the insurer; and
7-16 (ii) The premiums and charges for insurance written
7-17 in accordance with Chapter 5 of this title shall not
7-18 be in excess of or less than those specified in the
7-19 policy.
7-20 This subparagraph shall not be deemed to prohibit
7-21 surplus lines brokers licensed under Chapter 5 of this
7-22 title from the charging and collecting by surplus linebrokers licensed under Chapter 5 of this title of the
7-24 amount of applicable state and federal taxes in
7-25 addition to the premium required by the insurer; nor
7-26 shall it be deemed to prohibit a life or accident and
7-27 sickness insurer from the charging and collecting by alife or accident and sickness insurer of amounts
7-29 actually to be expended for medical examination of an
7-30 applicant for life or accident and sickness insurance
7-31 or for reinstatement of a life or accident and
7-32 sickness insurance policy."
SECTION 7.
7-33 Said title is further amended by striking subparagraph
7-34 (a)(4)(A) of Code Section 33-7-14, relating to the
7-35 reinsurance of risks, and inserting in lieu thereof a new
7-36 subparagraph (A) to read as follows:
7-37 "(4)(A) Credit shall be allowed when the reinsurance
7-38 is ceded to an assuming insurer which maintains a
7-39 trust fund in a qualified United States financial
7-40 institution, as defined in paragraph (2) of subsection
7-41 (c) of this Code section, for the payment of the valid
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8- 1 claims of its United States policyholders and ceding
8- 2 insurers, their assigns, and successors in interest.
8- 3 The assuming insurer shall report annually to the
8- 4 Commissioner information substantially the same as
8- 5 that required to be reported on the National
8- 6 Association of Insurance Commissioners Annual
8- 7 Statement form by licensed insurers to enable the
8- 8 Commissioner to determine the sufficiency of the trust
8- 9 fund. In the case of a single assuming insurer, the
8-10 trust shall consist of a trusteed account representing
8-11 the assuming insurer's liabilities attributable to
8-12 business written in the United States and, in
8-13 addition, the assuming insurer shall maintain a
8-14 trusteed surplus of not less than $20 million. In the
8-15 case of a group of including incorporated and
8-16 individual unincorporated underwriters, the trust
8-17 shall consist of a trusteed account representing the
8-18 group's liabilities attributable to business written
8-19 in the United States and, in addition, the group shall
8-20 maintain a trusteed surplus of which $100 million
8-21 shall be held jointly for the benefit of United States
8-22 ceding insurers of any member of the group; the
8-23 incorporated members of the group shall not be engaged
8-24 in any business other than underwriting as a member of
8-25 the group and shall be subject to the same level of
8-26 solvency regulation and control by the group's
8-27 domiciliary regulator as are the unincorporated
8-28 members; and the group shall make available to the
8-29 Commissioner an annual certification of the solvency
8-30 of each underwriter by the group's domiciliary
8-31 regulator and its independent public accountants."
SECTION 8.
8-32 This Act shall become effective upon its approval by the
8-33 Governor or upon its becoming law without such approval.
SECTION 9.
8-34 All laws and parts of laws in conflict with this Act are
8-35 repealed.
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Robert E. Rivers, Jr., Clerk of the House
Last Updated on 01/02/97