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AB-1641 Surplus line brokers: surplus line advisory organization.(2017-2018)

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Date Published: 10/05/2017 02:00 PM
AB1641:v95#DOCUMENT

Assembly Bill No. 1641
CHAPTER 477

An act to amend Sections 1763.1 and 1780.52 of the Insurance Code, relating to insurance.

[ Approved by Governor  October 04, 2017. Filed with Secretary of State  October 04, 2017. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 1641, Daly. Surplus line brokers: surplus line advisory organization.
Existing law authorizes a surplus line broker to solicit and place insurance for a home state insured, as defined, with a nonadmitted insurer only if that insurance cannot be procured from an insurer admitted for the particular class or classes of insurance and that actually writes the particular type of insurance in this state, as long as certain requirements are met. Existing law authorizes the Insurance Commissioner, by order, to declare permissible for placement for a home state insured with a nonadmitted insurer, exempt from specified requirements except the filing of a confidential written report, any type of insurance coverage or risk for which the commissioner finds, after a public hearing, that there is not a reasonable or adequate market among admitted insurers. The commissioner or his or her designee are required to maintain an export list showing all those exempt coverages and risks.
This bill, among other things, would authorize the commissioner to also declare exempt from the requirements for placement of insurance with a nonadmitted insurer the type of coverage that is for new, innovative products for which a reasonable or adequate market among admitted insurers has not had time to develop. The bill would authorize additions to the export list to be made after a hearing, as prescribed.
Existing law authorizes a qualified surplus line advisory organization to perform specified duties delegated by the commissioner related to the surplus line market and nonadmitted insurers. All surplus line brokers licensed under the surplus line law are deemed to be members of the advisory organization.
This bill would also include any member of the National Association of Registered Agents and Brokers licensed as a surplus line broker in his, her, or its home state of residence or business and paying the applicable state license fee as members of the surplus line advisory organization if certain conditions are met.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 1763.1 of the Insurance Code is amended to read:

1763.1.
 (a) The commissioner may by order declare permissible for placement for a home state insured with a nonadmitted insurer and exempt from all requirements of Section 1763 except the filing of a confidential written report, any type of insurance coverage or risk for which he or she finds, after a public hearing, that there is not a reasonable or adequate market among admitted insurers or that the type of coverage is for new, innovative products for which a reasonable or adequate market among admitted insurers has not had time to develop. The commissioner or his or her designee shall maintain an export list showing all those exempt coverages and risks. Additions to the export list may be made after a hearing, which may take place one or more times each year as deemed necessary by the commissioner. A public hearing shall be held annually or more often at the commissioner’s discretion and reasonable notice of a hearing shall be given to all interested parties including surplus line brokers, admitted insurers, trade associations representing admitted insurers, agents and brokers, and consumer groups. The hearing and findings shall not be required to be conducted in accordance with Chapter 3.5 (commencing with Section 11340) and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. An order by the commissioner shall continue in effect until terminated by the commissioner. Where the commissioner receives written comments or testimony or otherwise determines, prior to a hearing, that a type of insurance on the export list is more available, in the admitted market, the commissioner may remove the type of insurance from the list. The permissibility of any type of insurance to remain on the list is subject to an annual affirmative finding by the commissioner, however, when written comment or testimony is received prior to a hearing, the permissibility of that type of insurance to remain on the export list shall be reviewed at the next hearing and that type of insurance may not remain on the export list without an affirmative decision by the commissioner or his or her designee that there is not a reasonable or adequate market among admitted insurers. The commissioner or his or her designee shall notify all surplus line brokers of any removal. For purposes of this section, the commissioner shall not be authorized to include on the export list as permissible for placement with a nonadmitted insurer, automobile or motor vehicle liability insurance, insurance on residential property, as defined under Section 10087, or any insurance written by the California FAIR plan.
(b) The surplus line advisory organization authorized by Chapter 6.1 (commencing with Section 1780.50) shall pay the costs for a maximum of two public hearings per year held by the commissioner or his or her designee pursuant to this section.
(c) Except for the removal of a type of insurance from the export list pursuant to subdivision (a), nothing in this section shall authorize the commissioner to declare any type of insurance impermissible for exportation.

SEC. 2.

 Section 1780.52 of the Insurance Code is amended to read:

1780.52.
 (a) The surplus line advisory organization shall be deemed a joint arrangement established by statute to assure the availability of insurance on a sound basis under paragraph (2) of subdivision (b) of Section 1861.03.
(b) All surplus line brokers licensed under the surplus line law shall be deemed to be members of the advisory organization.
(c) Any member of the National Association of Registered Agents and Brokers, licensed as a surplus line broker in his, her, or its home state of residence or business and paying the applicable California license fee, shall be deemed to be members of the advisory organization. This subdivision shall not be effective unless and until the advisory organization recognizes in writing the National Association of Registered Agents and Brokers is incorporated and operating under its board-adopted bylaws.