BILL NUMBER: AB 1081	CHAPTERED  09/27/99

	CHAPTER   498
	FILED WITH SECRETARY OF STATE   SEPTEMBER 27, 1999
	APPROVED BY GOVERNOR   SEPTEMBER 27, 1999
	PASSED THE ASSEMBLY   AUGUST 31, 1999
	PASSED THE SENATE   AUGUST 23, 1999
	AMENDED IN SENATE   JULY 1, 1999
	AMENDED IN ASSEMBLY   MAY 28, 1999
	AMENDED IN ASSEMBLY   APRIL 27, 1999

INTRODUCED BY   Assembly Member Calderon
   (Principal coauthor:  Senator Johnston)

                        FEBRUARY 25, 1999

   An act to amend and repeal Section 1620 of the Insurance Code,
relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1081, Calderon.   Insurance:  surplus lines.
   Existing law generally requires an insurer to be admitted in order
to transact business in California, but permits insurance to be
transacted through nonadmitted insurers in various instances,
including through a surplus line broker.
   Existing law provides that before any nonadmitted foreign or alien
insurer may file any pleading in any action, suit, or proceeding
instituted against it, the insurer shall either procure a certificate
of authority to transact insurance or file a bond in the action.
However, this requirement does not apply when the insurance is exempt
from requirements regulating insurance by nonadmitted insurers, or
when the insurer has lawfully transacted surplus line insurance, as
specified, and the insurer has appointed an agent for the service of
process.  In that case, the court is permitted to require the insurer
to file a bond unless it makes a showing that it has sufficient
assets.
   Existing law also provides, until January 1, 2000, that the
restrictions as to filing suits by nonadmitted foreign or alien
insurers do not apply to the above-mentioned categories of insurance
and, in addition, those restrictions do not apply to insurance
procured by the insured from a nonadmitted insurer and insurance
determined to be eligible for placement with a nonadmitted insurer
and to be exempt by the Insurance Commissioner, as specified, or if
the contract is governed by and is in compliance with the laws of the
state in which the contract was issued.  Existing law also provides,
until January 1, 2000, that an insurer need not file a bond if at
the time the insurer files any pleading in any action, suit, or
proceeding instituted against it, the insurer is an eligible surplus
line insurer, as specified, or with respect to a dispute arising out
of certain contracts of reinsurance, the reinsurer has complied with
specified requirements.
   This bill would delete the January 1, 2000, repeal date applicable
to these provisions.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 1620 of the Insurance Code, as amended by
Section 1 of Chapter 687 of the Statutes of 1996, is amended to read:

   1620.  (a) The provisions of the preceding sections of this
article shall not apply to any action, suit or proceeding against any
unauthorized foreign or alien insurer arising out of any contract of
insurance effected in accordance with Section 1760, 1760.5, 1763, or
1763.1, or, if the contract is governed by and complies with the
laws of the state in which the contract was entered.  The provisions
of Section 1610 shall apply to any action, suit, or proceeding under
this section unless the insurer has designated an agent in California
for service of process or the contract contains a provision
designating a resident of this state or any firm of which one member
is a resident of this state to be its true and lawful attorney upon
whom may be served all lawful process in any such action, suit or
proceeding.
   (b) In any such action, suit or proceeding arising out of any such
contract of insurance, the court may require the insurer to file a
bond, in an amount sufficient to secure the payment of any final
judgment which may be rendered unless one or more of the following is
applicable:
   (1) The insurer makes a showing satisfactory to the court that it
maintains in a state of the United States funds or securities in
trust or otherwise, sufficient and available to satisfy any such
final judgment and that it will pay the judgment without requiring
suit to be brought thereon in the state where the securities or funds
are located.
   (2) At the time the insurer files any pleading in any action,
suit, or proceeding instituted against it, the insurer is listed as
an eligible surplus line insurer in accordance with subdivision (f)
of Section 1765.1, unless by facts presented to the court there is
created a reasonable doubt as to the present ability of the insurer
to satisfy any final judgment in the action, suit, or proceeding.
Upon request of a party or the court, the unauthorized foreign or
alien insurer or reinsurer shall provide the court and the party
requesting the bond with copies of documents relating to the
financial condition of the insurer, including, but not limited to,
copies of the insurer's most recent annual statement and audited
financial report and, where applicable, a certified copy of the trust
agreement required by subdivision (b) of Section 1765.1 and a
verified copy of the most recent quarterly statement or list of
assets in the trust.
   (3) With respect to a contract of reinsurance issued in accordance
with Section 1760.5, the reinsurer has complied with the provisions
of this code necessary to permit the ceding insurer to take credit on
its financial statement for the reinsurance as set forth in Section
922.4 or 922.5.
  SEC. 2.  Section 1620 of the Insurance Code, as added by Section 2
of Chapter 687 of the Statutes of 1996, is repealed.