BILL NUMBER: SB 131 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 28, 2011
AMENDED IN SENATE MAY 17, 2011
AMENDED IN SENATE MAY 3, 2011
AMENDED IN SENATE APRIL 13, 2011
INTRODUCED BY Senator Gaines
(Principal coauthor: Senator Calderon)
JANUARY 27, 2011
An act to amend Section 1774 of the Insurance Code, relating to
insurance.
LEGISLATIVE COUNSEL'S DIGEST
SB 131, as amended, Gaines. Insurance: surplus line brokers:
statement of business transacted.
Existing law requires, on or before the first day of March of each
year, the surplus line broker to file with the Insurance
Commissioner a sworn statement of all business transacted under his
or her surplus line license during the last preceding calendar year.
"Business done" or "business transacted" under a surplus line broker'
s license means all insurance regarding which that surplus line
broker is required to file a confidential written report with the
commissioner or the commissioner's designee, as provided. Existing
law further provides that if 2 or more persons licensed as surplus
line brokers are involved in placing an insurance policy, only the
one responsible for negotiating, effecting the placement, remitting
the premium to the nonadmitted insurer to its representatives, and
filing the confidential written report is considered transacting
under his or her surplus line broker's license.
This bill would instead require that when 2 or more persons
licensed as surplus line brokers are involved in placing an insurance
policy only the one who is responsible for filing the confidential
written report shall be considered transacting business and only one
licensed surplus line broker shall include the policy in his or her
sworn statement, as specified.
The bill would also provide that the surplus line broker who is
required to include the policy in his or her sworn statement is
either the one who is responsible for filing the confidential written
report, or the one who is delegated the responsibility for filing
the report pursuant to a written agreement between those two surplus
line brokers, as provided.
This bill would specify that the sworn statement filing
requirements apply to surplus line brokers placing business for a
home state insured. The bill would require that the information in
the sworn statement be expanded to include the total amount of gross
premium, the total gross premium for single state risks where 100% of
the premium is attributable to risks in California, and for
multistate risks, the percentage of gross premium allocated to
California and each other state. The bill would require that the
sworn statement filing also apply to a home state insured that
directly procures insurance with a nonadmitted insurer. The bill
would authorize the commissioner to waive or modify any of the
forgoing requirements by public notice published on the department's
Internet Web site.
The bill would change the definition of "business done" or
"business transacted" to mean all insurance business conducted by a
surplus line broker for a home state insured or directly procured by
the home state insured. The bill would require that when 2 or more
licensed surplus line brokers are involved in placing a policy, only
the one responsible for filing the confidential written report, as
specified, would be considered transacting business for tax purposes,
and only one licensed surplus broker would be required to include
the policy in his or her sworn statement. The surplus line broker
required to include the policy in his or her sworn statement would be
either the one responsible for negotiating, effecting the placement,
remitting the premium to the nonadmitted insurer or its
representatives, and filing the confidential written report, or the
one surplus line broker delegated the responsibility for the filing
the confidential written report pursuant to a written agreement, as
provided.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1774 of the
Insurance Code is amended to read:
1774. (a) (1) On or before the first day of
March of each year the surplus line broker , placing business
for a home state insured, shall file with the commissioner a
sworn statement of all business transacted under his or her surplus
line license during the last preceding calendar year. Such
The statement shall contain an account of the
business done by the surplus line broker placing business for a
home state insured for the prior year , and shall include
(A) the total amount of gross premium, (B) the total gross premium
for single state risks where 100 percent of the premium is
attributable to risks in California, and (C) for multistate risks,
the percentage of gross premium allocated to California and each
other state. The commissioner may waive or modify any of the forgoing
requirements by issuance of a notice published on the department's
Internet Web site .
(2) On or before the first day of March of each year, the home
state insured that directly procures insurance pursuant to Section
1760 shall file with the commissioner a sworn statement of all
business done during the last preceding calendar year. That statement
shall contain an account of the insurance directly procured by the
home state insured pursuant to Section 1760 for the prior year, and
shall include (A) the total amount of premium, (B) the total premium
for single state risks where 100 percent of the premium is
attributable to risks in California, and (C) for multistate risks,
the percentage of premium allocated to California and each other
state. The commissioner may waive or modify any of the forgoing
requirements by issuance of a notice published on the department's
Internet Web site.
(b) For purposes of this chapter, "business done" or "business
transacted" under a surplus line broker's license
means all insurance regarding which that surplus line broker
is required to file a confidential written report with the
commissioner or the commissioner's designee pursuant to subdivision
(a) of Section 1763 business conducted by the surplus
line broker for a home state insured or directly procured by the home
state insured . If two or more persons licensed as surplus
line brokers are involved in placing a policy, only the one who is
responsible for negotiating, effecting the placement,
remitting the premium to the nonadmitted insurer or its
representatives and filing the confidential written report
pursuant to subdivision (a) of Section 1763, shall be considered
transacting under his or her surplus line broker's license.
business for tax purposes and then only one licensed
surplus line broker shall in clude the policy in his or
her sworn statement. The surplus line broker who is required to
include the policy in his or her own statement is either
(1) the one who is responsible for negotiating, effecting the
placement, remitting the premium to the nonadmitted insurer or its
representatives, and filing the confidential written report pursuant
to subdivision (a) of Section 1763, or (2) the one surplus line
broker who is delegated the responsibility for the filing of the
confidential written report pursuant to subdivision (a) of Section
1763 pursuant to a written agreement that is (A) by and among the
surplus line brokers referenced in paragraph (1) and this paragraph
involved in the transaction, (B) signed by the surplus line brokers
referenced in paragraph (1) and this paragraph involved in the
transaction, and (C) provides by its terms that the agreement shall
be made available to the commissioner or his or her designee, upon
request.
(c) The date on which the surplus line broker transacting a policy
prepares a bill or invoice for payment of all or part of the
premiums due, shall be considered the date on which that business was
done or transacted, subject to paragraph (d). This date shall be
shown on the face of the bill or invoice and shall be referred to as
the "invoice date."
(d) (1) The invoice date shall be no more than 60 days after the
policy effective date and no more than 60 days after the insurance
was placed with a nonadmitted insurer, except as provided in
paragraph (2) of this section.
(2) For purposes of this chapter, the amount of gross premium to
be reported, if premiums are billed and payable in installments,
shall be the amount of the installment premium, provided the amount
and due date of each installment, or the basis for determining each
installment, is identifiable in the policy or an endorsement, and
either of the following conditions is satisfied:
(A) Installments under the policy are not billed more frequently
than once per month.
(B) If more than one installment is billed in any month, the
commissioner determines, in his or her discretion, that the
installment billing method used does not unduly burden the
commissioner's ability to accurately determine the amount of premium
paid by the insured.
(3) If a new or renewal policy has an effective date between
January 1, 2011, to July 20, 2011, inclusive, and is placed on or
before July 20, 2011, then the policy shall be considered to be
business done by the surplus line broker as of the effective date. If
a new or renewal policy has an effective date between January 1,
2011, to July 20, 2011, inclusive, then the policy shall be
considered to be business done by the home state insured who directly
procures policies as of the effective date. Cancellations or
endorsements shall be business done on the same date as the policy
that is being cancelled or endorsed, if that policy effective date is
on or before July 20, 2011. Installment premiums, as referenced in
paragraph (2), shall be business done on the date of the most recent
invoice issued on or before July 20, 2011, that included premium tax
charges. This paragraph is enacted to address the July 21, 2011,
effective date of the federal Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (Public Law 111-203), and shall
remain in effect only until October 18, 2012.
SECTION 1. Section 1774 of the Insurance Code
is amended to read:
1774. (a) On or before the first day of March of each year, the
surplus line broker shall file with the commissioner a sworn
statement of all business transacted under his or her surplus line
license during the last preceding calendar year. That statement shall
contain an account of the business done by the surplus line broker
for the prior year.
(b) For purposes of this chapter, "business done" or "business
transacted" under a surplus line broker's license means all insurance
regarding which that surplus line broker is required to file a
confidential written report with the commissioner or the commissioner'
s designee pursuant to subdivision (a) of Section 1763. If two or
more persons licensed as surplus line brokers are involved in placing
a policy, only the one who is responsible for filing the
confidential written report pursuant to subdivision (a) of Section
1763 shall be considered transacting business and then only one
licensed surplus line broker shall include the policy in his or her
sworn statement. The surplus line broker who is required to include
the policy in his or her own statement is either (1) the one who is
responsible for negotiating, effecting the placement, remitting the
premium to the nonadmitted insurer or its representatives, and filing
the confidential written report pursuant to subdivision (a) of
Section 1763, or (2) the one surplus line broker who is delegated the
responsibility for the filing of the confidential written report
pursuant to subdivision (a) of Section 1763 pursuant to a written
agreement that is (A) by and among the surplus line brokers
referenced in (1) and (2) involved in the transaction, (B) signed by
the surplus line brokers referenced in (1) and (2) involved in the
transaction, and (C) provides by its terms that the agreement shall
be made available to the commissioner or his or her designee, upon
request.
(c) The date on which the surplus line broker transacting a policy
prepares a bill or invoice for payment of all or part of the
premiums due, shall be considered the date on which that business was
done or transacted, subject to paragraph (d). This date shall be
shown on the face of the bill or invoice and shall be referred to as
the "invoice date."
(d) (1) The invoice date shall be no more than 60 days after the
policy effective date and no more than 60 days after the insurance
was placed with a nonadmitted insurer, except as provided in
paragraph (2) of this section.
(2) For purposes of this chapter, the amount of gross premium to
be reported, if premiums are billed and payable in installments,
shall be the amount of the installment premium, provided the amount
and due date of each installment, or the basis for determining each
installment, is identifiable in the policy or an endorsement, and
either of the following conditions is satisfied:
(A) Installments under the policy are not billed more frequently
than once per month.
(B) If more than one installment is billed in any month, the
commissioner determines, in his or her discretion, that the
installment billing method used does not unduly burden the
commissioner's ability to accurately determine the amount of premium
paid by the insured.