BILL ANALYSIS �
SB 131
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Date of Hearing: June 22, 2011
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
SB 131 (Gaines) - As Amended: May 17, 2011
SENATE VOTE : 38-0
SUBJECT : Surplus lines brokers: reports to the Insurance
Commissioner
SUMMARY : Clarifies reporting requirements by surplus lines
brokers when two or more brokers are involved in a transaction.
Specifically, this bill :
1)Clarifies that, where two or more surplus lines brokers are
involved in a transaction, only one need include the
transaction in the annual statement of business transacted
that must be filed with the Insurance Commissioner (IC).
2)Authorizes the surplus lines brokers involved in the
transaction to agree in writing among themselves which broker
shall be responsible for including the transaction in its
annual report.
3)Requires this written agreement to be available to the IC upon
request.
EXISTING LAW :
1)Requires generally that insurance sold in California be sold
by admitted (licensed) insurers.
2)Provides that, where a California insurance need cannot be met
by admitted insurers, a nonadmitted (unlicensed) insurer may
issue a policy.
3)Requires generally that nonadmitted insurance be transacted
only through specially licensed surplus lines brokers.
4)Requires surplus lines brokers to file an annual statement
with the IC detailing the business transacted by the surplus
lines broker.
FISCAL EFFECT : Undetermined but likely no impact on the
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Department of Insurance's (DOI) regulatory activities.
COMMENTS :
1)Purpose . According to the author, the bill is intended to
clarify reporting requirements when there are multiple surplus
lines brokers involved in a particular transaction. In the
case of surplus lines insurance, there are frequently more
than one broker involved because the nature of this insurance
is often complex and requires many parties to complete.
Currently, the law appears to require each surplus lines
broker involved to separately report such a transaction to the
IC, as if it were the only broker involved.
2)Department of Insurance involved in drafting bill . DOI has
been involved in the drafting of the bill, and has expressed
that it is satisfied that the streamlining of reporting
requirements accomplished by the bill does not adversely
impact its regulatory activities.
3)Conforming to AB 315 . When two bills amend the same Code
section, "chaptering" or "double-jointing" language is
typically used. However, in this case, the other bill, AB
315, is an urgency measure that is expected to reach the
Governor and be signed well ahead of this bill, but without
any Senate amendments that would delay its arrival on the
Governor's desk. In order to avoid chaptering out problems
when this bill is later chaptered, it is understood between
all of the stakeholders that the language in this bill will
have to be modified to reflect the new "current law" version
of the affected Insurance Code section.
REGISTERED SUPPORT / OPPOSITION :
Support
American International Group, AIG
Opposition
None received.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086
SB 131
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