View Daily Data Tracking History
View Bill Text
View Statement of Purpose / Fiscal Impact
H0484...........................................................by BUSINESS
INSURANCE - SURPLUS LINES BROKERS - Amends and repeals existing law
relating to insurance to provide for surplus line brokers to be licensed in
Idaho; to revise definitions; to provide that the broker shall file an
affidavit with the director of the Department of Insurance within thirty
days after the insurance policy is received by the broker; to provide for
rules; to provide that a person who independently procures his own
insurance pursuant to the surplus lines law shall only purchase surplus
line insurance from listed insurers; to apply penalties to the person who
independently procures his own insurance; to revise requirements for
licensing of surplus line brokers; to revise criteria for which a surplus
line broker's license may be suspended or revoked; to revise record
requirements; to require an annual report; to provide penalties for brokers
who fail to file the required report or remit the required tax; and to
revise requirements for reports and tax of independently procured
coverages.
01/24 House intro - 1st rdg - to printing
01/25 Rpt prt - to Bus
02/12 Rpt out - rec d/p - to 2nd rdg
02/13 2nd rdg - to 3rd rdg
02/15 3rd rdg - PASSED - 59-0-11
AYES -- Aikele, Barraclough, Barrett, Bell, Bieter, Black, Block,
Boe, Bolz, Bradford, Callister, Campbell, Clark, Collins, Cuddy,
Deal, Denney, Ellis, Ellsworth, Eskridge, Field(13), Field(20),
Gagner, Hadley, Hammond, Harwood, Henbest, Higgins, Hornbeck, Jones,
Kellogg, Kunz, Lake, Langford, Loertscher, Mader, Martinez, McKague,
Meyer, Mortensen, Moyle, Pearce, Pischner, Pomeroy, Raybould,
Ridinger, Roberts, Robison, Sali, Schaefer, Shepherd, Smith(33),
Smylie, Stevenson, Stone, Tilman, Trail, Wheeler, Young
NAYS -- None
Absent and excused -- Bedke, Bruneel, Crow, Gould, Jaquet, Kendell,
Montgomery, Sellman, Smith(23), Wood, Mr. Speaker
Floor Sponsor - Meyer
Title apvd - to Senate
02/18 Senate intro - 1st rdg - to Com/HuRes
03/06 Rpt out - rec d/p - to 2nd rdg
03/07 2nd rdg - to 3rd rdg
03/13 3rd rdg - PASSED - 35-0-0
AYES -- Andreason, Boatright, Branch(Bartlett), Brandt, Bunderson,
Burtenshaw, Cameron, Darrington, Davis, Deide, Dunklin, Frasure,
Geddes, Goedde, Hawkins, Hill, Ingram, Ipsen, Keough, King-Barrutia,
Little, Lodge, Marley, Noh, Richardson, Risch, Sandy, Schroeder,
Sims, Sorensen, Stegner, Stennett, Thorne, Wheeler, Williams
NAYS -- None
Absent and excused -- None
Floor Sponsor-Goedde
Title apvd - to House
03/14 To enrol
03/15 Rpt enrol - Sp signed
Pres signed
03/15 To Governor
03/19 Governor signed
Session Law Chapter 91
Effective: 03/19/02
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature Second Regular Session - 2002
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 484
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO THE SURPLUS INSURANCE LINE LAW; AMENDING SECTION 41-1211, IDAHO
3 CODE, TO PROVIDE FOR SURPLUS LINE BROKERS TO BE LICENSED IN IDAHO AND TO
4 MAKE A TECHNICAL CORRECTION; AMENDING SECTION 41-1213, IDAHO CODE, TO PRO-
5 VIDE THAT THE DEFINITION OF BROKER INCLUDES RESIDENT SURPLUS LINE BROKERS
6 AND NONRESIDENT SURPLUS LINE BROKERS AND TO MAKE A TECHNICAL CORRECTION;
7 AMENDING SECTION 41-1215, IDAHO CODE, TO PROVIDE THAT THE BROKER SHALL
8 FILE OR CAUSE TO BE FILED AN AFFIDAVIT WITH THE DIRECTOR OF THE DEPARTMENT
9 OF INSURANCE WITHIN THIRTY DAYS AFTER THE INSURANCE POLICY IS RECEIVED BY
10 THE BROKER; AMENDING SECTION 41-1216, IDAHO CODE, TO PROVIDE FOR RULES AND
11 TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 41-1217, IDAHO CODE, TO
12 PROVIDE THAT A PERSON WHO INDEPENDENTLY PROCURES ITS OWN INSURANCE PURSU-
13 ANT TO THE SURPLUS LINE LAW SHALL ONLY PURCHASE SURPLUS LINE INSURANCE
14 FROM INSURERS ON THE LIST OF ELIGIBLE INSURERS; AMENDING SECTION 41-1218,
15 IDAHO CODE, TO APPLY PENALTIES TO THE PERSON WHO INDEPENDENTLY PROCURES
16 ITS OWN INSURANCE AND TO MAKE A TECHNICAL CORRECTION; AMENDING SECTION
17 41-1223, IDAHO CODE, TO REVISE REQUIREMENTS FOR LICENSING OF SURPLUS LINE
18 BROKERS AND TO MAKE A TECHNICAL CORRECTION; AMENDING SECTION 41-1224,
19 IDAHO CODE, TO REVISE CRITERIA FOR WHICH A SURPLUS LINE BROKER'S LICENSE
20 MAY BE SUSPENDED OR REVOKED; REPEALING SECTION 41-1225, IDAHO CODE; AMEND-
21 ING SECTION 41-1227, IDAHO CODE, TO REVISE RECORD REQUIREMENTS FOR BRO-
22 KERS; AMENDING SECTION 41-1228, IDAHO CODE, TO REQUIRE AN ANNUAL REPORT OF
23 A BROKER; AMENDING SECTION 41-1230, IDAHO CODE, TO PROVIDE PENALTIES FOR
24 BROKERS WHO FAIL TO FILE THE ANNUAL REPORT OR REMIT THE REQUIRED TAX AND
25 TO MAKE A TECHNICAL CORRECTION; AND AMENDING SECTION 41-1233, IDAHO CODE,
26 TO REVISE REQUIREMENTS FOR REPORTS AND TAX OF INDEPENDENTLY PROCURED COV-
27 ERAGES; AND DECLARING AN EMERGENCY.
28 Be It Enacted by the Legislature of the State of Idaho:
29 SECTION 1. That Section 41-1211, Idaho Code, be, and the same is hereby
30 amended to read as follows:
31 41-1211. SURPLUS LINE LAW -- SHORT TITLE -- PURPOSE. (1) Sections 41-1211
32 through 41-1234, Idaho Code, constitute and may be cited as the "Surplus Line
33 Law."
34 (2) It is declared that the purposes of the Ssurplus Lline Llaw are to
35 provide orderly access for the insuring public of Idaho to insurers not autho-
36 rized to transact insurance in this state, through only qualified, licensed,
37 and supervised surplus line brokers resident licensed in Idaho and under such
38 safeguards for the insured as may be practical, for insurance coverages and to
39 the extent thereof not procurable from authorized insurers; to protect such
40 authorized insurers, which under the laws of Idaho must meet certain standards
41 as to policy forms and rates, from unwarranted competition by unauthorized
42 insurers who, in the absence of this law, would not be subject to similar
43 requirements; and for other purposes as set forth in this law.
2
1 SECTION 2. That Section 41-1213, Idaho Code, be, and the same is hereby
2 amended to read as follows:
3 41-1213. DEFINITIONS. (1) "Broker" as used in this chapter means a sur-
4 plus line broker duly licensed as such under this chapter, including resident
5 surplus line brokers and nonresident surplus line brokers.
6 (2) To "export" means to place in an unauthorized insurer under this
7 Ssurplus Lline Llaw insurance covering a subject of insurance resident,
8 located, or to be performed in Idaho.
9 SECTION 3. That Section 41-1215, Idaho Code, be, and the same is hereby
10 amended to read as follows:
11 41-1215. BROKER'S AFFIDAVIT. At the time of procuring any such surplus
12 line insurance the broker shall execute an affidavit, in form as prescribed or
13 accepted by the director, setting forth facts from which it can be determined
14 whether such insurance was eligible for export under section 41-1214, Idaho
15 Code. The broker shall file, or cause to be filed, this affidavit with the
16 director within thirty (30) days after the insurance policy is received by the
17 broker.
18 SECTION 4. That Section 41-1216, Idaho Code, be, and the same is hereby
19 amended to read as follows:
20 41-1216. OPEN LINES FOR EXPORT. (1) The director may by order or by rule
21 declare eligible for export generally and without compliance with the provi-
22 sions of sections 41-1214(2), 41-1214(3) and 41-1215, Idaho Code, any class or
23 classes of insurance coverage or risk for which he finds, after a hearing of
24 which notice was given to each insurer authorized to transact such class or
25 classes in this state, consistent with the procedural requirements of chapter
26 52, title 67, Idaho Code, that there is no reasonable or adequate market among
27 authorized insurers either as to acceptance of the risk, contract terms, or
28 premium or premium rate. Any such order shall continue in effect during the
29 existence of the conditions upon which predicated, but subject to earlier ter-
30 mination by the director.
31 (2) The broker shall file with or as directed by the director a memoran-
32 dum as to each such coverage placed by him in an unauthorized insurer, in such
33 form and context as the director may reasonably require for the identification
34 of the coverage and determination of the tax payable to the state relative
35 thereto.
36 (3) The broker, or a licensed Idaho agent of the authorized insurer, may
37 also place with authorized insurers any insurance coverage made eligible for
38 export generally under subsection (1) above, of this section and without
39 regard to rate or form filings which may otherwise be applicable as to the
40 authorized insurer. As to coverages so placed in an authorized insurer the
41 premium tax thereon shall be reported and paid by the insurer as required gen-
42 erally under section 41-402, Idaho Code.
43 SECTION 5. That Section 41-1217, Idaho Code, be, and the same is hereby
44 amended to read as follows:
45 41-1217. ELIGIBLE SURPLUS LINES INSURERS. (1) A broker shall not know-
46 ingly place surplus lines insurance with an insurer that is unsound finan-
47 cially, or that is ineligible under this section.
48 (2) The director shall from time to time compile or approve a list of all
3
1 surplus lines insurers deemed by him to be eligible currently, and shall cause
2 to be sent a copy of such list to each broker at his office last of record
3 with the director. This subsection shall not be deemed to require the director
4 to determine the actual financial condition or claims practices of any unau-
5 thorized insurer; and the status of eligibility, if granted by the director,
6 shall indicate only that the insurer appears to be sound financially and to
7 have satisfactory claims practices, and that the director has no credible evi-
8 dence to the contrary. While any such list is in effect the broker shall
9 restrict to the insurers so listed all surplus lines business placed by him
10 and a person who independently procures its own insurance pursuant to this
11 chapter for risks located in Idaho shall only purchase surplus line insurance
12 from insurers so listed.
13 SECTION 6. That Section 41-1218, Idaho Code, be, and the same is hereby
14 amended to read as follows:
15 41-1218. ELIGIBLE SURPLUS LINE INSURERS -- PENALTY FOR VIOLATION. (1) For
16 any violation of section 41-1217, Idaho Code, the broker or a person who inde-
17 pendently procures its own insurance shall, upon conviction thereof, be guilty
18 of a misdemeanor punishable as provided in section 41-117, Idaho Code,
19 (general penalty). If the director finds, after hearing, that the broker has
20 violated such section he shall revoke all licenses held by him under this
21 code, and shall not again license such individual under this code within a
22 period of two (2) years after such revocation became final.
23 (2) The director may impose an administrative penalty not to exceed fif-
24 teen thousand dollars ($15,000), for deposit in the general account of the
25 state of Idaho, upon any person or entity who transacts or who attempts to
26 transact insurance as a surplus lines insurer in violation of any provision of
27 chapter 12, title 41, Idaho Code. Failure of any such person or entity to pay
28 a fine imposed pursuant to the provisions of this section shall authorize the
29 director to seek enforcement of the fine, and any associated costs and attor-
30 ney fees related to bringing the action, in any district court of this state.
31 SECTION 7. That Section 41-1223, Idaho Code, be, and the same is hereby
32 amended to read as follows:
33 41-1223. LICENSING OF SURPLUS LINE BROKERS. (1) Any individual while
34 licensed in this state as a producer licensed for property or casualty insur-
35 ance who has had at least two (2) years' experience as a licensed agent or
36 broker producer for the lines of insurance for which he is seeking to be
37 licensed as a surplus lines broker, and who is deemed by the director to be
38 competent and trustworthy with respect to the handling of surplus lines, and
39 while maintaining an office at a designated location in this state, may be
40 licensed as a surplus line broker.
41 (2) Application for the license shall be made to the director on forms as
42 designated and furnished by the director.
43 (3) The license and continuation fee shall be as set forth by rule pursu-
44 ant to section 41-401, Idaho Code.
45 (4) The license and licensee shall be subject to the applicable provi-
46 sions of chapter 10, title 41, Idaho Code (producers -- licensing).
47 SECTION 8. That Section 41-1224, Idaho Code, be, and the same is hereby
48 amended to read as follows:
49 41-1224. SUSPENSION OR REVOCATION OF BROKER'S LICENSE. (1) The director
4
1 may suspend or revoke any surplus line broker's license:
2 (a) If the broker fails to file his annual statement report or to remit
3 the tax as required by this law; or
4 (b) If the broker fails to maintain an office in this state, or to keep
5 the records, or to allow the director to examine his records in this state
6 as required by this law, or if he removes his records from the state; or
7 (c) If the broker knowingly places a surplus line coverage in an insurer
8 that is in unsound financial condition in violation of section 41-1217,
9 Idaho Code; or
10 (d) For any other applicable cause for which a general lines agent's
11 producer's license may be suspended or revoked.
12 (2) The procedures provided by chapter 10, title 41, Idaho Code, for sus-
13 pension or revocation of licenses shall apply to suspension or revocation of a
14 surplus line broker's license.
15 (3) Upon suspending or revoking the broker's surplus line license the
16 director shall also suspend or revoke all other licenses of the same individ-
17 ual under this code.
18 (4) No broker whose license has been so suspended or revoked shall again
19 be so licensed until any fines or delinquent taxes owing by him have been
20 paid, nor, in case of revocation, until after expiration of one (1) year from
21 date revocation became final.
22 SECTION 9. That Section 41-1225, Idaho Code, be, and the same is hereby
23 repealed.
24 SECTION 10. That Section 41-1227, Idaho Code, be, and the same is hereby
25 amended to read as follows:
26 41-1227. RECORDS OF BROKER. (1) Each broker shall keep in his office in
27 this state a full and true record of each surplus line coverage procured by
28 him, including a copy of each daily report, if any, a copy of each certificate
29 of insurance issued by him, and such of the following items as may be applica-
30 ble:
31 (a) Amount of the insurance;
32 (b) Gross premium charged;
33 (c) Return premium paid, if any;
34 (d) Rate of premium charged upon the several items of property;
35 (e) Effective date of the contract, and the terms thereof;
36 (f) Name and address of each insurer on the direct risk and the propor-
37 tion of the entire risk assumed by such insurer if less than the entire
38 risk;
39 (g) Name and address of the insured;
40 (h) Brief general description of the property of risk injured and where
41 located or to be performed; and
42 (i) Other information as may be required by the director.
43 (2) The record shall not be removed from this state and shall at all
44 times within five (5) years after issuance of the coverage to which it relates
45 be open to examination in this state by the director.
46 SECTION 11. That Section 41-1228, Idaho Code, be, and the same is hereby
47 amended to read as follows:
48 41-1228. ANNUAL STATEMENT REPORT OF BROKER. (1) Each broker shall on or
49 before the first day of March of each year file with the director a verified
50 statement report of all surplus line insurance transacted by him during the
5
1 preceding calendar year.
2 (2) The statement shall be on forms as prescribed and furnished by the
3 director and shall show:
4 (a) Gross amount of each kind of insurance transacted;
5 (b) Aggregate gross premiums charged;
6 (c) Aggregate of returned premiums paid to insureds;
7 (d) Aggregate of net premiums; and
8 (e) Additional information as required by the director.
9 SECTION 12. That Section 41-1230, Idaho Code, be, and the same is hereby
10 amended to read as follows:
11 41-1230. FAILURE TO FILE STATEMENT REPORT OR REMIT TAX -- PENALTY. If any
12 broker fails to file his annual statement report, or fails to remit the tax
13 provided by section 41-1229, herein Idaho Code, prior to the first day of
14 April after the tax is due, he shall be liable for a fine of twenty-five dol-
15 lars ($25.00) for each day of delinquency commencing with the first day of
16 April. The tax may be collected by distraint, or the tax and fine may be
17 recovered by an action instituted by the director in any court of competent
18 jurisdiction. Any fine collected by the director shall be paid to the state
19 treasurer and credited to the general fund.
20 SECTION 13. That Section 41-1233, Idaho Code, be, and the same is hereby
21 amended to read as follows:
22 41-1233. REPORT AND TAX OF INDEPENDENTLY PROCURED COVERAGES. (1) Every
23 insured who in this state procures or causes to be procured or continues or
24 renews insurance in an unauthorized foreign insurer, or any self-insurer who
25 in this state so procures or continues excess loss, catastrophe or other
26 insurance, upon a subject of insurance resident, located or to be performed
27 within this state, other than insurance procured through a surplus line broker
28 pursuant to the surplus line law of this state or exempted from tax pursuant
29 to section 41-1212, Idaho Code, shall within thirty (30) days after the date
30 such insurance policy was so received by the insured, continued or renewed
31 file a written report of the same with the director surplus line association
32 on forms designated by the director and furnished to the insured upon request.
33 The report shall show the name and address of the insured or insureds, name
34 and address of the insurer, the subject of the insurance, a general descrip-
35 tion of the coverage, the amount of premium currently charged therefor, and
36 such additional pertinent information as the director reasonably requests. If
37 the insurance covers also a subject of insurance resident, located or to be
38 performed outside this state a proper pro rata portion of the entire premium
39 payable for all such insurance shall be allocated to this state for the pur-
40 poses of this section.
41 (2) Any insurance in an unauthorized insurer procured through negotia-
42 tions or an application in whole or in part occurring or made within or from
43 within this state, or for which premiums in whole or in part are remitted
44 directly or indirectly from within this state, shall be deemed to be insurance
45 procured or continued or renewed in this state within the intent of subsection
46 (1) of this section.
47 (3) The insured with respect to the obligation, chose in action, or right
48 represented by such insurance shall be subject to chapter 4, title 41, Idaho
49 Code, as it pertains to premium tax. Within thirty (30) days after the insur-
50 ance policy was so received by the insured, continued or renewed, and coinci-
51 dentally with the filing with the director surplus line association of the
6
1 report provided for in subsection (1) of this section, the insured shall pay
2 the amount of the tax to the director and a stamping fee to the surplus line
3 association.
4 (4) The tax imposed hereunder if delinquent shall bear interest at the
5 rate of six percent (6%) per annum, compounded annually.
6 (5) The tax shall be collectible from the insured by civil action brought
7 by the director, or by distraint.
8 (6) This section does not abrogate or modify any provision of sections
9 41-1201 (representing or aiding unauthorized insurer prohibited), 41-1202
10 (representing or aiding unauthorized insurer prohibited -- penalty), or
11 41-1203 (suits by unauthorized insurer prohibited), Idaho Code.
12 (7) This section does not apply as to life or disability insurances.
13 SECTION 14. An emergency existing therefor, which emergency is hereby
14 declared to exist, this act shall be in full force and effect on and after its
15 passage and approval.
STATEMENT OF PURPOSE
RS 11531C2
This legislation brings the Surplus Line broker regulation into
compliance with the national Gramm-Leach Bliley law. The law
also clarifies requirements relating to self-procured insurance
FISCAL IMPACT
There should be no fiscal impact resulting from this proposed
legislation.
Contact
Name: Woody Richards, Surplus Line Association
Phone: 385 5451
STATEMENT OF PURPOSE/FISCAL NOTE H 484