Arkansas Administrative Code › Agency 054 - Arkansas Insurance Department › Rule 054.00.91-006 - Surplus Life Insurance

Current through Register Vol. 49, No. 6, June, 2024
Section
		  1.
Purpose
The purpose of this Rule and Regulation is to clarify existing
			 legislation regarding this subject matter so that originating agents and
			 brokers, 'resident surplus line brokers in Arkansas licensed under Ark. Code
			 Ann. §§
								23-65-301, et
			 seq., and non-resident surplus line brokers for purchasing groups pursuant to
			 Ark. Code Ann. § 23-94-104(b) (2) (Supp. 1989) are provided with clear
			 guidelines in conducting surplus line business. It is the purpose of this Rule
			 and Regulation to adopt forms and documents necessary for proper reporting and
			 accounting on property, casualty, surety and marine insurance issued by surplus
			 line insurers through surplus line brokers.
Section 2.
Authority
This Rule and Regulation is promulgated pursuant to the authority
			 granted to the Insurance Commissioner under Ark. Code Ann. §§
								23-61-108;
			 23-65-301, et
			 seq.; 23-94-104(b);
			 25-15-201, et
			 seq.; and other applicable provisions of Arkansas law.
Section 3.
Applicabiliy and
		  Scope
The provisions of this Rule shall be applicable to resident and
			 non-resident agents and brokers licensed for property, casualty, surety and
			 marine insurance transactions in this State, and serving as the originating
			 agent/broker on Arkansas surplus line policies; Arkansas resident surplus line
			 brokers licensed pursuant to Ark. Code Ann. §§
								23-65-301, et
			 seq.; and non-resident surplus line brokers for purchasing groups only,
			 licensed pursuant to Ark. Code Ann. § 23-94-104(b).
Section 4.
Effective
		  Date
The effective date of this Rule shall be September 2,
			 1991.
Section 5.
Affidavits
A.
		  Attached to this Regulation is Form SL-1 which provides for the Affidavit of
		  the Originating Agent or Broker, and Form SL-2 which provides for the Affidavit
		  of the Surplus Line Broker. In accordance with Ark. Code. Ann. §
								23-65-306, the
		  surplus line broker's affidavit must be completed in full and forwarded to the
		  Commissioner by the surplus line broker within sixty (60) days of the end of
		  the month in which the coverage was procured. The executed originating agent's
		  affidavit must be maintained in the office of the originating agent or
		  broker.
B. The originating agent or
		  broker, pursuant to Ark. Code. Ann. §
								23-65-305,
		  must make a diligent effort to place the business in admitted insurers. To this
		  end the originating agent or broker must attempt to place the business with
		  those admitted insurers which he has reason to believe are actually marketing
		  in this State the kind or class of insurance sought to be placed, before the
		  business may be placed in surplus line insurers.
C. In regard to the affidavit of the surplus
		  line broker, he may rely on the diligent effort reported to have been made by
		  the originating agent or broker in the affidavit Form SL-1. If the surplus line
		  broker also serves as the originating agent or broker, the surplus line broker
		  must make the diligent effort to secure coverage through the admitted
		  market.
D. If the originating agent
		  or broker is made aware of an offer of renewal in the admitted market, from any
		  source, the property, casualty, surety or marine policy cannot be written on a
		  surplus line basis unless qualifying therefor under subsection (CE)
		  below.
E. The originating agent or
		  broker and the surplus line broker may consider to be a "declination" any offer
		  of similar coverage by an admitted insurer wherein such insurer would require a
		  gross premium of twenty percent (20%) or more higher than the total gross
		  premium and charges for insurance (including taxes and expense of underwriting)
		  applicable to the procurable surplus line coverage.
F. In accordance with Ark. Code. Ann. §
								23-65-305,
		  if a portion of the property or risk can be written in an admitted insurer,
		  this must be done, and the amount of insurance placed in an approved surplus
		  line insurer can only be the balance over the amount procurable from admitted
		  insurers.
G. The originating agent
		  or *broker shall complete each month a separate affidavit Form SL-1 for each
		  surplus line broker through whom business was placed in the surplus line market
		  for that month. The originating agent or broker must list thereon all risks
		  placed through each broker for each month. These affidavits should be
		  maintained in the office records of the originating agent or broker.
H. It is permissible for the surplus line
		  broker to file one completed monthly affidavit, Form SL-2, with the insurers'
		  names, total premiums, total expense of underwriting, and total tax for each
		  insurer with which he placed business during that month, and a completed Form
		  SL-2A for each insurer.
I. Each
		  affidavit must contain original signatures and rubber stamped or facsimile
		  signatures are unacceptable.
J.
		  Return premiums, additional premiums, and premiums paid on the monthly payment
		  method are to be so identified on Form SL-2A [in the column marked (7) Proper
		  Designation]. In the column designated as "Premium", the amount of the premium
		  and the amount of return premium (in parenthesis) are to be inserted.
K. If the surplus line broker desires to
		  retain evidence of having filed Forms SL-2 with the Department, the surplus
		  line broker must forward one (1) additional copy thereof so that the Department
		  can stamp the copy "FILED" and return it to the surplus line broker. The broker
		  must also attach a postage paid, self-addressed envelope for use in returning
		  the copy.
L. Due to the similarity
		  of the names of many insurers, the full and complete names as they appear on
		  the Arkansas Approved Surplus Lines Insurers List and the NAIC Non-Admitted
		  Insurers Quarterly Listing must be given on all forms.
M. The guidelines and procedures outlined in
		  this Regulation and as provided for by law shall apply anew each time a
		  particular coverage which has been placed in the surplus line market is
		  proposed to be rewritten or renewed on a surplus line basis.
N. Computer-generated Forms SL 1, 2, 3 and 4
		  are permissible for use so long as they follow the format outlined in the
		  Exhibits to this Rule; and specimen forms are submitted to the Commissioner for
		  approval prior to use in this State.