Arkansas Administrative Code › Agency 054 - Arkansas Insurance Department › Rule 054.00.09-004 - Amended Rule 24 - Surplus Line Insurance

Current through Register Vol. 49, No. 6, June, 2024
Section 1.
Purpose
The purpose of this Rule is to clarify existing legislation
			 regarding surplus lines insurance in order to provide clear guidance to
			 originating producers and brokers and surplus line brokers in Arkansas licensed
			 under Ark. Code Ann. §§
								23-65-301,
et seq
. This Rule provides direction regarding 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.
Forms SL-2, SL-3, and SL-4 referenced herein are available on the
			 Arkansas Insurance Department's website at
http://www.insurance.arkansas.gov/Accounting/divpage.htm.
At the discretion of the Commissioner, the forms may be accepted in electronic
			 format.
Section 2.
Authority
This Rule is promulgated pursuant to the authority granted to the
			 Commissioner under Ark. Code Ann. §§
								23-61-108,
			 23-65-301,
et seq
., and
			 25-15-201,
et seq
.
Section
		  3.
Applicability and Scope
The provisions of this Rule shall be applicable to resident and
			 non-resident producers and brokers licensed for property, casualty, surety and
			 marine insurance transactions in this State and serving as the originating
			 producer or broker on Arkansas surplus line policies and surplus line brokers
			 licensed pursuant to Ark. Code Ann. §§
								23-65-301,
et seq
.
Section
		  4.
Effective Date
The effective date of this Rule shall be the date on which it is
			 signed by the Commissioner.
Section
		  5.
Affidavits
A. In
		  accordance with Ark. Code. Ann. §
								23-65-306, Form
		  SL-2, 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.
B. The originating producer 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 producer 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 made by the originating
		  producer or broker. If the surplus line broker also serves as the originating
		  producer or broker, the surplus line broker must make the diligent effort to
		  secure coverage through the admitted market.
D. If the originating producer 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 it qualifies under Section 5(E) below.
E. Any offer of similar coverage by an
		  admitted insurer requiring a gross premium of twenty percent (20%) or more
		  higher than the total gross premium and charges, including taxes and expense of
		  underwriting, applicable to the procurable surplus line coverage may be
		  considered a declination by the originating producer or broker and the surplus
		  line broker.
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, it
		  must be written in that insurer. The amount of insurance placed in an approved
		  surplus line insurer can only be the balance remaining from the amount
		  procurable from admitted insurers.
G. It is permissible for the surplus line
		  broker to file a 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.
H. Return premiums,
		  additional premiums, and premiums paid on a monthly payment method are to be so
		  identified on Form SL-2A. In the column designated as "Premium," the amount of
		  the premium and the amount of return premium (in parenthesis) are to be
		  inserted.
I. 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 request a file-marked copy and include a
		  postage paid, self-addressed envelope for use in returning the copy.
J. 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.
K. The guidelines and procedures outlined in
		  this Rule and Ark. Code Ann. §§
								23-65-301,
et seq
., shall apply anew each time it is proposed that a
		  particular coverage, which has been placed in the surplus line market, be
		  rewritten or renewed on a surplus line basis.
L. Computer-generated Forms SL-2, SL-3, and
		  SL-4 are permissible for use if they follow the format outlined in the forms
		  located on the Department's website. Specimen forms must be submitted to the
		  Commissioner for approval prior to use in this State.