Bill Text: PA SB1096 | 2011-2012 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Further providing for purpose, for definitions, for acting for or aiding nonadmitted insurers, for requirements for eligible surplus lines insurers, for surplus lines licensee's duty to notify insured, for exempt risks, for surplus lines advisory organizations, for licensing of surplus lines licensee, for surplus lines licensees may accept business from insurance producer, for surplus lines tax, for tax on independently procured insurance and for suspension, revocation or nonrenewal of surplus lines licensee's license.

Spectrum: Slight Partisan Bill (Republican 3-1)

Status: (Passed) 2011-06-30 - Act No. 28 [SB1096 Detail]

Download: Pennsylvania-2011-SB1096-Introduced.html

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PRINTER'S NO. 1278
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 1096 Session of2011
INTRODUCED BY D. WHITE, STACK, ERICKSON AND RAFFERTY, JUNE 6, 2011
REFERRED TO BANKING AND INSURANCE, JUNE 6, 2011
AN ACT
Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An
act relating to insurance; amending, revising, and
consolidating the law providing for the incorporation of
insurance companies, and the regulation, supervision, and
protection of home and foreign insurance companies, Lloyds
associations, reciprocal and inter-insurance exchanges, and
fire insurance rating bureaus, and the regulation and
supervision of insurance carried by such companies,
associations, and exchanges, including insurance carried by
the State Workmen's Insurance Fund; providing penalties; and
repealing existing laws," further providing for purpose, for
definitions, for acting for or aiding nonadmitted insurers,
for requirements for eligible surplus lines insurers, for
surplus lines licensee's duty to notify insured, for exempt
risks, for surplus lines advisory organizations, for
licensing of surplus lines licensee, for surplus lines
licensees may accept business from insurance producer, for
surplus lines tax, for tax on independently procured
insurance and for suspension, revocation or nonrenewal of
surplus lines licensee's license.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 1601 of the act of May 17, 1921 (P.L.682,
No.284), known as The Insurance Company Law of 1921, added
December 18, 1992 (P.L.1519, No.178), is amended to read:
Section 1601. Purpose and scope.--(a) The purpose of this
article is to protect the public interest by:
(1) Protecting persons seeking insurance in this
Commonwealth.
(2) Permitting surplus lines insurance to be placed with
reputable and financially sound nonadmitted insurers and
exported from this Commonwealth pursuant to this article.
(3) Establishing a system of regulation which will permit
orderly access to surplus lines insurance in this Commonwealth
and encouraging insurers to make new and innovative types of
insurance available to consumers in this Commonwealth.
(4) Protecting revenues of this Commonwealth.
(b) (1) The provisions of this article, in so far as they
relate to the placement of surplus lines insurance and
independently procured insurance, shall apply when this
Commonwealth is the home state of the insured.
(2) The provisions of this article, in so far as they relate
to the imposition of surplus lines and independently procured
premium tax and penalties for policies placed after June 30,
2011, shall apply when this Commonwealth is the home state of
the insured.
(3) The provisions of this article, in so far as they relate
to the collection, reporting and remittance of surplus lines
insurance and independently procured insurance premium tax for
policies placed after June 30, 2011, shall apply when this
Commonwealth is the home state of the insured.
Section 2. Sections 1602, 1603(c)(6), 1605(a) and 1608 of
the act, amended March 22, 2010 (P.L.147, No.14), are amended to
read:
Section 1602. Definitions.--As used in this article the
following words and phrases shall have the meanings given to
them in this section:
20110SB1096PN1278 - 2 -
"Admitted insurer." An insurer licensed to do an insurance
business in this Commonwealth.
"Affiliate." With respect to an insured, any entity that
controls, is controlled by or is under common control with the
insured.
"Affiliated group." Any group of entities that are all
affiliated.
"Business entity." A corporation, a partnership, a limited
liability company, a limited liability partnership, a business
trust or any other entity doing business other than as a natural
person.
"Capital." The term, as used in the financial requirements
of section 1605, means funds paid for stock or other evidence of
ownership.
"Commissioner." The Insurance Commissioner of the
Commonwealth.
"Control." An entity has control over another entity if:
(1) the entity directly or indirectly or acting through one
or more other persons owns, controls or has the power to vote
twenty-five per centum (25%) or more of any class of voting
securities of the other entity; or
(2) the entity controls in any manner the election of a
majority of the directors or trustees of the other entity.
"Department." The Insurance Department of the Commonwealth.
"Eligible surplus lines insurer." A nonadmitted insurer with
which a surplus lines licensee may place surplus lines insurance
under section 1604.
"Export." To place surplus lines insurance with either a
nonadmitted insurer or an eligible surplus lines insurer in
accordance with this article.
20110SB1096PN1278 - 3 -
"Home state."
(1) (i) Except as provided under paragraph (2), with
respect to an insured:
(A) the state in which an insured maintains its principal
place of business or, in the case of an individual, the
individual's principal residence; or
(B) if one hundred per centum (100%) of the insured risk is
located out of the state referred to under clause (A), the state
to which the greatest percentage of the insured's taxable
premium for that insurance contract is allocated.
(ii) If more than one insured from an affiliated group are
named insureds on a single nonadmitted insurance contract, the
term means the home state, as determined under subparagraph (i),
of the member of the affiliated group that has the largest
percentage of premium attributed to it under the insurance
contract.
(2) This definition shall not apply to section 1615(g).
"Independently procured insurance." Any insurance [which a
resident of this Commonwealth directly negotiates with and
purchases, continues or renews from a nonadmitted insurer
without securing the services of an insurance producer or
surplus lines licensee] directly procured by an insured from a
nonadmitted insurer.
"Insurance producer." A person that is licensed to sell,
solicit or negotiate contracts of insurance with admitted
insurers.
"Kind of insurance." One of the types of insurance required
to be reported in the annual statement which must be filed with
the department by admitted insurers.
"Nonadmitted insurer." An insurer not authorized and not
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licensed to do an insurance business in this Commonwealth. The
term includes insurance exchanges as authorized under the laws
of various states. The term does not include a risk retention
group.
"Person." A natural person or business entity.
"Purchasing group." An entity formed to purchase liability
insurance under the Risk Retention Amendments of 1986 (Public
Law 99-563, 100 Stat. 3170).
"Risk retention group." An insurer organized to do business
under the Risk Retention Amendments of 1986 (Public Law 99-563,
100 Stat. 3170).
"State." Any state of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, Guam, the Northern
Mariana Islands, the Virgin Islands and American Samoa.
"Surplus." The term, as used in the financial requirements
of section 1605, means funds over and above liabilities and
capital of the company for the protection of its policyholders.
"Surplus lines insurance." Any insurance [of risks resident,
located or to be performed in this Commonwealth,] permitted to
be placed through a surplus lines licensee with a nonadmitted
insurer eligible to accept such insurance, other than
reinsurance, wet marine and transportation insurance,
independently procured insurance, life insurance and annuities
and coverage obtained from risk retention groups under the Risk
Retention Amendments of 1986 (Public Law 99-563, 100 Stat.
3170).
"Surplus lines licensee." A person licensed as a surplus
lines producer under section 1615 to place surplus lines
insurance with nonadmitted insurers eligible to accept such
insurance.
20110SB1096PN1278 - 5 -
"Type of insurance." Coverage afforded under the particular
policy that is being placed.
"Wet marine and transportation insurance." Any of the
following:
(1) Insurance upon vessels, crafts or hulls and of interests
therein or with relation thereto.
(2) Insurance of marine builder's risks, marine war risks
and contracts of marine protection and indemnity insurance.
(3) Insurance of freights and disbursements pertaining to a
subject of insurance coming within this definition.
(4) Insurance of personal property and interest therein, in
the course of exportation from or importation into any country,
or in the course of transportation coastwise or on inland
waters, including transportation by land, water or air from
point of origin to final destination, in connection with any and
all risks or perils of navigation, transit or transportation,
and while being prepared for and while awaiting shipment, and
during any delays, transshipment or reshipment. Insurance of
personal property and interests therein shall not be considered
wet marine and transportation insurance if:
(i) the property has been transported solely by land;
(ii) the property has reached its final destination as
specified in the bill of lading or other shipping document; or
(iii) the insured no longer has an insurable interest in the
property.
(5) Any insurance associated with transportation of property
listed under this definition.
"Writing producer." The insurance producer which brings
about or negotiates contracts of insurance directly on behalf of
the consumer seeking insurance.
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Section 1603. Acting for or Aiding Nonadmitted Insurers.--*
* *
(c) This section does not apply to any of the following:
* * *
(6) Transactions subsequent to issuance of a policy [not
covering domestic risks at time of issuance and lawfully
solicited, written or delivered outside of this Commonwealth] in
which this Commonwealth becomes the home state.
* * *
Section 1605. Requirements for Eligible Surplus Lines
Insurers.--(a) No surplus lines licensee shall place any
coverage with a nonadmitted insurer unless, at the time of
placement, such nonadmitted insurer[:
(1) Is of good repute and financial integrity.
(2) Qualifies under any of the following subparagraphs:
(i) Has policyholder surplus equal to or greater than two
times the minimum capital and surplus required to be fully
licensed in this Commonwealth. Two (2) years from the effective
date of this article is granted to allow those nonadmitted
insurers which are eligible surplus lines insurers on the
effective date of this article to achieve this capital and
surplus requirement. If an alien insurer, as defined by the act
of December 10, 1974 (P.L.804, No.266), referred to as the Alien
Insurer Domestication Law, it shall maintain in the United
States an irrevocable trust fund in either a national bank or a
member of the Federal Reserve System, in an amount not less than
that currently required by the National Association of Insurance
Commissioners' International Insurers Department or its
successor for the protection of all of its policyholders in the
United States, and such trust fund consists of cash, securities,
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letters of credit or investments of substantially the same
character and quality as those which are eligible investments
for admitted insurers authorized to write like kinds of
insurance in this Commonwealth. Such trust fund will be in
addition to the capital and surplus required in this
subparagraph and shall have an expiration date which at no time
shall be less than five (5) years.
(ii) Is any Lloyd's or other similar group of insurers which
includes unincorporated individual insurers that maintains a
trust fund of not less than fifty million ($50,000,000) dollars
as security to the full amount thereof for all policyholders and
creditors in the United States of each member of the group. Such
trust funds shall likewise comply with the terms and conditions
established in subparagraph (i) for alien insurers.
(iii) Is an insurance exchange created by the laws of
individual states that maintains capital and surplus or the
substantial equivalent thereof of not less than fifteen million
($15,000,000) dollars in the aggregate. For insurance exchanges
which maintain funds for the protection of all insurance
exchange policyholders, each individual syndicate shall maintain
minimum capital and surplus or the substantial equivalent
thereof of not less than one million five hundred thousand
($1,500,000) dollars. In the event the insurance exchange does
not maintain funds for the protection of all insurance exchange
policyholders, each individual syndicate shall meet the minimum
capital and surplus requirements of subparagraph (i).
(3) Has provided to the department a copy of its current
annual financial statement certified by such insurer, such
statement to be provided no more than thirty (30) days after the
date required for filing an annual financial statement in its
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domiciliary jurisdiction and which is either:
(i) certified by the regulatory authority in the domicile of
the insurer; or
(ii) certified by an accounting or auditing firm licensed in
the jurisdiction of the insurer's domicile.
In the case of an insurance exchange, the statement may be an
aggregate statement of all underwriting syndicates operating
during the period reported.] qualifies under one of the
following:
(1) (i) is authorized to write the type of insurance in its
domiciliary jurisdiction; and
(ii) has capital and surplus or its equivalent under the
laws of its domiciliary jurisdiction which is greater than or
equal to fifteen million ($15,000,000) dollars. The requirement
of this subparagraph may be satisfied by an insurer's possessing
less than the minimum capital and surplus upon an affirmative
finding of acceptability by the commissioner. The finding shall
be based upon such factors as quality of management, capital and
surplus of any parent company, company underwriting profit and
investment income trends, market availability and company record
and reputation within the industry. In no event shall the
commissioner make an affirmative finding of acceptability when
the nonadmitted insurer's capital and surplus is less than four
million five hundred thousand ($4,500,000) dollars.
(2) If domiciled outside the United States, is listed on the
Quarterly Listing of Alien Insurers maintained by the
International Insurers Department of the National Association of
Insurance Commissioners.
* * *
Section 1608. Surplus Lines Licensee's Duty to Notify
20110SB1096PN1278 - 9 -
Insured.--At the time of presenting a quotation to the insured,
the surplus lines licensee shall present to the insured or to
the writing producer written notice that the insurance or a
portion thereof involves placement with nonadmitted insurers.
The surplus lines licensee shall, either directly or through the
writing producer, give notice to the insured that:
(1) the insurer with which the licensee places the insurance
is not licensed by the [Pennsylvania Insurance Department]
department and is subject to its limited regulation; and
(2) in the event of the insolvency of an eligible surplus
lines insurer, losses will not be paid by the Pennsylvania
Property and Casualty Insurance Guaranty Association.
Section 3. Section 1610(a) of the act, added December 18,
1992 (P.L.1519, No.178), is amended and the section is amended
by adding subsections to read:
Section 1610. Exempt Risks.--[(a) The diligent search
requirements of section 1604(2), the reporting requirements of
section 1609(a) and the twenty-five per centum (25%) limitation
of section 1606 are not applicable to placements of insurance
with nonadmitted insurers for risks of an insured which meets at
least three of the following requirements:
(1) The insured employs a full-time risk manager or
contracts for services from a qualified risk management service.
(2) The insured has gross sales in excess of one hundred
million ($100,000,000) dollars.
(3) The insured regularly employs in excess of two hundred
fifty (250) full-time employes.
(4) The insured has assets in excess of one hundred million
($100,000,000) dollars.
(5) The insured has insurance premiums for property and
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casualty insurance, excluding employe benefits, in excess of two
hundred fifty thousand ($250,000) dollars.
(6) The insured is seeking insurance for risks resident,
located or to be performed in one or more states other than this
Commonwealth and the portion of the total risk ascribable to
states other than this Commonwealth exceeds fifty per centum
(50%).]
(a.1) The diligent search requirements of section 1604(2),
the reporting requirements of section 1609(a) and the twenty-
five per centum (25%) limitation of section 1606 shall not apply
to placements of insurance with nonadmitted insurers for an
exempt commercial purchaser if:
(1) the surplus lines licensee procuring or placing the
surplus lines insurance has disclosed to the exempt commercial
purchaser that the insurance may be available from the admitted
market that may provide greater protection with more regulatory
oversight; and
(2) the exempt commercial purchaser has subsequently
requested in writing the surplus lines licensee to procure or
place the insurance from a nonadmitted insurer.
* * *
(c) The following words and phrases when used in this
section shall have the meanings given to them in this subsection
unless the context clearly indicates otherwise:
"Exempt commercial purchaser." Any person purchasing
commercial insurance that, at the time of placement, meets the
following requirements:
(1) The person employs or retains a qualified risk manager
to negotiate insurance coverage.
(2) The person has paid aggregate nationwide commercial
20110SB1096PN1278 - 11 -
property and casualty insurance premiums in excess of one
hundred thousand ($100,000) dollars in the immediately preceding
twelve (12) months.
(3) (i) The person meets at least one of the following
criteria:
(A) The person possesses a net worth in excess of twenty
million ($20,000,000) dollars, as adjusted under subparagraph
(ii).
(B) The person generates annual revenues in excess of fifty
million ($50,000,000) dollars, as adjusted under subparagraph
(ii).
(C) The person employs more than five hundred (500) full-
time or full-time equivalent employees per individual insured or
is a member of an affiliated group employing more than one
thousand (1,000) employees in the aggregate.
(D) The person is a not-for-profit organization or public
entity generating annual budgeted expenditures of at least
thirty million ($30,000,000) dollars, as adjusted under
subparagraph (ii).
(E) The person is a municipality with a population in excess
of fifty thousand (50,000) persons.
(ii) Beginning January 1, 2015 and every five years
thereafter, the amounts under clauses (A), (B) and (D) shall be
adjusted to reflect the percentage change for the five-year
period in the Consumer Price Index for All Urban Consumers
published by the Bureau of Labor Statistics of the Department of
Labor and Industry.
"Qualified risk manager." With respect to a policyholder of
commercial insurance, a person who meets all of the following
requirements:
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(1) The person is an employee of, or third-party consultant
retained by, the commercial policyholder.
(2) The person provides skilled services in loss prevention,
loss reduction or risk and insurance coverage analysis and
purchase of insurance.
(3) The person:
(i) (A) has a bachelor's degree or higher from an
accredited college or university in risk management, business
administration, finance, economics or any other field determined
by the commissioner to demonstrate minimum competence in risk
management; and
(B) (I) has three (3) years of experience in risk
financing, claims administration, loss prevention, risk and
insurance analysis or purchasing commercial lines of insurance;
or
(II) has:
(a) a designation as a Chartered Property and Casualty
Underwriter issued by the American Institute for Chartered
Property and Casualty Underwriter/Insurance Institute of
America;
(b) a designation as an Associate in Risk Management issued
by the American Institute for Chartered Property and Casualty
Underwriter/Insurance Institute of America;
(c) a designation as Certified Risk Manager issued by the
National Alliance for Insurance Education & Research;
(d) a designation as a RIMS Fellow issued by the Global Risk
Management Institute; or
(e) any other designation, certification or license
determined by the commissioner to demonstrate minimum competency
in risk management;
20110SB1096PN1278 - 13 -
(ii) (A) has at least seven (7) years of experience in risk
financing, claims administration, loss prevention, risk and
insurance coverage analysis or purchasing commercial lines of
insurance; and
(B) has any one of the designations specified under clauses
(a), (b), (c), (d) and (e);
(iii) has at least ten (10) years of experience in risk
financing, claims administration, loss prevention, risk and
insurance coverage analysis or purchasing commercial lines of
insurance; or
(iv) has a graduate degree from an accredited college or
university in risk management, business administration, finance,
economics or any other field determined by the commissioner to
demonstrate minimum competence in risk management.
Section 4. Section 1611(f) of the act, amended March 22,
2010 (P.L.147, No.14), is amended to read:
Section 1611. Surplus Lines Advisory Organizations.--* * *
(f) The advisory organization may submit reports and make
recommendations to the department regarding the financial
condition of any eligible surplus lines insurer. These reports
and recommendations shall not be considered to be public
information or subject to any Federal or [State] state freedom
of information law. There shall be no liability on the part of
nor shall any cause of action of any nature be sustained against
eligible surplus lines insurers, the advisory organization or
its members, agents, employes, officers or directors or the
department or authorized representatives of the department for
statements and any reports or recommendations made by them in
good faith under this section.
* * *
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Section 5. Section 1615(a) of the act, amended March 22,
2010 (P.L.147, No.14), is amended and the section is amended by
adding subsections to read:
Section 1615. Licensing of Surplus Lines Licensee.--(a)
[No] For insureds whose home state is this Commonwealth, no
insurance producer licensed by the department shall transact
surplus lines insurance with any nonadmitted insurer unless the
insurance producer possesses a valid surplus lines producer's
license issued by the department.
* * *
(c.2) The commissioner may participate with the National
Association of Insurance Commissioners or its affiliates in a
centralized insurance producer registry for the purpose of
submitting or obtaining information on insurance producers,
surplus lines producers and other licensees, including licensing
history, lines of authority and regulatory actions.
* * *
(g) As used in subsection (c.1), the term "home state" for
an insurance producer or surplus lines producer shall be as
defined as in section 601-A of the act of May 17, 1921 (P.L.789,
No.285), known as "The Insurance Department Act of 1921."
Section 6. Sections 1616, 1621, 1622 and 1623 of the act,
amended March 22, 2010 (P.L.147, No.14), are amended to read:
Section 1616. Surplus Lines Licensees May Accept Business
from Insurance [Producer] Producers.--A surplus lines licensee
may originate surplus lines insurance or accept such insurance
from an insurance producer duly licensed as to the kind or kinds
of insurance involved, and the surplus lines licensee may
compensate the insurance producer.
Section 1621. Surplus Lines Tax.--(a) (1) There is hereby
20110SB1096PN1278 - 15 -
levied a tax of three per centum (3%) on all premiums charged
for insurance which is placed with either an eligible surplus
lines insurer, other than a risk retention group, or other
nonadmitted insurer in accordance with this article, such taxes
to be based on the gross premiums charged less any return
premiums. This tax shall be in addition to the full amount of
the gross premium charged by the insurer for the insurance. The
tax on any unearned portion of the premium shall be returned to
the insured.
[(b) Neither the surplus lines licensee nor the writing
producer shall pay directly or indirectly such tax or any
portion thereof, either as an inducement to the insured to
purchase the insurance or for any other reason.
(c) The surplus lines licensee shall collect from the
insured or the writing producer the amount of the tax at the
time of delivery of the initial policy, cover note or other
evidence of insurance or at such time thereafter as is
reasonably consistent with normal credit terms customary in the
business. Each surplus lines licensee shall, on or before
January 31 of each year, file with the Department of Revenue a
report of all transactions involving the placement of insurance
with either an eligible surplus lines insurer or other
nonadmitted insurers during the previous calendar year. The
report shall set forth the name of the insured, identification
of the insurer, the type of insurance, gross premiums charged
less any return premiums allowed and the tax due as provided in
this section. The remittance for the taxes due shall accompany
this report. Such report shall be made on forms prescribed and
furnished by the Department of Revenue. A copy of the report
shall be filed with the department by the surplus lines
20110SB1096PN1278 - 16 -
licensee. A surplus lines licensee that is a business entity
licensee which files the annual premium tax return with the
Department of Revenue shall include in its return the premium
taxes generated during the year subject to reporting by all
licensees associated with said business entity during the
reporting period.]
[(d)] (2) In the event that a placement of insurance
involves subjects of insurance resident, located or to be
performed in one or more states other than this Commonwealth,
then the premium taxes provided for in this section shall be
levied:
(i) For policies placed before July 1, 2011, only on that
portion of the premium reasonably ascribable to that portion of
the risk situated in this Commonwealth.
(ii) For policies placed after June 30, 2011, upon the gross
premium charged less any return premiums where this Commonwealth
is the home state of the insured.
(d.1) (1) Each surplus lines licensee shall, on or before
January 31 of each year, file a report of all premiums
transacted from the placement of insurance with either an
eligible surplus lines insurer or other nonadmitted insurers
during the previous calendar year. The report shall be filed as
prescribed by the Department of Revenue with any payment. A full
copy of the report shall be filed with the department by the
surplus lines licensee.
(2) The report described under this subsection shall set
forth the name of the insured, the home state of the insured, if
required by the department, identification of the insurer, the
type of insurance, gross premiums charged less any return
premiums allowed, the tax due as provided in this section and
20110SB1096PN1278 - 17 -
any other information as required by the Department of Revenue.
A surplus lines licensee that is a business entity licensee
which files the annual premium tax return with the Department of
Revenue shall include in its return the premium taxes generated
during the year subject to reporting by all licensees associated
with said business entity during the reporting period. The
report shall be made on forms prescribed by the Department of
Revenue.
(3) The remittance for the taxes due shall accompany the
report described under this subsection. Neither the surplus
lines licensee nor the writing producer shall pay directly or
indirectly the tax or any portion of the tax, either as an
inducement to the insured to purchase the insurance or for any
other reason. The surplus lines licensee shall collect from the
insured or the writing producer the amount of the tax at the
time of delivery of the initial policy, cover note or other
evidence of insurance or at the time thereafter as is reasonably
consistent with normal credit terms customary in the business.
(4) A penalty shall be imposed for failure to file the
report required under this subsection on or before the due date
in accordance with the rules of section 403(d) of the act of
March 4, 1971 (P.L.6, No.2), known as the "Tax Reform Code of
1971."
(e) With respect to insurance placed with or issued by a
risk retention group which is an eligible surplus lines insurer,
there is hereby levied a tax of two per centum (2%) on all
premiums charged for risks resident, located or to be performed
in this Commonwealth. The risk retention group shall be
responsible for the payment of the taxes levied in this article
in accordance with procedures set forth in Article XV.
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(f) The [settlement and resettlement] assessment of taxes
imposed by this article, including the granting of extensions of
time to file reports and the rights of the taxpayers to present
and prosecute a petition for [resettlement] assessment, a
petition for review or an appeal to court or to file a petition
for refund and the imposition of interest and penalties, shall
be governed by the provisions of the act of March 4, 1971
(P.L.6, No.2), known as the "Tax Reform Code of 1971," as
approved in the case of [capital stock and franchise taxes]
corporate net income tax.
Section 1622. Tax on Independently Procured Insurance.--(a)
(1) The tax provided by section 1621(a) is imposed upon an
insured whose home state is this Commonwealth who independently
procures insurance [on a subject of insurance resident, located
or to be performed in this Commonwealth] from a nonadmitted
insurer or continues or renews such independently procured
insurance. [The insured shall, within thirty (30) days after the
date when such insurance was independently procured, continued
or renewed, report such transaction on forms prescribed by the
Department of Revenue. This report shall set forth the
information required of surplus lines licensees as required in
section 1621(c). The tax of three per centum (3%) shall be paid
on the date the report is due as provided in this section. If
the independently procured insurance covers risks resident,
located or to be performed in one or more states other than this
Commonwealth, the premium taxes shall be prorated in accordance
with provisions in section 1621(d). A copy of such report shall
be filed with the department by the insured.]
(2) If the independently procured insurance covers risks
resident, located or to be performed in one or more states other
20110SB1096PN1278 - 19 -
than this Commonwealth, the premium taxes shall be payable as
computed in accordance with section 1621(a).
(b) The insured shall, within thirty (30) days after the
last day of the month in which the insurance was independently
procured, continued or renewed, report the transaction on the
forms and in the manner prescribed by the Department of Revenue.
The report shall set forth the information required of surplus
lines licensees as required in any report described under
section 1621. The tax of three per centum (3%) shall be paid on
the date the report is due as provided under this section. The
insured shall file a copy of the report with the department upon
its request.
(c) A penalty shall be imposed for failure to file the
report required under this section on or before the due date in
accordance with the rules of section 403(d) of the act of March
4, 1971 (P.L.6, No.2), known as the "Tax Reform Code of 1971."
Section 1623. Suspension, Revocation or Nonrenewal of
Surplus Lines Licensee's License.--The department may suspend,
revoke or refuse to renew the license of a surplus lines
licensee after notice and a hearing, as provided under the
applicable provision of the laws of this Commonwealth, upon any
one or more of the following grounds:
(3) Closing of the surplus lines licensee's office for a
period of more than thirty (30) business days, unless permission
is granted by the department.
(4) Failure to make and file required reports.
(5) Failure to collect or transmit required tax on surplus
lines premiums.
(7) Failure to remit premiums due insurers or return
premiums due insureds in the normal course of business and
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within reasonable time limits.
(8) Violation of any provision of this [article] act.
(9) For any other cause for which an insurance producer's
license could be denied, revoked or suspended or refused upon
renewal.
Section 7. This act shall take effect immediately.
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