USA Statutes : alabama
Title : Title 27 INSURANCE.
Chapter : Chapter 10 UNAUTHORIZED INSURERS AND SURPLUS LINES.
Section 27-10-1
Section 27-10-1
Representing or aiding unauthorized insurer not allowed; exceptions; validity of contracts.
(a) No person shall in this state, directly or indirectly, act as agent for, or otherwise represent or aid on behalf of another, any insurer not then authorized to transact such insurance in this state in the solicitation, negotiation or effectuation of insurance or annuity contracts, forwarding of applications, delivery of policies or contracts, inspection of risks, fixing of rates, investigation or adjustment of losses, collection of premiums or in any other manner in the transaction of insurance with respect to subjects of insurance resident, located or to be performed in this state.
(b) This section shall not apply to:
(1) Acceptance of service of process by the commissioner under Section 27-10-52;
(2) Surplus lines insurance or coverage specified in Section 27-10-34 and other transactions as to which a certificate of authority is not required of an insurer;
(3) Adjustment of losses as authorized in Section 27-10-35;
(4) Transactions for which a certificate of authority to do business is not required of an insurer under the laws of this state;
(5) Reinsurance effectuated in accordance with this title; or
(6) The property and operations of the shipbuilding and/or ship repair industry engaged in interstate or foreign commerce and vessels, cargoes, watercraft, piers, wharves, graven docks, drydocks, marine railways and building ways, commonly known as wet marine.
(c) This section shall not be deemed to render invalid, as between the parties thereto, any insurance contract entered into in violation of this section.
(Acts 1963, No. 521, p. 1112, §4; Acts 1971, No. 407, p. 707, §191.)Section 27-10-2
Section
27-10-2
Liability of persons violating Section 27-10-1; liability of adjusters.
(a) Any person who in this state willfully represents or aids an unauthorized insurer in violation of Section 27-10-1 shall, in addition to any other applicable penalty, be liable for the full amount of any loss sustained by the insured under any such contract and for the amount of any premium taxes which may be payable under Section 27-10-35 by reason of such contract.
(b) Any adjuster who, directly or indirectly, enters into an investigation or adjustment of any loss arising under a contract of insurance or annuity issued by an unauthorized insurer and covering at time of issuance a subject of insurance resident, located or to be performed in this state shall be liable for the full amount of any loss suffered by the insured under such contract. The commissioner may, after hearing, revoke the license of such an adjuster. This subsection does not apply as to surplus lines contracts lawfully written under this chapter, or exempted under Section 27-10-34, or to insurance contracts procured by the insured on his own behalf and on which the tax is paid as required by Section 27-10-35 or to transactions as to which the insurer is not required to have a certificate of authority.
(Acts 1963, No. 521, p. 1112, §5; Acts 1971, No. 407, p. 707, §192.)Section 27-10-20
Section 27-10-20
Procuring of surplus lines from unauthorized insurers.
If certain insurance coverages cannot be procured on terms acceptable to the insureds from authorized insurers, such coverages, designated 'surplus lines,' may be procured from unauthorized insurers subject to the terms and conditions of either subdivisions (1) or (2) of this section:
(1)a. The insurance must be procured through a licensed surplus line broker;
b. The full amount of insurance required must not be procurable, after diligent effort has been made to do so, from among the insurers authorized to transact and actually transacting that kind and class of insurance in this state or has been procured to the full extent such insurers are willing to insure;
c. The insurance must not be procured for the purpose of securing advantages as to a lower premium rate than would be accepted by an authorized insurer; and
d. This section, and this surplus line law, does not apply as to life insurance or disability insurance.
(2) The contracts of insurance are issued to an industrial insured, defined as an insured:
a. Which procures the insurance of any risk by use of services of a full-time employee acting as an insurance manager or buyer or the services of a regularly and continuously retained, qualified insurance consultant;
b. Whose aggregate annual premiums for insurance on all risks other than workmen's compensation and group insurance total at least $25,000.00; and
c. Which has at least 25 employees.
(Acts 1963, No. 521, p. 1112, §7; Acts 1971, No. 407, p. 707, §195.)Section 27-10-21
Section 27-10-21
Report of surplus line broker.
Within 30 days after the effective date of any such insurance, the surplus line broker shall file a written report with the commissioner setting forth facts from which it can be determined whether under Section 27-10-20 the coverage has been lawfully placed as a surplus line. If so required by the commissioner, the report shall be in the form of the broker's affidavit. If so required by the commissioner, the report shall be accompanied by a written statement signed by the insured to the effect that the coverage was placed in an unauthorized insurer with the insured's knowledge and consent.
(Acts 1963, No. 521, p. 1112, §8; Acts 1971, No. 407, p. 707, §196.)Section 27-10-22
Section 27-10-22
Endorsement of surplus line contract.
Every insurance contract procured and delivered as a surplus line coverage pursuant to this article shall be initialed by, or bear the name and license number of, the surplus line broker who procured it and shall have stamped upon it the following:
'This contract is registered and delivered as a surplus line coverage under the Alabama Surplus Line Insurance Law.'
(Acts 1963, No. 521, p. 1112, §9; Acts 1971, No. 407, p. 707, §197.)Section 27-10-23
Section 27-10-23
Validity and enforceability of surplus
line contracts.
Insurance contracts procured as 'surplus line' coverages from unauthorized insurers in accordance with this article shall be fully valid and enforceable as to all parties and shall be given acceptance and recognition in all matters and respects to the same effect and extent as like contracts issued by authorized insurers.
(Acts 1963, No. 521, p. 1112, §10; Acts 1971, No. 407, p. 707, §198.)Section 27-10-24
Section
27-10-24
Licensing of surplus line brokers.
(a) Any person, while licensed as a resident insurance producer in this state for the property lines of authority and who is deemed by the commissioner to have had sufficient experience in the insurance business to be competent for the purpose may be licensed as a surplus line broker for the types and kinds of insurance that he or she as a resident producer is licensed to handle as follows:
(1) Application to the commissioner for the license shall be made on forms as designated and furnished by the commissioner.
(2) License fee in the amount stated in Section 27-4-2 shall be paid to the commissioner. The license shall expire on December 31 next after its issue.
(3) Prior to the issuance of the license, the applicant shall file with the commissioner, and thereafter for as long as any license remains in effect he or she shall keep in force and unimpaired, a bond in favor of the State of Alabama in the penal sum of at least fifty thousand dollars ($50,000), aggregate liability, with authorized corporate sureties approved by the commissioner. The amount of the bond may be increased if deemed necessary by the commissioner, considering the amount of surplus lines tax paid in previous years. The bond shall be conditioned that the broker will conduct business under the license in accordance with the provisions of the surplus line insurance law and that he or she will promptly remit the taxes as provided by the law. No bond shall be terminated unless at least 30 days' prior written notice thereof is given to the broker and the commissioner.
(b) A business entity acting as a surplus line broker shall designate each licensed individual producer acting under the license, each of whom shall be responsible for the business entity's compliance with the insurance laws, rules, and regulations of this state. A separate fee shall be paid for each individual producer acting under a business entity license as surplus line broker, as set forth in Section 27-4-2.
(c)(1) Each licensed nonresident surplus line broker shall be considered to have performed acts equivalent to and constituting an appointment of the commissioner as his or her attorney to receive service of legal process issued against the nonresident in this state upon causes of action arising within this state out of transactions under the nonresident's surplus line broker license. Service upon the commissioner as such attorney shall constitute effective legal service upon the nonresident.
(2) The appointment shall be irrevocable for as long as there may be any such cause of action in this state against the nonresident.
(3) Service of process under this section shall be made by leaving three copies of the summons and complaint, or other process, with the commissioner, along with payment of the fee prescribed in Section 27-4-2, and the service shall be sufficient service upon the nonresident if notice of the service and a copy of the summons and complaint or other process are sent by registered or certified mail to the defendant by the commissioner; and the defendant's return and the certificate of the commissioner certifying compliance herewith shall be filed in the office of the clerk of court, or in the court or tribunal wherein the action is pending. The certificate of the commissioner shall show the date of the mailing by registered or certified mail of the notice of the service and copy of the summons and complaint, or other process, to the nonresident defendant and the date of the receipt of the return card and shall be signed by the commissioner. The commissioner may give the nonresident defendant notice of the service upon him or her, in lieu of the notice of service provided for herein to be given by registered or certified mail, in the following manner:
a. By having a notice of service and a copy of the summons and complaint, or other process, served upon the nonresident defendant, if found within the State of Alabama, by any officer duly qualified to serve legal process within the State of Alabama or, if the nonresident defendant is found to be outside of the State of Alabama, by a sheriff, deputy sheriff, or United States marshal or deputy United States marshal, or any duly constituted officer qualified to serve like process in the state or the jurisdiction where the nonresident defendant is found.
b. The officer's return showing service, when made, shall be filed in the office of the clerk of the court, or in the court or tribunal wherein the action is pending, on or before the return day of the process or as the court or tribunal may allow, and the court or tribunal in which the action is pending may order a continuance, or continuances, as may be necessary to afford the nonresident defendant reasonable opportunity to defend the action.
(4) The commissioner shall keep on file for a period of not less than three years a copy of the summons and complaint or other process served upon the commissioner, together with a record of all such process and of the day, hour, and manner of service.
(Acts 1963, No. 521, p. 1112, §11; Acts 1971, No. 407, p. 707, §199; Acts 1994, 1st Ex. Sess., No. 94-790, p. 92, §2; Act 2001-702, p. 1509, §15.)Section 27-10-25
Section 27-10-25
Acceptance and placement of surplus line business from agents or brokers.
A licensed surplus line broker may accept and place surplus line business for any insurance producer licensed in this state for the kind and class of insurance involved and may compensate the producer therefor. No producer shall knowingly misrepresent to the broker any material fact involved in any insurance or in the eligibility thereof for placement with an unauthorized insurer.
(Acts 1963, No. 521, p. 1112, §12; Acts 1971, No. 407, p. 707, §200; Act 2001-702, p. 1509, §15.)Section 27-10-26
Section 27-10-26
Eligibility of insurers for placement of surplus line insurance.
(a) A surplus line broker shall not knowingly place surplus line insurance with an insurer that is unsound financially, or that is ineligible under this section. The broker shall ascertain the financial condition of the unauthorized insurer before placing insurance therewith.
(b) The broker shall not so insure with any of the following:
(1) With any insurer which is not an authorized insurer in at least one state of the United States for the kind of insurance involved, and with capital or surplus, or both, amounting to at least five million dollars ($5,000,000); or guaranteed trust fund amounting to at least five million dollars ($5,000,000).
(2) With an alien insurer not authorized to transact insurance in at least one state of the United States, unless the insurer shall have established an effective trust fund of at least two million five hundred thousand dollars ($2,500,000) within the United States administered by a recognized financial institution and held for the benefit of all its policyholders or policyholders and creditors in the United States, and with capital or surplus, or both, amounting to at least fifteen million dollars ($15,000,000).
(3) With a foreign or alien insurer which has transacted insurance as an authorized insurer in its state or country of domicile for less than five years, unless it is a wholly owned subsidiary of an insurer authorized to transact insurance in this state.
(4) With an insurer the voting control of which is held in whole or substantial part by any government or governmental agency.
(5) In any insurer made ineligible as a surplus line insurer by order of the commissioner received by or known to the broker. The commissioner may issue an order of ineligibility if he or she finds that the insurer:
a. Does not meet the financial requirements of this section;
b. Has without just cause refused to pay valid claims arising under its contracts in this state or has otherwise conducted its affairs in a manner as to result in injury or loss to the insuring public of this state; or
c. Has conducted its affairs in a manner as to result in the avoidance of payment of tax as required by Sections 27-10-31 and 27-10-35.
(Acts 1963, No. 521, p. 1112, §13; Acts 1971, No. 407, p. 707, §201; Acts 1975, No. 219, p. 746, §1; Acts 1994, 1st Ex. Sess., No. 94-790, p. 92, §2.)Section 27-10-27
Section 27-10-27
Evidence of surplus line insurance; changes; issuance of false certificate and failure to notify insured of material change.
(a) Upon placing a surplus line coverage, the broker shall promptly issue and deliver to the insured evidence of the insurance, consisting either of the policy as issued by the insurer or, if such policy is not then available, the surplus line broker's certificate. Such a certificate shall be executed by the broker and shall show the description and location of the subject of the insurance, coverage, conditions and term of the insurance, the premium and rate charged and taxes collected from the insured and the name and address of the insured and insurer. If the direct risk is assumed by more than one insurer, the certificate shall state the name and address and proportion of the entire direct risk assumed by each such insurer.
(b) No broker shall issue any such certificate or any cover note or purport to insure or represent that insurance will be, or has been, granted by any unauthorized insurer unless he has prior written authority from the insurer for the insurance, or has received information from the insurer in the regular course of business that such insurance has been granted or an insurance policy providing the insurance actually has been issued by the insurer and delivered to the insured.
(c) If after the issuance and delivery of any such certificate there is any change as to the identity of the insurers, or the proportion of the direct risk assumed by an insurer as stated in the broker's original certificate or in any other material respect as to the insurance coverage evidenced by the certificate, the broker shall promptly issue and deliver to the insured a substitute certificate accurately showing the current status of the coverage and the insurers responsible thereunder.
(d) If a policy issued by the insurer is not available upon placement of the insurance and the broker has issued and delivered his certificate as provided in this section, upon request therefor by the insured, the broker shall, as soon as reasonably possible, procure from the insurer its policy evidencing such insurance and deliver such policy to the insured in replacement of the broker's certificate theretofore issued.
(e) Any surplus line broker who knowingly or negligently issues a false certificate of insurance or who fails promptly to notify the insured of any material change with respect to such insurance by delivery to the insured of a substitute certificate as provided in subsection (c) of this section shall, upon conviction, be subject to the penalties provided by Section 27-1-12 or to any greater applicable penalty otherwise provided by law.
(Acts 1963, No. 521, p. 1112, §14; Acts 1971, No. 407, p. 707, §202.)Section 27-10-28
Section 27-10-28
Liability of insurer as to
losses and unearned premiums.
(a) As to a surplus line risk which has been assumed by an unauthorized insurer pursuant to this surplus line insurance law and if the premium thereon has been received by the surplus line broker who placed such insurance, in all questions thereafter arising under the coverage as between the insurer and the insured, the insurer shall be deemed to have received the premium due to it for such coverage and the insurer shall be liable to the insured as to losses covered by such insurance and for unearned premiums which may become payable to the insured upon cancellation of such insurance, whether or not in fact the broker is indebted to the insurer with respect to such insurance or for any other cause.
(b) Each unauthorized insurer assuming a surplus line direct risk under this surplus line insurance law shall be deemed thereby to have subjected itself to the terms of this section.
(Acts 1963, No. 521, p. 1112, §15; Acts 1971, No. 407, p. 707, §203.)Section 27-10-29
Section 27-10-29
Records of surplus line brokers.
(a) Each surplus line broker shall keep in his office in this state a full and true record of each surplus line contract procured by him, including a copy of the policy, certificate, cover note or other confirmation of insurance and of the daily report, if any, and showing such of the following items as may be applicable:
(1) Amount of the insurance and risks insured against;
(2) Gross premium charged;
(3) Return premium paid, if any;
(4) Rate of premium charged upon the several items of property;
(5) Effective date of the contract and the terms thereof;
(6) Name and address of the insurer;
(7) Name and address of the insured;
(8) Brief general description of property insured and where located;
(9) Amount of tax and other sums collected from the insured; and
(10) Other information as may be required by the commissioner.
(b) The record shall at all times be open to examination by the commissioner and shall be kept available and open to the commissioner for five years next following the issuance of the contract.
(Acts 1971, No. 407, p. 707, §204.)Section 27-10-3
Section 27-10-3
Actions by unauthorized insurers not allowed; exceptions.
(a) No unauthorized insurer shall institute or file, or cause to be instituted or filed, any action or proceeding in this state to enforce any right, claim or demand arising out of any insurance transaction in this state until such insurer has obtained a certificate of authority to transact such insurance in this state.
(b) This section does not apply as to:
(1) Transactions for which a certificate of authority is not required;
(2) Surplus line coverages written under this chapter; or
(3) Coverages exempted from the surplus line law under Section 27-10-34.
(Acts 1963, No. 521, p. 1112, §6; Acts 1971, No. 407, p. 707, §193.)Section 27-10-30
Section 27-10-30
Annual statement of surplus line broker.
(a) Each surplus line broker shall, on or before the first day of March of each year, file with the commissioner a verified statement of all surplus line insurance transacted by him during the preceding calendar year.
(b) The statement shall be on forms as prescribed and furnished by the commissioner and shall show:
(1) Gross amount of each kind of insurance transacted;
(2) Aggregate gross premiums charged, exclusive of sums collected to cover state or federal taxes;
(3) Aggregate of returned premiums and taxes paid to insureds;
(4) Aggregate of net premiums; and
(5) Additional information as required by the commissioner.
(Acts 1963, No. 521, p. 1112, §17; Acts 1971, No. 407, p. 707, §205.)Section 27-10-31
Section 27-10-31
Annual tax of
surplus line brokers.
(a) On or before the first day of March each year, the surplus line broker shall remit to the State Treasurer through the commissioner, as a tax imposed for the privilege of transacting business as a surplus line broker in this state, a tax of six percent on the direct premiums, less return premiums and exclusive of sums collected to cover state or federal taxes, on surplus line insurance subject to tax transacted by the broker during the preceding calendar year as shown by the annual statement filed with the commissioner.
(b) If a surplus line policy covers risks or exposures only partially in this state, the tax so payable shall be computed on the proportion of the premium which is properly allocable to the risks or exposures located in this state.
(c) The tax under the provisions of this section shall be subject to deduction of the full amount of all expenses of examination of the surplus line broker by the commissioner in the same manner as that allowed for domestic insurers for examination expenses under the provisions of subdivision (5) of subsection (c) of Section 27-4A-3. All taxes collected under this section shall be deposited in the State Treasury to the credit of the State General Fund.
(Acts 1963, No. 521, p. 1112, §18; Acts 1971, No. 407, p. 707, §206; Acts 1980, No. 80-774, p. 1608, §2; Acts 1993, No. 93-679, p. 1291, §7.)Section 27-10-32
Section 27-10-32
Revocation or suspension
of surplus line broker's license.
(a) The commissioner may revoke or suspend any surplus line broker's license for any one or more of the following:
(1) If the broker fails to file an annual statement or to remit the tax as required by law.
(2) If the broker fails to keep the records or to allow the commissioner to examine the broker's records as required by law.
(3) For any of the causes for which a producer's license may be revoked.
(b) The commissioner may suspend or revoke the broker's license if the commissioner finds that the broker has, willfully or without exercise of due care, placed any insurance coverage with an unauthorized insurer in violation of any of the requirements or conditions of Section 27-10-20.
(c) The procedures and rights provided by Section 27-7-19 as for the suspension or revocation of producers' licenses shall be applicable to suspension or revocation of a surplus line broker's license.
(d) No broker whose license has been so revoked shall again be so licensed within one year thereafter nor until any fines or delinquent taxes owing by the broker have been paid.
(Acts 1963, No. 521, p. 1112, §19; Acts 1971, No. 407, p. 707, §207; Act 2001-702, p. 1509, §15.)Section 27-10-33
Section 27-10-33
Service of process in action or proceeding against insurer.
(a) Any unauthorized insurer issuing a policy or assuming a direct insurance risk under this surplus line law shall be deemed thereby to have appointed the commissioner as its attorney upon whom may be served all lawful process in any action or proceeding against it in this state arising out of such insurance.
(b) Service of process upon the commissioner as process agent of the insurer shall be made by the proper officer of Montgomery County by serving copies in triplicate of the process upon the commissioner or upon his assistant, deputy or other person in charge of his office. Upon receiving such service, the commissioner shall promptly forward a copy thereof by certified mail or registered mail to the person last designated to receive the same, as provided in subsection (c) of this section, return one copy with his admission of service and retain one copy in the files of the department.
(c) Each such policy, or the certificate of insurance issued by the broker, shall contain a provision stating the substance of this section and designating the person to whom the commissioner shall mail process as provided for in subsection (b) of this section. The broker shall, likewise, file the name of such person with the commissioner. As to the same unauthorized insurer and all insurance coverages issued or accepted by it under this surplus line law, no more than one person shall at any one time be the designee to whom copies of process against the insurer, served upon the commissioner, shall be forwarded.
(d) Where process is served upon the commissioner as an insurer's process agent, the insurer shall not be required to answer or plead except within 30 days after the date upon which the commissioner mailed a copy of the process served upon him as required by subsection (b) of this section.
(e) Process served upon the commissioner, and copy thereof forwarded as in this section provided, shall for all purposes constitute valid and binding service thereof upon the insurer.
(Acts 1963, No. 521, p. 1112, §20; Acts 1971, No. 407, p. 707, §208.)Section 27-10-34
Section 27-10-34
Exemptions from surplus line insurance law.
The provisions of this surplus line insurance law controlling the placing of insurance with unauthorized insurers shall not apply to reinsurance or to the following insurances when so placed by licensed agents or brokers of this state:
(1) Wet marine and transportation insurance;
(2) Insurance on subjects located, resident or to be performed wholly outside of this state or on vehicles or aircraft owned and principally garaged outside this state;
(3) Insurance on property or operation of railroads engaged in interstate commerce;
(4) Insurance of aircraft owned or operated by manufacturers of aircraft or aircraft operated in scheduled interstate flight, or cargo of such aircraft or against liability, other than workmen's compensation and the employer's liability, arising out of the ownership, maintenance or use of such aircraft; and
(5) The property and operations of the shipbuilding and ship repair industry engaged in interstate or foreign commerce and vessels, cargoes, watercraft, piers, wharves, graving docks, drydocks, marine railways and building ways, commonly known as wet marine.
(Acts 1963, No. 521, p. 1112, §21; Acts 1971, No. 407, p. 707, §209.)Section 27-10-35
Section 27-10-35
Report of, and tax on, independently procured coverages; exceptions.
(a) Anyone who may desire to place his insurance in a foreign insurer not authorized to do business in this state may place such insurance, and any insured who in this state procures, or causes to be procured, or continues or renews insurance in an unauthorized foreign insurer or any self-insurer who in this state so procures or continues excess loss, catastrophe or other insurance, upon a subject of insurance resident, located or to be performed within this state, other than insurance procured through a surplus line broker pursuant to the surplus lines law of this state or exempted from such law under Section 27-10-34 shall, within 90 days after the date such insurance was so procured, continued or renewed, file a written report of the same with the commissioner on forms designated by the commissioner and furnished to such an insured upon request. The report shall show the name and address of the insured or insureds, name and address of the insurer, the subject of the insurance, a general description of the coverage, the amount of premium currently charged therefor and such additional pertinent information as is reasonably requested by the commissioner. If any such insurance covers also subjects of insurance resident, located or to be performed outside this state, a proper pro rata portion of the entire premium payable for all such insurance shall be allocated as to the subjects of insurance resident, located or to be performed in this state for the purposes of this section.
(b) Any insurance in an unauthorized insurer procured through negotiations or an application, in whole or in part, occurring or made within or from within this state or for which premiums, in whole or in part, are remitted, directly or indirectly, from within this state shall be deemed to be insurance procured, or continued or renewed in this state within the intent of subsection (a) of this section.
(c) For the general support of the government of this state, there is levied upon the obligation, chose in action or right represented by the premium charged or payable for such insurance a tax at the rate of four percent of the gross amount of such premium. The insured shall withhold the amount of the tax from the amount of premium charged by and otherwise payable to the insurer for such insurance; and, within 30 days after the insurance was so procured, continued or renewed and coincidentally with the filing with the commissioner of the report provided for in subsection (a) of this section, the insured shall pay the amount of the tax to the State Treasurer through the commissioner.
(d) If the insured fails to withhold from the premium the amount of tax levied by this section, the insured shall be liable for the amount thereof and shall pay the same to the commissioner within the time stated in subsection (c) of this section.
(e) The tax imposed under this section, if delinquent, shall bear interest at the rate of six percent per annum, compounded annually.
(f) Payment of such tax shall be enforced by the commissioner by civil action against any person failing to pay the tax provided for in this section.
(g) A licensed adjuster may lawfully investigate and adjust any loss occurring or claim made under any such contract of insurance as to which the tax has been paid as provided in this section.
(h) This section does not apply as to life or disability insurances.
(Acts 1963, No. 521, p. 1112, §22; Acts 1971, No. 407, p. 707, §210.)Section 27-10-36
Section 27-10-36
Production of policies, etc., for inspection by commissioner.
Every person as to whom insurance is placed with an unauthorized insurer, upon the commissioner's order, shall produce for his examination all policies and other documents evidencing the insurance and shall disclose to the commissioner the amount of gross premiums paid, or agreed to be paid, for the insurance. For each willful refusal to obey such order, such person shall be liable to a fine of not more than $500.00.
(Acts 1963, No. 521, p. 1112, §23; Acts 1971, No. 407, p. 707, §211.)Section 27-10-37
Section 27-10-37
Penalty for violation of article.
(a) Any person who in this state represents or aids a nonadmitted insurer in willful violation of the provisions of this surplus lines insurance law shall, upon conviction thereof, be guilty of a misdemeanor and be subject to a fine not in excess of $1,000.00 or imprisonment for not more than one year, or by both such fine and imprisonment, in the discretion of the court.
(b) In addition to the penalties provided for in subsection (a) of this section, such violator shall be liable, personally, jointly and severally, with any other person, or persons, liable therefor for payment of taxes payable on account of such insurance.
(c) In addition to any other penalty provided for in this section or otherwise provided by law, including suspension, revocation or refusal to renew license, any person, firm, association or corporation willfully violating any provision of this article shall be liable to a penalty not exceeding $1,000.00 for the first offense and not exceeding $2,000.00 for each succeeding offense.
(Acts 1963, No. 521, p. 1112, §25; Acts 1971, No. 407, p. 707, §212.)Section 27-10-38
Section 27-10-38
Short title.
This article constitutes, and may be referred to as, 'the surplus line insurance law.'
(Acts 1971, No. 407, p. 707, §194.)Section 27-10-50
Section 27-10-50
Purpose.
The purpose of this article is to subject certain insurers to the jurisdiction of courts of this state in actions by, or on behalf of, insureds or beneficiaries under insurance contracts. The Legislature declares that it is a subject of concern that many residents of this state hold policies of insurance issued or delivered in this state by insurers while not authorized to do business in this state, thus presenting to such residents the often insuperable obstacle of resorting to distant forums for the purpose of asserting legal rights under such policies. In furtherance of such state interest, the Legislature provides in this article a method of substituted service of process upon such insurers and declares that in so doing it exercises its power to protect its residents and to define, for the purpose of this article, what constitutes doing business in this state and also exercises powers and privileges available to the state by virtue of the federal Insurance Regulation Act, which declares that the business of insurance and every person engaged therein shall be subject to the laws of the several states.
(Acts 1951, No. 768, p. 1335, §1; Acts 1971, No. 407, p. 707, §214.)Section 27-10-51
Section 27-10-51
Acts constituting appointment of commissioner as agent for service of
process on foreign or alien insurer.
Any of the following acts in this state, effected by mail or otherwise, by an unauthorized foreign or alien insurer:
(1) The issuance or delivery of contracts of insurance to residents of this state or to corporations authorized to do business therein; (2) The solicitation of applications for such contracts; (3) The collection of premiums, membership fees, assessments or other considerations for such contracts; or (4) Any other transaction of insurance business;is equivalent to, and shall constitute, an appointment by such insurer of the commissioner and his successor or successors in office to be its true and lawful attorney, upon whom may be served all lawful process in any action or proceeding instituted by, or on behalf of, an insured or beneficiary arising out of any such contract of insurance; and any such act shall be signification of the insurer's agreement that such service of process is of the same legal force and validity as personal service of process in this state upon such insurer.
(Acts 1951, No. 768, p. 1335, §2; Acts 1971, No. 407, p. 707, §215.)Section 27-10-52
Section 27-10-52
Service of process upon insurer; judgment by default.
(a) Service of process upon an insurer pursuant to Section 27-10-51 shall be made by delivering to, and leaving with, the commissioner, or some person in apparent charge of his office, two copies thereof and the payment to him of such fees as may be prescribed by law. The commissioner shall forthwith mail by registered mail one of the copies of the process to the defendant at its last known principal place of business and shall keep a record of all process so served upon him. Such service of process is sufficient, provided notice of the service and a copy of the process are sent promptly after such service by the commissioner by registered mail to the defendant at its last known principal place of business and the defendant's receipt, or receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the certificate of the commissioner showing a compliance herewith are filed with the clerk or register of the court in which such action is pending on, or before, the date the defendant is required to appear, or within such further time as the court may allow.
(b) Service of process in any such action or proceeding shall in addition to the manner provided in subsection (a) of this section, be valid if served in the manner provided by law upon any person within this state, who, in this state on behalf of such insurer, is:
(1) Soliciting insurance;
(2) Making, issuing or delivering any contract of insurance; or
(3) Collecting or receiving any premium, membership fee, assessment or other consideration for insurance; and a copy of such process is sent within 10 days thereafter by registered mail by the clerk or register of the court in which the action or proceeding is pending to the defendant at the last known principal place of business of the defendant, and the defendant's receipt, or the receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, are filed with the clerk or register of the court in which the action is pending on, or before, the date the defendant is required to appear, or within such further time as the court may allow.
(c) No plaintiff or complainant shall be entitled to a judgment by default under this section until the expiration of 30 days from date of the completion of service as provided in this section.
(d) Nothing in this section shall limit or abridge the right to serve any process, notice or demand upon any insurer in any other manner, now or hereafter, permitted by law.
(Acts 1951, No. 768, p. 1335, §2; Acts 1971, No. 407, p. 707, §216.)Section 27-10-53
Section 27-10-53
Defense of action or proceeding by insurer.
(a) Before an unauthorized insurer shall file, or cause to be filed, any pleading in any action or proceeding instituted against it under Sections 27-10-51 and 27-10-52, such insurer shall:
(1) Procure a certificate of authority to transact insurance in this state; or
(2) Deposit with the clerk of the court in which such action or proceeding is pending cash or securities or file with such clerk a bond with good and sufficient sureties, to be approved by the court, in an amount to be fixed by the court sufficient to secure the payment of any final judgment which may be entered in such action. The court may, in its discretion, make an order dispensing with such deposit or bond where the insurer makes a showing satisfactory to the court that it maintains in a state of the United States funds or securities, in trust or otherwise, sufficient and available to satisfy any final judgment which may be entered in such action or proceeding and that the insurer will pay any final judgment entered therein without requiring an action to be brought on such judgment in the state where such funds or securities are located.
(b) The court, in any action or proceeding in which service is made in the manner provided in Section 27-10-52, may, in its discretion, order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with the provisions of subsection (a) of this section, and to defend such action.
(c) Nothing in subsection (a) of this section is to be construed to prevent an unauthorized insurer from filing a motion to quash or to set aside the service of any process made in the manner provided in Section 27-10-52 on the ground either:
(1) That such unauthorized insurer has not done any of the acts enumerated in Section 27-10-51; or
(2) That the person on whom service was made pursuant to subsection (b) of Section 27-10-52 was not doing any of the acts therein enumerated.
(Acts 1951, No. 768, p. 1335, §3; Acts 1971, No. 407, p. 707, §217.)Section 27-10-54
Section 27-10-54
Transaction of insurance business not authorized by article.
Nothing in the Unauthorized Insurers Process Act shall be construed to authorize or permit the transaction of any insurance business in this state by any unauthorized insurer nor relieve any such insurer from any penalty provided by law in the transaction of business in this state.
(Acts 1951, No. 768, p. 1335, §5; Acts 1971, No. 407, p. 707, §218.)Section 27-10-55
Section 27-10-55
Exemptions.
This Unauthorized Insurers Process Act shall not apply as to surplus line insurance lawfully effectuated under this title nor to any action or proceeding against an unauthorized insurer arising out of:
(1) Wet marine and transportation insurance;
(2) Insurance on, or with respect to, subjects located, resident or to be performed wholly outside this state or on, or with respect to, vehicles or aircraft owned and principally garaged outside this state;
(3) Insurance on property or operations of railroads engaged in interstate commerce; or
(4) Insurance on aircraft or cargo of such aircraft or against liability, other than employer's liability, arising out of the ownership, maintenance or use of such aircraft where the policy or contract contains a provision designating the commissioner as its attorney for the acceptance of service of lawful process in any action or proceeding instituted by, or on behalf of, an insured or beneficiary arising out of any such policy or contract or where the insurer enters a general appearance in any such action or proceeding.
(Acts 1951, No. 768, p. 1335, §6; Acts 1971, No. 407, p. 707, §219.)Section 27-10-56
Section 27-10-56
Short title; construction of article.
(a) This article constitutes and may be cited as the Unauthorized Insurers Process Act.
(b) This article shall be so interpreted as to effectuate its general purpose to make uniform the law of those states which enact it.
(Acts 1951, No. 768, p. 1335, §7; Acts 1971, No. 407, p. 707, §213.)