MISSISSIPPI LEGISLATURE

2017 Regular Session

To: Insurance

By: Representative Chism

House Bill 447

AN ACT TO AMEND SECTIONS 83-21-19 AND 83-21-23, MISSISSIPPI CODE OF 1972, TO PERMIT PLACEMENT OF INSURANCE WITH A SURPLUS LINES INSURER WITHOUT REGARD TO THE AVAILABILITY OF AUTHORIZED INSURANCE; TO REQUIRE CERTAIN WRITTEN ACKNOWLEDGMENTS FROM THE SURPLUS LINES INSURANCE PRODUCER AND INSURED REGARDING PLACEMENT OF PERSONAL LINES POLICIES WITH SURPLUS LINES INSURERS; AND FOR RELATED PURPOSES.

     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

     SECTION 1.  Section 83-21-19, Mississippi Code of 1972, is amended as follows:

     83-21-19.  (1)  Surplus lines insurance may be placed by a surplus lines insurance producer if:

          (a)  Each insurer is an eligible surplus lines insurer;  * * *and

          (b)  Each insurer is authorized to write the line of insurance in its domiciliary jurisdiction; and

 * * *  (c)  The full amount or type of insurance cannot be obtained from insurers who are admitted to do business in this state.  The full amount or type of insurance may be procured from eligible surplus lines insurers, provided that a diligent search is made among the insurers who are admitted to transact and are actually writing the particular type of insurance in this state, if any are writing it; and

          ( * * *dc)  All other requirements as set forth by law are met.

     (2)  The Commissioner of Insurance, upon the biennial payment of a fee of One Hundred Dollars ($100.00) and submission of a completed license application on a form approved by the commissioner, may issue a surplus lines insurance producer license to a qualified holder of an insurance producer license with a property, casualty and/or personal lines line of authority, who is regularly commissioned to represent * * *two (2) or more a fire and casualty insurance * * *companies company licensed to do business in the state.

     (3)  The privilege license shall continue from the date of issuance until the last day of the month of the licensee's birthday in the second year following issuance or renewal of the license, with a minimum term of twelve (12) months.

     (4)  A nonresident person shall receive a surplus lines insurance producer license if:

          (a)  The person is currently licensed as a surplus lines insurance producer or equivalent and in good standing in his or her home state;

          (b)  The person has submitted the proper request for licensure and has paid the biennial fee of One Hundred Dollars ($100.00); and

          (c)  The person's home state awards nonresident surplus lines licenses to residents of this state on the same basis.

 * * *(5)  A nonresident person shall not be required to hold an insurance producer license with a property, casualty and/or personal lines line of authority if the person is not required to perform a diligent search of admitted insurers as set forth in Section 83‑21‑23.

     ( * * *65)  The commissioner may verify a person's licensing status through the National Producer Database maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries. 

     ( * * *76)  A nonresident surplus lines insurance producer licensee who moves from one (1) state to another state, or a resident surplus lines licensee who moves from this state to another state, shall file a change of address and provide certification from the new resident state within thirty (30) days of the change of legal residence.  No fee or license application is required.

     ( * * *87)  The commissioner may deny, suspend, revoke or refuse the license of a surplus lines insurance producer licensee and/or levy a civil penalty in an amount not to exceed Two Thousand Five Hundred Dollars ($2,500.00) per violation, after notice and hearing as provided hereunder, for one or more of the following grounds:

          (a)  Providing incorrect, misleading, incomplete or materially untrue information in the license application;

          (b)  Violating any insurance laws, or violating any regulation, subpoena or order of the commissioner or of another state's commissioner;

          (c)  Obtaining or attempting to obtain a license through misrepresentation or fraud;

          (d)  Improperly withholding, misappropriating or converting any monies or properties received in the course of doing the business of insurance;

          (e)  Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance;

          (f)  Having been convicted of a felony;

          (g)  Having admitted or been found to have committed any insurance unfair trade practice or fraud;

          (h)  Using fraudulent, coercive or dishonest practices or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere;

          (i)  Having an insurance producer license, or its equivalent, denied, suspended or revoked in any other state, province, district or territory;

          (j)  Forging another's name to an application for insurance or to any document related to an insurance transaction;

          (k)  Improperly using notes or any other reference material to complete an examination for an insurance license;

          (l)  Knowingly accepting insurance business from an individual who is not licensed;

          (m)  Failing to comply with an administrative or court order imposing a child support obligation; or

          (n)  Failing to pay state income tax or comply with any administrative or court order directing payment of state income tax.

     ( * * *98)  If the action by the commissioner is to nonrenew, suspend, revoke or to deny an application for a license, the commissioner shall notify the applicant or licensee and advise, in writing, the applicant or licensee of the reason for the denial or nonrenewal of the applicant's or licensee's license.  The applicant or licensee may make written demand upon the commissioner within ten (10) days for a hearing before the commissioner to determine the reasonableness of the commissioner's action.  The hearing shall be held within thirty (30) days.

     ( * * *109)  Every surplus lines insurance contract procured and delivered according to Sections 83-21-17 through 83-21-31 shall have stamped upon it in bold ten-point type, and bear the name of the surplus lines insurance producer who procured it, the following:  "NOTE:  This insurance policy is issued pursuant to Mississippi law covering surplus lines insurance.  The company issuing the policy is not licensed by the State of Mississippi, but is authorized to do business in Mississippi as a nonadmitted company.  The policy is not protected by the Mississippi Insurance Guaranty Association in the event of the insurer's insolvency."  No diminution of the license fee herein provided shall occur as to any license effective after January 1 of any year.

     SECTION 2.  Section 83-21-23, Mississippi Code of 1972, is amended as follows:

     83-21-23.  (1)  When any policy of insurance or certificate of insurance is procured under the authority of such license, there shall be executed by the surplus lines insurance producer and the insured an acknowledgment on a form promulgated by the commissioner.  * * *setting forth facts in complete detail as to what was done to place such kind of insurance and showing that such surplus lines insurance producer therein was unable, after diligent effort, to procure from a licensed company or companies the full amount of insurance required to protect the property, liability, or risk desired to be insured. This acknowledgment form shall be maintained on file with the surplus lines insurance producer and may be subject to review by the Commissioner of Insurance at any time if the commissioner deems such request advisable.  A copy of the acknowledgment form shall be provided to the insured upon execution.  The acknowledgment shall verify that:

(a)  The applicant for insurance was expressly advised prior to placement of the surplus lines insurance that such insurance may or may not be available from the admitted market that may provide greater protection with more regulatory oversight;

(b)  In the event of an insolvency of the surplus lines insurer, losses shall not be paid by the Mississippi Insurance Guaranty Association;

(c)  The applicant for insurance expressly authorizes the placement of surplus lines insurance coverage;

(d)  The coverage is being procured through a duly licensed nonadmitted insurance producer; and

(e)  Any other information the commissioner believes should be disclosed to the applicant.

(2)  As long as the surplus lines policy continues to be renewed by the surplus lines insurer or eligible nonadmitted insurer, a new acknowledgment is not required upon a renewal.  At renewal, if the policy is placed with a different surplus lines insurer or eligible nonadmitted insurer, a new acknowledgment shall be obtained in the manner prescribed in subsection (1) of this section.

(3)  The Commissioner of Insurance may promulgate rules and regulations and establish appropriate fees for the implementation of Sections 83-21-17 through 83-21-31.

 * * * (2)  (a)  A surplus lines insurance producer is not required to make a due diligence search to determine whether the full amount or type of insurance can be obtained from admitted insurers when the surplus lines insurance producer is seeking to procure or place nonadmitted insurance for an exempt commercial purchaser provided:

   (i)  The surplus lines insurance producer procuring or placing the surplus lines insurance has disclosed to the exempt commercial purchaser that such insurance may or may not be available from the admitted market that may provide greater protection with more regulatory oversight; and

   (ii)  The exempt commercial purchaser has subsequently requested in writing for the surplus lines insurance producer to procure or place such insurance from a nonadmitted insurer.

  (b)  The term "exempt commercial purchaser" means any person purchasing commercial insurance that, at the time of placement, meets the following requirements:

   (i)  The person employs or retains a qualified risk manager, as defined in Section 527(13) of the Nonadmitted and Reinsurance Reform Act of 2010, to negotiate insurance coverage.

   (ii)  The person has paid aggregate nationwide commercial property and casualty insurance premiums in excess of One Hundred Thousand Dollars ($100,000.00) in the immediately preceding twelve (12) months.

   (iii)  1.  The person meets at least one (1) of the following criteria:

     a.  The person possesses a net worth in excess of Twenty Million Dollars ($20,000,000.00) as such amount is adjusted according to item 2 of this subparagraph (iii).

     b.  The person generates annual revenues in excess of Fifty Million Dollars ($50,000,000.00) as such amount is adjusted according to item 2 of this subparagraph (iii).

     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 Dollars ($30,000,000.00) as such amount is adjusted according to item 2 of this subparagraph (iii).

     e.  The person is a municipality with a population in excess of fifty thousand (50,000) persons.

    2.  Effective on January 1, 2015, and every five (5) years thereafter, the amounts in items 1a, 1b and 1d of this subparagraph (iii) shall be adjusted to reflect the percentage change for such five‑year period in the Consumer Price Index for All Urban Consumers published by the Federal Bureau of Labor Statistics of the United States Department of Labor.

     SECTION 3.  This act shall take effect and be in force from and after July 1, 2017.

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