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SENATE
BILL 5809
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Passed
Legislature - 1997 Regular Session
State of Washington 55th
Legislature 1997 Regular Session
By
Read first time 02/13/97.
Referred to Committee on Financial Institutions, Insurance & Housing.
Requiring
unauthorized insurers to be financially sound.
AN
ACT Relating to the financial condition of unauthorized insurers; amending RCW
48.15.090; and providing an effective date.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
48.15.090 and 1994 c 86 s 2 are each amended to read as follows:
(1)
A surplus line broker shall not knowingly place surplus line insurance with
insurers unsound financially. The surplus line broker shall ascertain the
financial condition of the unauthorized insurer, and maintain written evidence
thereof, before placing insurance therewith. The surplus line broker shall not
so insure with:
(a)
Any foreign insurer having less than six million dollars of capital and surplus
or substantially equivalent capital funds, of which not less than one million
five hundred thousand dollars is capital; or
(b)
Any alien insurer having less than six million dollars of capital and surplus
or substantially equivalent capital funds. By January 1, 1992, this requirement
shall be increased to twelve million five hundred thousand dollars. By January
1, 1993, this requirement shall be further increased to fifteen million
dollars.
Such
alien insurers must have in force in the United States an irrevocable trust ((account))
fund, in a qualified United States financial institution, on behalf of
United States policyholders of not less than ((two)) five million
((five)) four hundred thousand dollars and consisting of cash,
securities, letters of credit, or of investments of substantially the same
character and quality as those which are eligible investments for the capital
and statutory reserves of admitted insurers authorized to write like kinds of
insurance in this state.
There
must be on file with the commissioner a copy of the trust, certified by the
trustee, evidencing a subsisting trust fund deposit having an expiration
date which at no time shall be less than five years after the date of creation
of the trust. Such trust fund shall be included in the calculation of the
insurer's capital and surplus or its equivalents; or
(c)
Any group including incorporated and individual insurers maintaining a trust
fund of less than fifty million dollars as security to the full amount thereof
for all policyholders in the United States of each member of the group, and
such trust shall likewise comply with the terms and conditions established in
(b) of this subsection for an alien insurer; or
(d)
Any insurance exchange created by the laws of an individual state, maintaining
capital and surplus, or substantially equivalent capital funds of less than
fifty million 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 six million 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 (a) of this subsection.
(2)
The commissioner may, by rule:
(a)
Increase the financial requirements under subsection (1) of this section by not
more than one million dollars in any twelve-month period, but in no case may
the requirements exceed fifteen million dollars; or
(b)
Prescribe the terms under which the foregoing financial requirements may be waived
in circumstances where insurance cannot be otherwise procured on risks located
in this state.
(3)
For any violation of this section the surplus line broker may be fined not less
than one hundred dollars or more than five thousand dollars, and in addition to
or in lieu thereof the surplus line broker's license may be revoked, suspended,
or nonrenewed.
NEW SECTION. Sec. 2. This
act takes effect June 1, 1998.
