HOUSE BILL REPORT
SSB 6251
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent. |
As Passed House:
February 28, 2010
Title: An act relating to nonresident surplus line brokers and insurance producers.
Brief Description: Concerning nonresident surplus line brokers and insurance producers.
Sponsors: Senate Committee on Financial Institutions, Housing & Insurance (originally sponsored by Senator Benton; by request of Insurance Commissioner).
Brief History:
Committee Activity:
Financial Institutions & Insurance: 2/23/10 [DP].
Floor Activity:
Passed House: 2/28/10, 96-0.
Brief Summary of Substitute Bill |
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HOUSE COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE |
Majority Report: Do pass. Signed by 11 members: Representatives Kirby, Chair; Kelley, Vice Chair; Bailey, Ranking Minority Member; Parker, Assistant Ranking Minority Member; Hurst, McCoy, Nelson, Roach, Rodne, Santos and Simpson.
Staff: Jon Hedegard (786-7127).
Background:
The Insurance Commissioner (Commissioner) licenses and regulates insurance producers doing business in this state. An insurance producer is a person required to be licensed under the laws of the state to sell, solicit, or negotiate insurance.
Licensing of Insurance Producers.
Insurance producers must meet a number of licensing requirements, including:
background checks, including fingerprints;
pre-license education and testing;
continuing education;
certain bond requirements for placing business with a company that has not appointed the producer; and
fees.
Surplus Lines and Licensing of Surplus Lines Brokers.
Under insurance statutes, if coverage cannot be purchased from an authorized insurer, the coverage may be purchased from an unauthorized insurer only if:
the purchaser procures the insurance through a licensed surplus lines broker;
a diligent effort is made to find the coverage from authorized insurers; and
the purpose for using an unauthorized insurer is something other than securing a lower premium rate than would be accepted by any authorized insurer.
Licensing requirements regarding surplus lines brokers include:
background checks, including fingerprints;
minimum bonding amounts of $20,000 in the name of the state to ensure compliance with the law and payment of taxes, and $100,000 in the name of the state or a named insured for liability;
record-keeping; and
reporting.
In 2007, 2008, and 2009 legislation was passed that altered the regulatory framework for insurance producers and surplus lines brokers. These bills were based largely on the National Association of Insurance Commissioners' Producer Licensing Model Act. Among the many modifications were changes to the categories of licenses, background checks, fees, and commissions. All of these bills took effect on July 1, 2009.
Summary of Bill:
The Commissioner may license a qualified nonresident as a surplus lines broker if the nonresident lives in a state that offers reciprocal licensing to a Washington resident. The license is for the same duration and costs the same fees as a resident's license. The nonresident surplus lines broker is not required to submit fingerprints as a part of a background check and is not required to meet the same financial responsibility requirements.
The Commissioner must waive certain license requirements for nonresident insurance producers if the applicant has a valid license from their home state and that state offers reciprocal treatment for insurance producers from this state. The nonresident insurance producer is not required to submit fingerprints as a part of a background check and is not required to meet the same financial responsibility requirements.
Entities acting as nonresident title agents must designate an officer to be responsible for compliance with the state's insurance laws and rules.
Standards for service of process are created for legal actions against a nonresident producer or surplus lines broker who may be served by service of process on the Commissioner. The service of process must be sent or made available in a secure manner that provides a verifiable receipt. The Commissioner may adopt rules to implement the service of process provisions.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect on July 26, 2010.
Staff Summary of Public Testimony:
(In support) None.
(Opposed) None.
Persons Testifying: None.
Persons Signed In To Testify But Not Testifying: None.