CERTIFICATION OF ENROLLMENT

SUBSTITUTE SENATE BILL 6251

Chapter 18, Laws of 2010

61st Legislature
2010 Regular Session



RESIDENT SURPLUS LINE BROKERS--LICENSING REQUIREMENTS



EFFECTIVE DATE: 07/26/10

Passed by the Senate February 16, 2010
  YEAS 46   NAYS 0

BRAD OWEN
________________________________________    
President of the Senate
Passed by the House February 28, 2010
  YEAS 96   NAYS 0

FRANK CHOPP
________________________________________    
Speaker of the House of Representatives


 
CERTIFICATE

I, Thomas Hoemann, Secretary of the Senate of the State of Washington, do hereby certify that the attached is SUBSTITUTE SENATE BILL 6251 as passed by the Senate and the House of Representatives on the dates hereon set forth.

THOMAS HOEMANN
________________________________________    
Secretary
Approved March 10, 2010, 2:40 p.m.








CHRISTINE GREGOIRE
________________________________________    
Governor of the State of Washington
 
FILED
March 10, 2010







Secretary of State
State of Washington


_____________________________________________ 

SUBSTITUTE SENATE BILL 6251
_____________________________________________

Passed Legislature - 2010 Regular Session
State of Washington61st Legislature2010 Regular Session

By Senate Financial Institutions, Housing & Insurance (originally sponsored by Senator Benton; by request of Insurance Commissioner)

READ FIRST TIME 01/22/10.   



     AN ACT Relating to nonresident surplus line brokers and insurance producers; amending RCW 48.15.070, 48.15.073, 48.17.173, and 48.17.250; adding a new section to chapter 48.02 RCW; and providing an effective date.

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

Sec. 1   RCW 48.15.070 and 2009 c 162 s 3 are each amended to read as follows:
     Any individual while a resident of this state, or any firm ((or any)), corporation, or other business entity that has in its employ a qualified individual who is a resident of this state and who is authorized to exercise the powers of the firm or corporation, deemed by the commissioner to be competent and trustworthy, and while maintaining an office at a designated location in this state, may be licensed as a surplus line broker in accordance with this section.
     (1) Application to the commissioner for the license ((shall)) must be made on forms furnished by the commissioner. As part of, or in connection with, this application, the applicant ((shall)) must furnish information concerning his or her identity, including fingerprints for submission to the Washington state patrol, the federal bureau of investigation, and any governmental agency or entity authorized to receive this information for a state and national criminal history background check; personal history; experience; business records; purposes; and other pertinent information, as the commissioner may reasonably require. If in the process of verifying fingerprints, business records, or other information, the commissioner's office incurs fees or charges from another governmental agency or from a business firm, the amount of the fees or charges ((shall)) must be paid to the commissioner's office by the applicant.
     (2) Every resident surplus line broker licensed under this chapter must maintain a bond in favor of the state of Washington in the penal sum of twenty thousand dollars, with authorized corporate sureties approved by the commissioner, conditioned that the licensee will conduct business under the license in accordance with the provisions of this chapter and that the licensee will promptly remit the taxes provided by RCW 48.15.120. The licensee ((shall)) must maintain such bond in force for as long as the license remains in effect.
     (3) Every resident surplus line broker licensed under this chapter must maintain in force while so licensed a bond in favor of the people of the state of Washington or a named insured such that the people of the state are covered by the bond, executed by an authorized corporate surety approved by the commissioner, in the amount of two thousand five hundred dollars, or five percent of the premiums from placement of coverage with surplus line insurers in the previous calendar year, whichever is greater, but not to exceed one hundred thousand dollars total aggregate liability. The bond may be continuous in form, and total aggregate liability on the bond may be limited to the required amount of the bond. The bond ((shall)) must be contingent on the accounting by the resident surplus line broker to any person requesting the broker to obtain insurance, for moneys or premiums collected in connection therewith. A bond issued in accordance with RCW 48.17.250 or with this subsection will satisfy the requirements of both RCW 48.17.250 and this subsection if the limit of liability is not less than the greater of the requirement of RCW 48.17.250 or the requirement of this subsection.
     (4) Authorized surplus line brokers of a business entity may meet the requirements of subsection (3) of this section with a bond in the name of the business entity, continuous in form, and in the amount set forth in subsection (3) of this section.
     (5) Surplus line brokers may meet the requirements of this section with a bond in the name of an association. The association must have been in existence for five years, have common membership, and have been formed for a purpose other than obtaining a bond. An individual surplus line broker remains responsible for assuring that a bond is in effect and is for the correct amount.
     (6) Members of an association may meet the requirements of subsection (3) of this section with a bond in the name of the association that is continuous in form and in the amounts set forth in subsection (3) of this section for each participating member.
     (7) The surety may cancel the bond and be released from further liability thereunder upon thirty days' written notice in advance to the principal. The cancellation does not affect any liability incurred or accrued under the bond before the termination of the thirty-day period.
     (8) Failure to have and maintain the bonds required under subsections (2) and (3) of this section is grounds for revocation of a license under RCW 48.15.140.
     (9) If a party injured under the terms of the bond required under subsection (3) of this section requests the surplus line broker to provide the name of the surety and the bond number, the surplus line broker must provide the information within three working days after receiving the request.
     (10) All records relating to the bonds required by this section must be kept available and open to the inspection of the commissioner at any business time.
     (11) A surplus line broker's license expires if not timely renewed. Surplus line broker licenses are valid for the time period established by the commissioner unless suspended or revoked at an earlier date.
     (12) Subject to the right of the commissioner to suspend, revoke, or refuse to renew any surplus line broker's license as provided in this title, the license may be renewed into another like period by filing with the commissioner by any means acceptable to the commissioner on or before the expiration date a request, by or on behalf of the licensee, for the renewal accompanied by payment of the renewal fee as specified in RCW 48.14.010.
     (13) If the request and fee for renewal of a surplus line broker's license are filed with the commissioner prior to expiration of the existing license, the licensee may continue to act under the license, unless sooner revoked or suspended, until the issuance of a renewal license, or until the expiration of fifteen days after the commissioner has refused to renew the license and has mailed notification of the refusal to the licensee. If the request and fee for the license are not received by the expiration date, the authority conferred by the license ends on the expiration date.
     (14) If the request for renewal of a surplus line broker's license and payment of the fee are not received by the commissioner prior to the expiration date, the applicant for renewal ((shall)) must pay to the commissioner in addition to the renewal fee, a surcharge as follows:
     (a) For the first thirty days or part thereof of delinquency, the surcharge is fifty percent of the renewal fee; and
     (b) For the next thirty days or part thereof of delinquency, the surcharge is one hundred percent of the renewal fee.
     (15) If the request for renewal of a surplus line broker's license and payment of the renewal fee are not received by the commissioner after sixty days but prior to twelve months after the expiration date, the application ((shall)) must be for reinstatement of the license and the applicant for reinstatement ((shall)) must pay to the commissioner the license fee and a surcharge of two hundred percent of the license fee.
     (16) Subsections (14) and (15) of this section do not exempt any person from any penalty provided by law for transacting business without a valid and subsisting license.
     (17) An individual surplus line broker who allows his or her license to lapse may, within twelve months after the expiration date, reinstate the same license without the necessity of passing a written examination.
     (18) For the purposes of this section, a "qualified individual" is a natural person who has met all the requirements that must be met by an individual surplus line broker.
     (19) The commissioner may require any documents reasonably necessary to verify the information contained in an application and may, from time to time, require any licensed surplus line broker to produce the information called for in an application for license.

Sec. 2   RCW 48.15.073 and 2009 c 162 s 4 are each amended to read as follows:
     (1) The commissioner may license as a surplus line broker a person who is otherwise qualified under this code but who is not a resident of this state, if by the laws of the state or province of his or her residence or domicile a similar privilege is extended to residents of this state.
     (2) A person under subsection (1) of this section must meet the same qualifications((, other than residency,)) as any other person seeking to be licensed as a surplus line broker under this chapter, except for residency, and is not required to submit fingerprints with the license application for a background check. A person granted a nonresident surplus line broker's license must ((have)) fulfill all the same responsibilities as any other surplus line broker, except for bonding, and is subject to the (a) commissioner's supervision as though resident in this state and (b) rules adopted under this chapter.
     (3) A nonresident surplus line broker's license((: (a) Expires and (b) is subject to)) expires if not timely renewed. A nonresident surplus line broker's license is valid for the time period established by the commissioner unless suspended or revoked at an earlier date. The request and fee for the renewal of the license is the same as the renewal and fee requirements for ((renewal as)) a resident surplus line broker licensed under RCW 48.15.070.
     (4) Each licensed nonresident surplus line broker ((shall appoint)), by application for and issuance of a license, is deemed to have appointed the commissioner as the surplus line broker's attorney to receive service of legal process issued against the surplus line broker in this state upon causes of action arising within this state. Service upon the commissioner as attorney constitutes effective legal service upon the surplus line broker.
     (a) The appointment of the commissioner as attorney is irrevocable, binds any successor in interest or to the assets or liabilities of the surplus line broker, and remains in effect for as long as there could be any cause of action against the surplus line broker arising out of the surplus line broker's insurance transactions in this state.
     (b) ((Duplicate copies of legal process against a surplus line broker shall be served upon the commissioner either by a person competent to serve a summons, or through registered mail. At the time of service the plaintiff shall pay to the commissioner ten dollars, taxable as costs in the action.
     (c) Upon receiving service, the commissioner shall immediately send one of the copies of the process, by registered mail with return receipt requested, to the defendant surplus line broker at the surplus line broker's last address of record with the commissioner.
     (d) The commissioner shall keep a record of the day and hour of service upon the commissioner of all legal process. Proceedings may not be had against the defendant surplus line broker and the defendant is not required to appear, plead, or answer until the expiration of forty days after the date of service upon the commissioner.
)) Service of legal process must be accomplished and processed in the manner prescribed in section 5 of this act.

Sec. 3   RCW 48.17.173 and 2009 c 162 s 20 are each amended to read as follows:
     (1) Unless denied licensure under RCW 48.17.530, a nonresident person ((shall)) must receive a nonresident producer license for the line or lines of authority under RCW 48.17.170 which is substantially equivalent to the line or lines of authority granted to the nonresident person in the person's home state if:
     (a) The person is currently licensed as a resident and in good standing in the person's home state;
     (b) The person has submitted the proper request for licensure and has paid the fees required by RCW 48.14.010;
     (c) The person has submitted or transmitted to the commissioner a completed uniform application;
     (d) The person's home state awards nonresident producer licenses to residents of this state on the same basis; and
     (e) A business entity, it has designated an individual licensed insurance producer responsible for the business entity's compliance with the insurance laws and rules of this state.
     (2) An individual, as part of the request for licensure, ((shall)) must furnish information concerning the individual's identity((, including fingerprints)) for submission to the Washington state patrol, the federal bureau of investigation, and any governmental agency or entity authorized to receive this information for a state and national criminal history background check. If, in the process of verifying ((fingerprints,)) business records((,)) or other information, the commissioner's office incurs fees or charges from another governmental agency or from a business firm, the amount of the fees or charges ((shall)) must be paid to the commissioner's office by the applicant.
     (3) A nonresident business entity acting as a title insurance agent is required to obtain a title insurance agent license. Application ((shall)) must be made to the commissioner on the uniform business entity application, and the individual submitting the application ((shall)) must declare under penalty of refusal, suspension, or revocation of the license that the statements made in the application are true, correct, and complete to the best of the individual's knowledge and belief. Before approving the application, the commissioner must find that the business entity:
     (a) Has paid the fees set forth in RCW 48.14.010;
     (b) Maintains a lawfully established place of business in its home state and holds a corresponding license issued by the state of its principal place of business, and has complied with the laws of this state governing the admission of foreign corporations;
     (c) Is empowered to be a title agent under a members' agreement, if a limited liability company, or by its articles of incorporation;
     (d) Is appointed as an agent by one or more authorized title insurance companies; ((and))
     (e) Has complied with RCW 48.29.155 and 48.29.160; and
     (f) Has designated an individual officer of the title insurance agent to be responsible for the business entity's compliance with the insurance laws and rules of this state
.
     (4) ((The commissioner shall waive any license application requirements for a nonresident license applicant with a valid license from the applicant's home state, except the requirements imposed by this section, if the applicant's home state awards nonresident licenses to residents of this state on the same basis.)) If the nonresident insurance producer applicant (a) has a valid license from the applicant's home state and (b) the applicant's home state awards nonresident insurance producer licenses to residents of this state on the same basis, the commissioner must waive any license application requirements, except those imposed under this section.
     (5) A nonresident insurance producer's satisfaction of the nonresident insurance producer's home state's continuing education requirements for licensed insurance producers ((shall)) constitutes satisfaction of this state's continuing education requirements if the nonresident producer's home state recognizes the satisfaction of its continuing education requirements imposed upon producers from this state on the same basis.
     (6) ((The commissioner shall waive the requirement for providing fingerprints for submission to the Washington state patrol, the federal bureau of investigation, and any governmental agency or entity authorized to receive this information for a state and national criminal history background check, if the person possesses a valid insurance producer's or surplus line broker's license from the person's home state and the person's home state requires submission of information concerning a person's identity, including fingerprints for the licensure of its resident insurance producers or surplus line brokers, respectively.
     (7)
)) The commissioner may verify the nonresident insurance producer's licensing status through the producer database maintained by the NAIC, its affiliates, or subsidiaries.
     (((8))) (7) A nonresident insurance producer who moves from one state to another state or a resident producer who moves from this state to another state ((shall)) must file a change of address and provide certification from the new resident state within thirty days of the change of legal residence. No fee or license application is required.
     (((9))) (8) A person licensed as a limited line credit insurance or other type of limited lines insurance producer in the person's home state and who complies with the requirements of subsection (1) of this section ((shall)) must receive a nonresident limited lines insurance producer license, under subsection (1) of this section, granting the same scope of authority as granted under the license issued by the insurance producer's home state. For the purpose of this subsection, "limited lines insurance" is any authority granted by the home state which restricts the authority of the license to the lines set out in RCW 48.17.170(1) (g) or (h).
     (((10))) (9) Each licensed nonresident insurance producer or title insurance agent ((shall appoint)), by application for and issuance of a license, is deemed to have appointed the commissioner as the insurance producer's or title insurance agent's attorney to receive service of legal process issued against the insurance producer or title insurance agent in this state upon causes of action arising within this state. Service upon the commissioner as attorney ((shall)) constitutes effective legal service upon the insurance producer or title insurance agent.
     (a) The appointment ((shall be)) of the commissioner as attorney is irrevocable, binds any successor in interest or to the assets or liabilities of the insurance producer or title insurance agent, and remains in effect for as long as there could be any cause of action against the insurance producer or title insurance agent arising out of the insurance producer's or title insurance agent's insurance transactions in this state.
     (b) ((Duplicate copies of such legal process against such insurance producer or title insurance agent shall be served upon the commissioner either by a person competent to serve a summons, or through registered mail. At the time of such service the plaintiff shall pay to the commissioner ten dollars, taxable as costs in the action.
     (c) Upon receiving such service, the commissioner shall forthwith send one of the copies of the process, by registered mail with return receipt requested, to the defendant insurance producer or title insurance agent at the insurance producer's or title insurance agent's last address of record with the commissioner.
     (d) The commissioner shall keep a record of the day and hour of service upon the commissioner of all such legal process. No proceedings shall be had against the defendant insurance producer or title insurance agent, and the defendant shall not be required to appear, plead, or answer until the expiration of forty days after the date of service upon the commissioner.
     (11)
)) Service of legal process must be accomplished and processed in the manner prescribed in section 5 of this act.
     (10)
The commissioner may require any documents reasonably necessary to verify the information contained in an application and may, from time to time, require any licensed insurance producer or title insurance agent to produce the information called for in an application for license.

Sec. 4   RCW 48.17.250 and 2009 c 162 s 21 are each amended to read as follows:
     (1) Every resident insurance producer licensed under this chapter on or after July 1, 2009, who places insurance either directly or indirectly with an insurer with which the insurance producer is not appointed as an agent must maintain in force while so licensed a bond in favor of the people of the state of Washington or a named insured such that the people of Washington are covered by the bond, executed by an authorized corporate surety approved by the commissioner, in the amount of two thousand five hundred dollars, or five percent of the premiums brokered in the previous calendar year, whichever is greater, but not to exceed one hundred thousand dollars total aggregate liability. The bond may be continuous in form, and total aggregate liability on the bond may be limited to the required amount of the bond. The bond ((shall)) must be contingent on the accounting by the resident insurance producer to any person requesting the resident insurance producer to obtain insurance, for moneys or premiums collected in connection therewith.
     (2) Authorized insurance producers of a business entity may meet the requirements of this section with a bond in the name of the business entity, continuous in form, and in the amounts set forth in subsection (1) of this section. Insurance producers may meet the requirements of this section with a bond in the name of an association. The association must have been in existence for five years, have common membership, and have been formed for a purpose other than obtaining a bond. An individual insurance producer remains responsible for assuring that a bond is in effect and is for the correct amount.
     (3) The surety may cancel the bond and be released from further liability thereunder upon thirty days' written notice in advance to the principal. The cancellation does not affect any liability incurred or accrued under the bond before the termination of the thirty-day period.
     (4) The insurance producer's license may be revoked if the insurance producer acts without a bond that is required under this section.
     (5) If a party injured under the terms of the bond requests the insurance producer to provide the name of the surety and the bond number, the insurance producer must provide the information within three working days after receiving the request.
     (6) Members of an association may meet the requirements of this section with a bond in the name of the association that is continuous in form and in the amounts set forth in subsection (1) of this section for each participating member.
     (7) All records relating to the bond required by this section ((shall)) must be kept available and open to the inspection of the commissioner at any business time.

NEW SECTION.  Sec. 5   A new section is added to chapter 48.02 RCW to read as follows:
     (1) Legal process against a person (a) for whom the commissioner has been appointed attorney for service of process, or (b) who may be served by service of process upon the commissioner, must be served upon the commissioner either by a person competent to serve a summons or by registered mail. At the time of service, the plaintiff must pay to the commissioner ten dollars, taxable as costs in the action.
     (2) As soon as practicable, the commissioner must send or make available a copy of the process to the person on whose behalf he or she has been served by mail, electronic means, or other means reasonably calculated to give notice. The copy must be sent or made available in a manner that is secure and with a receipt that is verifiable.
     (3) The commissioner must keep a record of the day and hour of service upon him or her of all legal process.
     (4) Proceedings must not be had against the person, and the person must not be required to appear, plead, or answer until the expiration of forty days after the date of service upon the commissioner.
     (5) The commissioner may adopt rules to implement this section.

NEW SECTION.  Sec. 6   This act takes effect July 26, 2010.


         Passed by the Senate February 16, 2010.
         Passed by the House February 28, 2010.
         Approved by the Governor March 10, 2010.
         Filed in Office of Secretary of State March 10, 2010.