Industry Issues | Surplus Lines Reform

Georgia Senate Passes DSLI legislation, SB381

Georgia - UPDATE II

DSLI legislation, SB 381, was introduced in the Georgia General Assembly and was favorably reported out of the Senate Committee on Insurance and Labor. The bill sets forth the criteria by which a nonadmitted insurer domiciled in the state may be deemed a domestic surplus lines insurer. As defined, a "domestic surplus lines insurer" means a nonadmitted insurer that is domiciled in this state with which a surplus lines broker may place surplus lines insurance.

To address a concern raised by the Department of Insurance, the last provision in the act was amended to remove reference to "policy cancellation and nonrenewal" laws.

As amended,
70   (g) Policies issued by a domestic surplus lines insurer shall be exempt from all statutory
71   requirements relating to insurance rating plans, policy forms, premiums charged to
72   insureds, and other statutory requirements in the same manner and to the same extent as a
73   nonadmitted insurer domiciled in another state."

On February 20, SB 381 passed the Senate, and is now referred to the House.

Georgia Enacts SB 385, Surplus Lines Tax

On May 2, 2012, Georgia Governor Nathan Deal signed Senate Bill 385 , a bill that amends Title 33 of the Official Code of Georgia Annotated, relating to insurance, and, among other things, provides for surplus lines premium taxes and the rate and manner of collection to include state participation in certain agreements with other states. The law is effective July 1, 2012.

For a surplus lines multi-state policy, Georgia currently requires payment of taxes on allocable premiums at the respective states' tax rates. GA SB 385 amends this to tax at the other state’s rates only if the state participates in a tax sharing arrangement with those other states.

The bill provides that if Georgia participates in a tax-sharing cooperative agreement, etc. with other states then there is levied a tax for any such insurance covering risks or exposures located or to be performed both in and out of this state. The sum payable shall be computed based on an amount equal to 4 percent of that portion of the gross premiums allocated to Georgia plus an amount equal to the portion of premiums allocated to other states or territories on the basis of the tax rates and fees applicable to properties, risks, or exposures located or to be performed outside the state. If Georgia does not participate in a cooperative agreement, etc. with other states, then there is to be levied a tax collected from every such insured in this state insuring property or interests both in and outside of this state, at the rate of 4 percent of the gross premium paid for any such insurance.

Georgia Issues Surplus Lines Broker Survey

On the last Committee teleconference call on May 25, PCI staff and members discussed an Iowa Department notice of targeted market conduct examination of surplus lines insurers. While there is no update on that matter to report, I do raise attention to this latest state survey issued by the Georgia Office of Insurance and Safety Fire Commissioner.

The attached bulletin states that as part of the commissioner's ongoing review of the implications of the NRRA of 2010, he is issuing this informational request to obtain information respecting premium written with nonadmitted/unauthorized insurers. This request is directed to licensed resident and non-resident surplus lines brokers; it is sent to PCI member insurance companies for informational purpose only.

TO: All Resident and Non-resident Georgia Licensed Surplus Line Brokers

FROM: Georgia Commissioner of Insurance Ralph T. Hudgens

DATE: May 26, 2011

RE: Pursuant to Directive No. 11-EX-6 and O.C.G.A. §§ 33-2-12 and 33-5-28 , the Commissioner of Insurance requires the following information:

The Non-Admitted and Reinsurance Reform Act of 2010 defines the "home state" of the insured as follows:
A. In General - except as provided in subparagraph(B):
i. The State in which the insured maintains its principal place of business or, in the case of an individual, the individual's principal residence; or
ii. If 100 percent of the insured risk is located out of the State referred to in clause (i), the State to which the greatest percentage of the insured's taxable premium for that insurance contract is allocated.
B. Affiliated Groups - If more than one insured from an affiliated group are named insureds on a single non-admitted insurance contract, the term "home state" means the home State, as determined pursuant to subparagraph (A), of the member of the affiliated group that has the largest percentage of premium attributed to it under such insurance contract.
Your response is required by June 10, 2011.

Using the above definition of home state, please answer the following question:

What was the total amount of premiums you placed in 2010 for insureds whose home state is Georgia?

INSTRUCTIONS: please enter an amount as a rounded integer, like 123456 instead of $123,456.00
ATTENTION: You may revise your answers until June 10, 2011 at which time this survey will be closed

*** Next PCI teleconference update call on NRRA state implementation will take place on Wednesday, June 29, 2011 @ 1pm CDT ***