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2007 SESSION
Be it enacted by the General Assembly of Virginia:
1. That §§ 38.2-800, 38.2-4811, and 38.2-4812 of the Code of Virginia are amended and reenacted as follows:
§ 38.2-800. Definition.
For the purposes of this article, "insurer" includes
health services plans, health maintenance organizations, legal services plans, and
dental or optometric services plans, and unlicensed insurers approved by
the Commission to issue surplus lines coverage as respectively provided for
in Chapters 42, 43, 44 and, 45, and 48 of this title.
§ 38.2-4811. Surplus lines coverage to be placed only with unlicensed insurers approved by Commission.
A. No surplus lines broker shall procure a policy of insurance with any insurer not licensed to transact insurance business in this Commonwealth, unless such unlicensed insurer has prior approval of the Commission to issue surplus lines insurance.
B. Any unlicensed insurer wishing to be approved by the Commission to issue surplus lines coverage may receive such approval upon providing:
1. Satisfactory evidence of good repute and financial integrity; and
2. Proof that it qualifies under a, b or c of this subdivision:
a. Has The unlicensed insurer has capital and
surplus or its equivalent under the laws of its domiciliary jurisdiction, which
equal the greater of (i) the minimum capital and surplus requirements under §§
38.2-1028, 38.2-1029, 38.2-1030 or § 38.2-1031, or (ii) $15 million except
that nonadmitted insurers already qualified under this chapter shall have $5
million up to and including June 30, 1996; $10 million after June 30, 1996;
$12.5 million after June 30, 1997; and $15 million after June 30, 1998.
After June 30, 1995, the (1) The capital and surplus
requirements of this subdivision 2 a of this subsection may be
satisfied by an unlicensed insurer possessing less than the aforementioned
capital and surplus upon an affirmative finding of acceptability by the
Commission. The finding shall be based upon such factors as quality of management,
capital and surplus of any parent company, company underwriting profit and
investment income trends, market availability, and company record and
reputation within the industry. In no event, however, shall the
Commission make an affirmative finding of acceptability when the surplus lines
insurer's capital and surplus is less than $4.5 million.
In addition, an (2) An unlicensed alien insurer
may qualify under this paragraph if also shall provide evidence that
it maintains in the United States an irrevocable trust fund in a qualified U.S. financial institution on behalf of U.S. policyholders of not less than $2.5 million.
This trust fund at all times shall be valued at not less than $2.5 million
and shall consist of cash, securities, letters of credit, or investments of
substantially the same character and quality as those which that
are eligible investments for the capital and statutory reserves of admitted
insurers authorized to write like classes of insurance in this Commonwealth.
Such trust fund, which shall be included in any calculation of capital and
surplus or its equivalent, shall have an expiration date which at no time shall
be less than five years; and
b. In the case of any Lloyd's or other similar group,
including incorporated and individual unincorporated underwriters, the
incorporated members of which shall not be engaged in any business other than
underwriting as a member of the group and shall be subject to the same level of
solvency regulation and control by the group's domiciliary regulator as are the
unincorporated members, the Lloyd's or other similar group maintains a
trust fund of not less than fifty $50 million dollars as
security to the full amount thereof for all policyholders and creditors in the
United States of each member of the group, and such trust shall likewise comply
with the terms and conditions established in subdivision 2 a (2) of
this subsection for alien insurers; and
c. In the case of an "insurance exchange" created by
the laws of individual states, the insurance exchange maintains capital
and surplus, or the substantial equivalent of capital and surplus, of not less
than $50 million in the aggregate. For insurance exchanges which that
maintain funds for the protection of all insurance exchange policyholders, each
individual syndicate shall maintain minimum capital and surplus, or the
substantial equivalent of capital and surplus, of not less than $3 million. If
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 subdivision 2 a of this
subsection.
C. Any such unlicensed insurer shall cause to be provided to
the Commission, not later than six months after the close of the
period reported upon March 1 or the later date established by the
insurer's state of domicile or entry, a copy of its current annual
statement certified by the insurer. Such later date established by the
insurer’s state of domicile or entry shall not be later than August 31. The
report shall be:
1. Filed with and approved by the regulatory authority in the domicile of the nonadmitted insurer; or
2. Certified by an accounting or auditing firm licensed in the jurisdiction of the insurer's domicile.
In the case of an insurance exchange, such report may be an aggregate combined statement of all underwriting syndicates operating during the period reported upon.
The Commission, at its discretion, may extend the period for filing an annual statement by a maximum of two months.
D. If at any time the Commission has reason to believe that an
eligible surplus lines insurer (i) is in unsound financial condition, (ii) is
no longer eligible under subdivision B 2 of subsection B above,
(iii) has willfully violated the laws of this Commonwealth, or (iv) does not
make reasonably prompt payment of just losses and claims in this Commonwealth
or elsewhere, the Commission may declare it ineligible. The Commission shall
promptly mail notice of all such declarations to each surplus lines licensee.
§ 38.2-4812. Surplus lines insurers subject to Unlicensed Insurers Process.
Every insurer issuing surplus lines coverage under this
chapter shall be subject to the provisions of §§ 38.2-801 through 38.2-807
Article 1 (§ 38.2-800 et seq.) of Chapter 8 of this title.