Section 27-10-26

Eligibility of insurers for placement of surplus line insurance.

(a) A surplus line broker shall not knowingly place surplus line insurance with an insurer that is unsound financially, or that is ineligible under this section. The broker shall ascertain the financial condition of the unauthorized insurer before placing insurance therewith.

(b) The broker shall not so insure with any of the following:

(1) With any insurer which is not an authorized insurer in at least one state of the United States for the kind of insurance involved, and with capital or surplus, or both, amounting to at least five million dollars ($5,000,000); or guaranteed trust fund amounting to at least five million dollars ($5,000,000).

(2) With an alien insurer not authorized to transact insurance in at least one state of the United States, unless the insurer shall have established an effective trust fund of at least two million five hundred thousand dollars ($2,500,000) within the United States administered by a recognized financial institution and held for the benefit of all its policyholders or policyholders and creditors in the United States, and with capital or surplus, or both, amounting to at least fifteen million dollars ($15,000,000).

(3) With a foreign or alien insurer which has transacted insurance as an authorized insurer in its state or country of domicile for less than five years, unless it is a wholly owned subsidiary of an insurer authorized to transact insurance in this state.

(4) With an insurer the voting control of which is held in whole or substantial part by any government or governmental agency.

(5) In any insurer made ineligible as a surplus line insurer by order of the commissioner received by or known to the broker. The commissioner may issue an order of ineligibility if he or she finds that the insurer:

a. Does not meet the financial requirements of this section;

b. Has without just cause refused to pay valid claims arising under its contracts in this state or has otherwise conducted its affairs in a manner as to result in injury or loss to the insuring public of this state; or

c. Has conducted its affairs in a manner as to result in the avoidance of payment of tax as required by Sections 27-10-31 and 27-10-35.

(Acts 1963, No. 521, p. 1112, §13; Acts 1971, No. 407, p. 707, §201; Acts 1975, No. 219, p. 746, §1; Acts 1994, 1st Ex. Sess., No. 94-790, p. 92, §2.)