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Surplus Lines > Surplus Lines - WA Statutes & Regulations > Flashcards

Surplus Lines - WA Statutes & Regulations Flashcards

1
Q

Insurance Definition

A

Contract whereby one undertakes to indemnify another or pay a speciifed amount upon determinable contingencies.

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2
Q

Insurance Transaction Defined

A

1) Solicitation
2) Negotiations preliminary to execution
3) Execution of an Insuraance Contract
4) Transaction of matters subsequent to execution of the contract & arising out of it
5) Insuring

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3
Q

Person Defined

A

Any individual, company, insurer, association, organization, reciprocal or interinsurance exchange, partnership, business trust or corporation

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4
Q

Immunity from Civil Liability

A

1) Any person who provides information required by Commissioner is immune from liability in civil action arising from providing the information unliss malice, fraud or bad faith shown.
2) NAIC for publication of information
3) Any licensee or licensee assoc. providing information regarding unauthorized insurers.

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5
Q

Domestic Insurer

A

Insurer formed under laws of WA state

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6
Q

Foreign Insurer

A

Insurer formed under US laws or US state, other than WA, or DC or Puerto Rico

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7
Q

Alien Insurer

A

Insurer formed under laws of country other than US

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8
Q

Certificate of Authority

A

Authorization by the insurance commissioner to transact business in state.

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9
Q

What must Certificate of Authority include?

A

1) Name of Insurer
2) Location of principal office
3) Name & location of attorney in fact id reciprocal insurer
4) Kinds of business authorized

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10
Q

Capital Funds

A

Excess of the assets of an insurer over its liabilities. Capital stock is not considerd a liability.

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11
Q

Foreign Insurer Deposit

A

Asset deposit w/commissioner in same amount required of a domesic insurer or certificae of proof of equivalent deposit in another state.

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12
Q

Alien Insurer Asset Requirement

A

Assets held in US equal to liabilites of US transactions.

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13
Q

Alien Insurer Deposit

A

1) Trust amount for not less than reserves
plus:
1) assets equal to equivalent domestic insurer
or
2) $200,000

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14
Q

Jurisdiction of State Courts

A

Alien & Foreign insures subject to WA state law if do business in WA

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15
Q

Service of Suit - Response Time

A

40 days from date of service on commissioner

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16
Q

Venue of actions against insurer

A

County in which cause of action arose

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17
Q

Affiliate (Insured)

A

Any entity that contols or is controlled by or under common control with the insured.

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18
Q

Control with respect to an insured is defined as:

A

1) Owns, controls, has voting power for 25% or more of any voting stock, OR
2) Contols the election of the majority of directors or trustees

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19
Q

Requirements to Qualify as Exempt Commerical Purchaser

A

1) Retains qualified risk manager to negotiate insurance
2) Paid aggregate premium > $100,000 for P&C in prior 12 months
3) One of the following:
i. net worth > 20M
ii. annual revenues > 50M or nonprofit expenditure > 30M
iii. FT Employees > 500 or >1000 in affiliated group
iv. municipality with population > 50,000

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20
Q

Are policies issued by an unauthorized insurer in violation of code enforceable?

A

Only with respect to the insurer. Otherwise voidable.

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21
Q

To what lines of commerical insurance does “Exempt Commercial Purchaser” apply?

A

P&C pertaining to a business, profession, occupation, nonprofit organization, public entity.

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22
Q

Definition of Insured’s Home State

A

1) State in which insured’s principal place of business is located
2) State in which individual insured resides
3) State to which greatest % of insured’s taxable premium for insurance contract is allocated - if 100% of insured risk is outside WA

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23
Q

Determination of “Home State” when affiliated group are named insureds on single policy.

A

Home State of affiliated group with highest % of premium on policy

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24
Q

State of Principal Place of Business is determined by

A

1) Insured HQ Location

2) Location where highest level officers direct, control & coordinate business activities of insured

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25
Q

Qualified Risk Manager criteria:

A

1) Employee or 3rd party consultant of commerical policyholder
2) Provides services in loss prevention, reduction or risk/insurance coverage analysis and purchase
3) BA or higher in discipline related to business & risk mgt + 3 Years experience in risk mgt/comm’l lines ins or insurance designation - CPCU, ARM - RIMS
OR
3) 7 Years experience + insurance designation
OR
3) 10 years experience
OR
3) Graduate degree

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26
Q

Personal Liability

A

Applies if RCW not followed in good faith

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27
Q

Penalties for violating statute re unauth insurers

A

$25,000 (each rule) & license suspension/revocation

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28
Q

Knowing Violation of RCW 48.15 is what kind of crime?

A

Class B Felony

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29
Q

Bond Requirements

A

1) $25,000 - State of WA - Taxes

2) $2,500 or 5% of premiums placed in preceding calendar year/ $100,000 max - People of WA - Premium Collection

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30
Q

Conditions of Surplus Lines Eligibility

A

1) Licensed SL Broker
2) Diligent Effort to procure from among a majority of authorized insurers
3) Not for purpose of lower premium or other competitive advantage

31
Q

Diligent Effort Certification

A

1) Unable to procure from among a majority of authorized insurers
2) No competitive advantage
3) True & Correct under eanlty of losing SL license
4) Filed within 60 days of procurement

32
Q

Is a JUA considered an authorized insurer for SL purposes?

A

No

33
Q

Exemption from Diligent Effort Requirement

A

If Exempt Commerical Purchaser requests unauthorized insurer in writing to SL broker

34
Q

Penalty for failure to have or maintain bonds.

A

License revocation

35
Q

Deadline to show proof of bond

A

3 days

36
Q

Penalites for Late License Renewal

A

1) 30 days - 50% of renewal fee
2) 30-60 days - 100% or renewal fee
3) 60 days -12 months - 200% of renewal fee & application for reinstatement

37
Q

Solvency - Foreign Insurer

A

1) Lines authorized in its domiciliary jurisdiction

2) Capital or surplus = greater of minimum required to be domiciled in WA or $15M.

38
Q

Solvency - Alien Insurer

A

Must be on NAIC quarterly list of alien insurers

39
Q

Penalty for using insurer that doesn’t meet solvency requirements.

A

Min $100/ Max $5,000

License suspension or revocation

40
Q

SL Records Retention

A

5 Years

41
Q

Brokers Annual / Verified Statement Due

A

March 1

42
Q

Brokers Annual / Verified Statement Includes

A

Agg net premiums

43
Q

SL Premium Tax Due Date

A

March 1 for preceding calendar year based on premium shown in brokers annual statement.

44
Q

SL Premium Tax Rate

A

1) Insured Home State - 2% of total premium

2) Multi State - 2% of portion of premium allocated to exposure in WA

45
Q

Who must be designated for service of suit against SL (unauthorized) insurer on SL policy?

A

WA State Commissioner of Insurance

46
Q

Reponse period after service of suit.

A

40 days

47
Q

Exemptions from SL Requirements (LOB)

A

1) Reinsurance
2) Ocean Marine & Foreign Trade
3) Insurance on subjects located wholly outside WA
4) Vehicles & aircraft principally garaged outside WA
5) RR engaged in interstate commerce & their property used in the operations
6) Aircraft owned by aircraft manufacturers or operated in scheduled interstate flight incl cargo & liability (except WC & EL)

48
Q

Are Records Retention Requirements the same on Exempt SL business?

A

Yes / 5 years

49
Q

Qualifies US Financial Institution Defined

A

1) Organized or licensed under US laws
2) Regulated, supervised & examined by US /State authorities
3) Approved by commissioner or NAIC
4) Not affiliated with insurance co. assuming risk

50
Q

Premium Tax Due Date

A

March 1, Late March 31

51
Q

Late Penalty on Tax Statement Filing & Payments (Unauthorized Insurers/ Not SL Broker)

A

5% of tax amount - up to 45 days
10% of tax amount - 45-60 days
20% of tax amount - over 60 days

52
Q

Interest on Late Tax Payment (Unauthorized Insurers/ Not SL Broker)

A

Max legal rate permitted stating 61 days after due date

53
Q

Premium - Definition

A

All sums chaarges, received or deposited as consideration for an insurance contract - includes any membership, policy, survey, etc. fees chared by insurer

54
Q

Do additional charges have to be included on policy premium?

A

Yes, except fee paid to producer by insured.

55
Q

Maximum Binder Length

A

90 dyas or until policy issued

56
Q

Financial Condition Documentation (Not on NAIC Quarterly Report)

A

Substantiate & retain record thereof for 5 years

57
Q

Do policies purchased by Exempt Commercial Purchasers have to be reported to the commissioner?

A

Yes, within 60 days of procurement (same as SL filing with taxes)

58
Q

Requirements to request Waiver of Financial Requirements by Commissioner

A

1) Detailed explanation of why
2) Most recent annual statement of insurer
3) Summary of insurers experience in LOB
4) Signed Insured acknowledgment:
i. informed unauthorized insurer
ii. financial requirements must be waived to enable coverage
iii. no Guaranty Assoc protection

59
Q

Minimum Capital & Surplus for Waiver of Financial Requirements

A

$4.5M

60
Q

If referring producer is not agent of insured, who must reciev premiums/notices, etc.?

A

Insured

61
Q

Minimum Cancellation Notice Provisions on SL Policies

A

10 days non pay

20 days any other reason , except for fire insurance

62
Q

“Complete COpy of Filing for SL Broker records includes:

A

1) “Registered” certification form

2) Copy of coverages

63
Q

What types of endorsements must be filed with Association?

A

1) Premium
2) Policy Number
3) Change in security

64
Q

To whom must all surplus lines policies be submitted for review in WA?

A

WA SL Association

65
Q

FIling Deadline for Registration of a SL policy

A

60 days from inception

66
Q

State SL Tax & Stamping Fee tax is computed on?

A

Sum of all Premium + Fees

67
Q

SL Broker Duties regarding financial condition of unauthorized insurer (3)

A
  1. Ascertain the financial condition of insurer (annual fiancial statement or NAIC Quaterly)
  2. Mainstain written evidence thereof before placing insurance
  3. Not knowingly place with financially unsound carrier
68
Q

US Carrier Capital & Surplus Requirement

A

$15M

69
Q

Alien Insurer Financial Requirements

A

$15M Capital & Surplus + $5.4M US Trust

70
Q

Groups of Insurers (incl Lloyds) Financial Requirements

A

$50M US Trust

71
Q

US Exchanges Financial Requirements

A

$50M Capital & Surplus aggregate/$6M Each Individual Syndicate

72
Q

How many bonds must SL Broker maintain?

A

2

73
Q

What bonds must SL Broker have?

A

1) To people of WA for monies collected - $2500 or 5% of premium for 12 months. Max $100,000
2) To state of WA for compliance & taxes

Surplus Lines (5 decks)

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