20-407. Surplus lines; brokers
A. Any portion or all of an insurance coverage designated in this article as
"surplus lines" may be procured from unauthorized insurers subject to the following
conditions:
1. The insurance is procured through a surplus lines broker licensed in this state,
referred to in this article as the "broker".
2. The insurance coverage is a recognized surplus line pursuant to section 20-409
or the insurance coverage is not procurable, after diligent effort has been made to
procure coverage or the coverage has been procured to the full extent the insurers are
willing to insure, and the placing of insurance with an unauthorized insurer is not for
the purpose of securing advantages either as to premium rate or terms of the insurance
contract.
B. Subsection A, paragraph 2 of this section does not apply to the sale of
insurance coverage to an industrial insured as defined in section 20-401.07. At the
inception of each new policy and at the time of each renewal, but not less than annually
during the term of the policy, each industrial insured that purchases a policy as
provided in this section shall certify to the broker on a form prescribed by the director
that the insured meets the definition of industrial insured prescribed in section
20-401.07. The broker shall maintain the certification in the broker's files. The
insurance is surplus lines insurance and is subject to the applicable provisions of this
article that relate to surplus lines insurance.
C. Nothing in this section prohibits a resident or nonresident insurance producer
or managing general agent licensed in this state for property or casualty insurance from
obtaining surplus lines insurance for policyholders through a surplus lines broker if the
insurance producer or managing general agent uses a surplus lines broker licensed in this
state for the transaction of the insurance with the surplus lines insurer. The surplus
lines broker is responsible for compliance with the applicable provisions of this
article. The insurance producer or managing general agent may pay a fee or share a
commission with a surplus lines broker who procures the surplus coverage on behalf of the
insurance producer. For the purposes of this subsection, "transaction" means the acts
listed in section 20-106, subsection A.
D. For the transaction of surplus lines insurance, a surplus lines broker licensed
in this state shall not receive a fee, commission, brokerage or other valuable
consideration from any person who is not licensed in this state as any of the following:
1. An insurance producer pursuant to chapter 2, article 3 of this title.
2. A managing general agent pursuant to chapter 2, article 3.1 of this title.
3. A surplus lines broker pursuant to section 20-411, 20-411.01 or 20-411.02.
|