State Codes and Statutes

Statutes > Delaware > Title18 > C019

TITLE 18

Insurance Code

Insurance

CHAPTER 19. SURPLUS LINES

§ 1901. Short title.

This chapter constitutes and may be cited as the "surplus lines" law.

18 Del. C. 1953, § 1901; 56 Del. Laws, c. 380, § 1.;

§ 1902. Exemptions.

This surplus lines law shall not apply to life insurance, health insurance or reinsurance or to the following insurances when so placed by licensed general lines agents or brokers or surplus line brokers of this State:

(1) Wet marine and transportation insurance;

(2) Insurance on subjects located, resident or to be performed wholly outside this State or on vehicles or aircraft owned and principally garaged outside this State;

(3) Insurance on operations of railroads engaged in transportation in interstate commerce and their property used in such operations;

(4) Insurance of aircraft owned or operated by manufacturers of aircraft or of aircraft operated in commercial interstate flight or cargo of such aircraft or against liability, other than worker's compensation and employer's liability, arising out of the ownership, maintenance or use of such aircraft.

18 Del. C. 1953, § 1902; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1903. Definitions; "broker," "export."

(a) "Broker," as used in this chapter and unless context otherwise requires, means a surplus line broker duly licensed as such under this chapter.

(b) To "export" means to place in an unauthorized insurer under this surplus lines law insurance covering a subject of insurance resident, located or to be performed in Delaware.

18 Del. C. 1953, § 1903; 56 Del. Laws, c. 380, § 1.;

§ 1904. Conditions for export.

If certain insurance coverages cannot be procured from authorized insurers, such coverages, hereinafter designated "surplus lines," may be procured from unauthorized insurers, subject to the following conditions:

(1) The insurance must be procured through a licensed surplus line broker;

(2) The full amount of insurance required must not be procurable, after diligent effort has been made to do so, from among the insurers authorized to transact and actually writing that kind and class of insurance in this State, and the amount of insurance exported shall be only the excess over or other than the amount procurable from authorized insurers;

(3) The insurance must not be so exported for the purpose of securing advantages either as to:

a. A lower premium rate than would be accepted by an authorized insurer; or

b. Terms of the insurance contract.

18 Del. C. 1953, § 1904; 56 Del. Laws, c. 380, § 1.;

§ 1905. Broker's affidavit.

At the time of effecting any such surplus line insurance, the broker shall execute an affidavit, in form prescribed or accepted by the Commissioner, setting forth facts from which it can be determined whether such insurance was eligible for export under § 1904 of this title. The broker shall file this affidavit with the Commissioner within 30 days after the insurance was so effected.

18 Del. C. 1953, § 1905; 56 Del. Laws, c. 380, § 1.;

§ 1906. Open lines for export.

(a) The Commissioner may by order declare eligible for export, generally and without compliance with the provisions of §§ 1904(2), 1904(3) and 1905 of this title, any class or classes of insurance coverage or risk for which the Commissioner finds, after a hearing of which notice was given to each insurer authorized to transact such class or classes in this State, that there is not a reasonable or adequate market among authorized insurers either as to acceptance of the risk, contract terms, or premium or premium rate. Any such order shall continue in effect during the existence of the conditions upon which predicated, but subject to earlier termination by the Commissioner.

(b) The broker shall file with or as directed by the Commissioner a memorandum as to each such coverage placed by him/her in an unauthorized insurer, in such form and context as the Commissioner may reasonably require for the identification of the coverage and determination of the tax payable to the State relative thereto.

(c) The broker or a licensed Delaware agent of the authorized insurer or a general lines broker may also place with authorized insurers any insurance coverage made eligible for export generally under subsection (a) above, and without regard to rate or form filings which may otherwise be applicable as to the authorized insurer. As to coverages so placed in an authorized insurer, the premium tax thereon shall be reported and paid by the insurer as required generally under Chapter 7 of this title.

18 Del. C. 1953, § 1906; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1907. Eligible surplus line insurers.

(a) A broker shall not knowingly place surplus line insurance with an insurer that is unsound financially or that is ineligible under this section.

(b) The Commissioner shall from time to time publish a list of all surplus lines insurers deemed by him/her to be eligible currently, and shall mail a copy of such list to each broker at his/her office last of record with the Commissioner. This subsection shall not be deemed to require the Commissioner to determine the actual financial condition or claims practices of any unauthorized insurer; and the status of eligibility, if granted by the Commissioner, shall indicate only that the insurer appears to be sound financially and to have satisfactory claims practices, and that the Commissioner has no credible evidence to the contrary. While any such list is in effect the broker shall restrict to the insurers so listed all surplus line business placed by him/her.

(c) An insurance company eligible to write surplus lines insurance pursuant to subsection (b) of this section may maintain offices in this State subject to the provisions of this chapter and to such regulations as the Commissioner may prescribe from time to time.

18 Del. C. 1953, § 1907; 56 Del. Laws, c. 380, § 1; 57 Del. Laws, c. 351; 70 Del. Laws, c. 186, § 1.;

§ 1908. Evidence of the insurance; changes; penalty.

(a) Upon placing a surplus line coverage, the broker shall promptly issue and deliver to the insured evidence of the insurance consisting either of the policy as issued by the insurer or, if such policy is not then available, the surplus line broker's certificate. Such a certificate shall be executed by the broker and shall show the description and location of the subject of the insurance, coverage, conditions and term of the insurance, the premium and rate charged and taxes collected from the insured, and the name and address of the insured and insurer. If the direct risk is assumed by more than 1 insurer, the certificate shall state the name and address and proportion of the entire direct risk assumed by each such insurer.

(b) No broker shall issue any such certificate or any cover note, or purport to insure or represent that insurance will be or has been granted by any unauthorized insurer, unless he/she has prior written authority from the insurer for the insurance, or has received information from the insurer in the regular course of business that such insurance has been granted, or an insurance policy providing the insurance actually has been issued by the insurer and delivered to the insured.

(c) If after the issuance and delivery of any such certificate there is any change as to the identity of the insurers, or the proportion of the direct risk assumed by an insurer as stated in the broker's original certificate, or in any other material respect as to the insurance evidenced by the certificate, the broker shall promptly issue and deliver to the insured a substitute certificate accurately showing the current status of the coverage and the insurers responsible thereunder.

(d) If a policy issued by the insurer is not available upon placement of the insurance and the broker has issued and delivered his/her certificate as hereinabove provided, upon request therefor by the insured the broker shall as soon as reasonably possible procure from the insurer its policy evidencing such insurance and deliver such policy to the insured in replacement of the broker's certificate theretofore issued.

(e) Any surplus line broker, who knowingly or negligently issues a false certificate of insurance or who fails promptly to notify the insured of any material change with respect to such insurance by delivery to the insured of a substitute certificate as provided in subsection (c) of this section, shall, upon conviction, be subject to the penalty provided by § 106 of this title or to any greater applicable penalty otherwise provided by law.

18 Del. C. 1953, § 1908; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1909. Endorsement of contract.

Every insurance contract procured and delivered as a surplus line coverage pursuant to this law shall have stamped upon it, initialed by or bearing the name of the surplus line broker who procured it, the following:

"This insurance contract is issued pursuant to the Delaware Insurance Laws by an insurer neither licensed by nor under the jurisdiction of the Delaware Insurance Department."

18 Del. C. 1953, § 1909; 56 Del. Laws, c. 380, § 1.;

§ 1910. Surplus line insurance valid.

Insurance contracts procured as surplus line coverage from unauthorized insurers in accordance with this law shall be fully valid and enforceable as to all parties, and shall be given recognition in all matters and respects to the same effect as like contracts issued by authorized insurers.

18 Del. C. 1953, § 1910; 56 Del. Laws, c. 380, § 1.;

§ 1911. Liability of insurer.

(a) As to a surplus line risk which has been assumed by an unauthorized insurer pursuant to this surplus lines insurance law, and if the premium thereon has been received by the surplus line broker who placed such insurance, in all questions thereafter arising under the coverage as between the insurer and the insured the insurer shall be deemed to have received the premium due to it for such coverage, and the insurer shall be liable to the insured as to losses covered by such insurance and for unearned premiums which may become payable to the insured upon cancellation of such insurance, whether or not in fact the broker is indebted to the insurer with respect to such insurance or for any other cause.

(b) Each unauthorized insurer assuming a surplus line risk under this surplus lines insurance law shall be deemed thereby to have subjected itself to the terms of this section.

18 Del. C. 1953, § 1911; 56 Del. Laws, c. 380, § 1.;

§ 1912. Surplus line brokers; licensing.

(a) Any person, while licensed in this State as a resident or nonresident producer for general lines, which includes all lines of authority defined in Chapter 17 of this title except life insurance, variable annuity and title insurance, who is deemed by the Commissioner to be competent and trustworthy with respect to the handling of surplus lines may be licensed as a surplus lines broker.

(b) Application for the license shall be made to the Commissioner on forms as designated and furnished by the Commissioner.

(c) The license fee shall be as specified in § 701 (fee schedule) of this title.

(d) The license and licensee shall be subject to the applicable provisions of Chapter 17 (Agents, Brokers, Consultants, Adjusters, Appraisers and Limited Representatives) of this title.

18 Del. C. 1953, § 1912; 56 Del. Laws, c. 380, § 1; 73 Del. Laws, c. 69, § 1.;

§ 1913. Suspension, revocation of broker's license.

(a) Subject to § 1733 (termination, suspension of certificate of authority) of this title, the Commissioner may also suspend or revoke any surplus line broker's license:

(1) If the broker fails to file the annual statement or to remit the tax as required by §§ 1916 and 1917 of this title; or

(2) If the broker fails to maintain an office in this State, or to keep the records, or to allow the Commissioner to examine his/her records as required by this law, or if he/she removes his/her records from the State; or

(3) If the broker places a surplus line coverage in an insurer other than as authorized under § 1907 of this title.

(b) The procedures provided by Chapter 17 of this title for suspension or revocation of licenses shall apply to suspension or revocation of a surplus line broker's license.

(c) Upon suspending or revoking the broker's surplus line license the Commissioner shall also suspend or revoke all other licenses of or as to the same individual under this title.

18 Del. C. 1953, § 1913; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1914. Broker may compensate agents and brokers.

A licensed surplus line broker may accept and place surplus line business for any insurance agent or broker licensed in this State for the kind of insurance involved, and may compensate the agent or broker therefor.

18 Del. C. 1953, § 1914; 56 Del. Laws, c. 380, § 1.;

§ 1915. Records of broker.

(a) Each broker shall keep in his/her office in this State a full and true record of each surplus line coverage procured by him/her, including a copy of each daily report, if any, a copy of each certificate of insurance issued by him/her, and such of the following items as may be applicable:

(1) Amount of the insurance;

(2) Gross premium charged;

(3) Return premium paid, if any;

(4) Rate of premium charged upon the several items of property;

(5) Effective date of the contract and the terms thereof;

(6) Name and address of each insurer on the direct risk and the proportion of the entire risk assumed by such insurer if less than the entire risk;

(7) Name and address of the insured;

(8) Brief general description of the property or risk insured and where located or to be performed; and

(9) Other information as may be required by the Commissioner.

(b) The record shall be open to examination by the Commissioner at all times within 5 years after issuance of the coverage to which it relates.

18 Del. C. 1953, § 1915; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; 73 Del. Laws, c. 69, § 2.;

§ 1916. Annual statement of broker.

(a) Each broker shall on or before the 1st day of March of each year file with the Commissioner a statement verified by the broker of all surplus line insurance transacted by him/her during the preceding calendar year.

(b) The statement shall be on forms as prescribed and furnished by the Commissioner and shall show:

(1) Gross amount of each kind of insurance transacted;

(2) Aggregate gross premiums charged;

(3) Aggregate of returned premiums paid to insureds;

(4) Aggregate of net premiums; and

(5) Additional information as required by the Commissioner.

18 Del. C. 1953, § 1916; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1917. Tax on surplus lines.

(a) At or before the time specified in § 702 of this title for payment of premium tax and estimated payments, each broker shall remit to the State Treasurer through the Commissioner a tax on surplus line insurance subject to tax transacted by him/her with unauthorized insurers during the next preceding calendar year as shown by his/her annual statement filed with the Commissioner. The tax shall be computed on premiums received, exclusive of sums collected to cover federal and state taxes and examination fees, if any, and at the same rate as applies to premiums for like kinds of insurance written by authorized insurers under this title.

(b) If a surplus line policy covers risks or exposures only partially in this State, the tax so payable shall be computed upon the proportion of the premium which is properly allocable to the risks or exposures located in this State.

18 Del. C. 1953, § 1917; 56 Del. Laws, c. 380, § 1; 66 Del. Laws, c. 382, § 6; 70 Del. Laws, c. 186, § 1.;

§ 1918. Failure to file statement or remit tax; penalty.

If any broker fails to file his/her annual statement or fails to remit the tax provided by § 1917 of this title prior to the 1st day of April after the tax is due, and, if in the Commissioner's opinion such failure is without just cause, he/she shall be liable for a fine of $25 for each day of delinquency commencing with the 1st day of April. The tax may be collected by distraint, or the tax and fine may be recovered by an action instituted by the Commissioner in any court of competent jurisdiction. Any fine collected by the Commissioner shall be paid to the State Treasurer and credited to the General Fund.

18 Del. C. 1953, § 1918; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1919. Legal process against surplus line insurer.

(a) An unauthorized insurer shall be sued, upon any cause of action arising in the State under any contract issued by it as a surplus line contract pursuant to this law, in the Superior Court of the State.

(b) Service of legal process against the insurer may be made in any such action by service of 2 copies thereof upon the Commissioner and payment of the service of process fee specified in § 701 (fee schedule) of this title. The Commissioner shall forthwith mail a copy of the process served to the person designated by the insurer in the policy for the purpose by prepaid registered or certified mail with return receipt requested. If no such person is so designated in the policy, the Commissioner shall in like manner mail a copy of the process to the broker through whom such insurance was procured, or to the insurer at its principal place of business, addressed to the address of the broker or insurer, as the case may be, last of record with the Commissioner. Upon service of process upon the Commissioner and mailing of the same in accordance with this provision, the Court shall be deemed to have jurisdiction in personam of the insurer.

(c) An unauthorized insurer issuing such policy shall be deemed thereby to have authorized service of process against it in the manner and to the effect as provided in this section. Any such policy shall contain a provision stating the substance of this section and designating the person to whom the Commissioner shall mail process as provided in subsection (b) of this section.

18 Del. C. 1953, § 1919; 56 Del. Laws, c. 380, § 1.;

State Codes and Statutes

Statutes > Delaware > Title18 > C019

TITLE 18

Insurance Code

Insurance

CHAPTER 19. SURPLUS LINES

§ 1901. Short title.

This chapter constitutes and may be cited as the "surplus lines" law.

18 Del. C. 1953, § 1901; 56 Del. Laws, c. 380, § 1.;

§ 1902. Exemptions.

This surplus lines law shall not apply to life insurance, health insurance or reinsurance or to the following insurances when so placed by licensed general lines agents or brokers or surplus line brokers of this State:

(1) Wet marine and transportation insurance;

(2) Insurance on subjects located, resident or to be performed wholly outside this State or on vehicles or aircraft owned and principally garaged outside this State;

(3) Insurance on operations of railroads engaged in transportation in interstate commerce and their property used in such operations;

(4) Insurance of aircraft owned or operated by manufacturers of aircraft or of aircraft operated in commercial interstate flight or cargo of such aircraft or against liability, other than worker's compensation and employer's liability, arising out of the ownership, maintenance or use of such aircraft.

18 Del. C. 1953, § 1902; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1903. Definitions; "broker," "export."

(a) "Broker," as used in this chapter and unless context otherwise requires, means a surplus line broker duly licensed as such under this chapter.

(b) To "export" means to place in an unauthorized insurer under this surplus lines law insurance covering a subject of insurance resident, located or to be performed in Delaware.

18 Del. C. 1953, § 1903; 56 Del. Laws, c. 380, § 1.;

§ 1904. Conditions for export.

If certain insurance coverages cannot be procured from authorized insurers, such coverages, hereinafter designated "surplus lines," may be procured from unauthorized insurers, subject to the following conditions:

(1) The insurance must be procured through a licensed surplus line broker;

(2) The full amount of insurance required must not be procurable, after diligent effort has been made to do so, from among the insurers authorized to transact and actually writing that kind and class of insurance in this State, and the amount of insurance exported shall be only the excess over or other than the amount procurable from authorized insurers;

(3) The insurance must not be so exported for the purpose of securing advantages either as to:

a. A lower premium rate than would be accepted by an authorized insurer; or

b. Terms of the insurance contract.

18 Del. C. 1953, § 1904; 56 Del. Laws, c. 380, § 1.;

§ 1905. Broker's affidavit.

At the time of effecting any such surplus line insurance, the broker shall execute an affidavit, in form prescribed or accepted by the Commissioner, setting forth facts from which it can be determined whether such insurance was eligible for export under § 1904 of this title. The broker shall file this affidavit with the Commissioner within 30 days after the insurance was so effected.

18 Del. C. 1953, § 1905; 56 Del. Laws, c. 380, § 1.;

§ 1906. Open lines for export.

(a) The Commissioner may by order declare eligible for export, generally and without compliance with the provisions of §§ 1904(2), 1904(3) and 1905 of this title, any class or classes of insurance coverage or risk for which the Commissioner finds, after a hearing of which notice was given to each insurer authorized to transact such class or classes in this State, that there is not a reasonable or adequate market among authorized insurers either as to acceptance of the risk, contract terms, or premium or premium rate. Any such order shall continue in effect during the existence of the conditions upon which predicated, but subject to earlier termination by the Commissioner.

(b) The broker shall file with or as directed by the Commissioner a memorandum as to each such coverage placed by him/her in an unauthorized insurer, in such form and context as the Commissioner may reasonably require for the identification of the coverage and determination of the tax payable to the State relative thereto.

(c) The broker or a licensed Delaware agent of the authorized insurer or a general lines broker may also place with authorized insurers any insurance coverage made eligible for export generally under subsection (a) above, and without regard to rate or form filings which may otherwise be applicable as to the authorized insurer. As to coverages so placed in an authorized insurer, the premium tax thereon shall be reported and paid by the insurer as required generally under Chapter 7 of this title.

18 Del. C. 1953, § 1906; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1907. Eligible surplus line insurers.

(a) A broker shall not knowingly place surplus line insurance with an insurer that is unsound financially or that is ineligible under this section.

(b) The Commissioner shall from time to time publish a list of all surplus lines insurers deemed by him/her to be eligible currently, and shall mail a copy of such list to each broker at his/her office last of record with the Commissioner. This subsection shall not be deemed to require the Commissioner to determine the actual financial condition or claims practices of any unauthorized insurer; and the status of eligibility, if granted by the Commissioner, shall indicate only that the insurer appears to be sound financially and to have satisfactory claims practices, and that the Commissioner has no credible evidence to the contrary. While any such list is in effect the broker shall restrict to the insurers so listed all surplus line business placed by him/her.

(c) An insurance company eligible to write surplus lines insurance pursuant to subsection (b) of this section may maintain offices in this State subject to the provisions of this chapter and to such regulations as the Commissioner may prescribe from time to time.

18 Del. C. 1953, § 1907; 56 Del. Laws, c. 380, § 1; 57 Del. Laws, c. 351; 70 Del. Laws, c. 186, § 1.;

§ 1908. Evidence of the insurance; changes; penalty.

(a) Upon placing a surplus line coverage, the broker shall promptly issue and deliver to the insured evidence of the insurance consisting either of the policy as issued by the insurer or, if such policy is not then available, the surplus line broker's certificate. Such a certificate shall be executed by the broker and shall show the description and location of the subject of the insurance, coverage, conditions and term of the insurance, the premium and rate charged and taxes collected from the insured, and the name and address of the insured and insurer. If the direct risk is assumed by more than 1 insurer, the certificate shall state the name and address and proportion of the entire direct risk assumed by each such insurer.

(b) No broker shall issue any such certificate or any cover note, or purport to insure or represent that insurance will be or has been granted by any unauthorized insurer, unless he/she has prior written authority from the insurer for the insurance, or has received information from the insurer in the regular course of business that such insurance has been granted, or an insurance policy providing the insurance actually has been issued by the insurer and delivered to the insured.

(c) If after the issuance and delivery of any such certificate there is any change as to the identity of the insurers, or the proportion of the direct risk assumed by an insurer as stated in the broker's original certificate, or in any other material respect as to the insurance evidenced by the certificate, the broker shall promptly issue and deliver to the insured a substitute certificate accurately showing the current status of the coverage and the insurers responsible thereunder.

(d) If a policy issued by the insurer is not available upon placement of the insurance and the broker has issued and delivered his/her certificate as hereinabove provided, upon request therefor by the insured the broker shall as soon as reasonably possible procure from the insurer its policy evidencing such insurance and deliver such policy to the insured in replacement of the broker's certificate theretofore issued.

(e) Any surplus line broker, who knowingly or negligently issues a false certificate of insurance or who fails promptly to notify the insured of any material change with respect to such insurance by delivery to the insured of a substitute certificate as provided in subsection (c) of this section, shall, upon conviction, be subject to the penalty provided by § 106 of this title or to any greater applicable penalty otherwise provided by law.

18 Del. C. 1953, § 1908; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1909. Endorsement of contract.

Every insurance contract procured and delivered as a surplus line coverage pursuant to this law shall have stamped upon it, initialed by or bearing the name of the surplus line broker who procured it, the following:

"This insurance contract is issued pursuant to the Delaware Insurance Laws by an insurer neither licensed by nor under the jurisdiction of the Delaware Insurance Department."

18 Del. C. 1953, § 1909; 56 Del. Laws, c. 380, § 1.;

§ 1910. Surplus line insurance valid.

Insurance contracts procured as surplus line coverage from unauthorized insurers in accordance with this law shall be fully valid and enforceable as to all parties, and shall be given recognition in all matters and respects to the same effect as like contracts issued by authorized insurers.

18 Del. C. 1953, § 1910; 56 Del. Laws, c. 380, § 1.;

§ 1911. Liability of insurer.

(a) As to a surplus line risk which has been assumed by an unauthorized insurer pursuant to this surplus lines insurance law, and if the premium thereon has been received by the surplus line broker who placed such insurance, in all questions thereafter arising under the coverage as between the insurer and the insured the insurer shall be deemed to have received the premium due to it for such coverage, and the insurer shall be liable to the insured as to losses covered by such insurance and for unearned premiums which may become payable to the insured upon cancellation of such insurance, whether or not in fact the broker is indebted to the insurer with respect to such insurance or for any other cause.

(b) Each unauthorized insurer assuming a surplus line risk under this surplus lines insurance law shall be deemed thereby to have subjected itself to the terms of this section.

18 Del. C. 1953, § 1911; 56 Del. Laws, c. 380, § 1.;

§ 1912. Surplus line brokers; licensing.

(a) Any person, while licensed in this State as a resident or nonresident producer for general lines, which includes all lines of authority defined in Chapter 17 of this title except life insurance, variable annuity and title insurance, who is deemed by the Commissioner to be competent and trustworthy with respect to the handling of surplus lines may be licensed as a surplus lines broker.

(b) Application for the license shall be made to the Commissioner on forms as designated and furnished by the Commissioner.

(c) The license fee shall be as specified in § 701 (fee schedule) of this title.

(d) The license and licensee shall be subject to the applicable provisions of Chapter 17 (Agents, Brokers, Consultants, Adjusters, Appraisers and Limited Representatives) of this title.

18 Del. C. 1953, § 1912; 56 Del. Laws, c. 380, § 1; 73 Del. Laws, c. 69, § 1.;

§ 1913. Suspension, revocation of broker's license.

(a) Subject to § 1733 (termination, suspension of certificate of authority) of this title, the Commissioner may also suspend or revoke any surplus line broker's license:

(1) If the broker fails to file the annual statement or to remit the tax as required by §§ 1916 and 1917 of this title; or

(2) If the broker fails to maintain an office in this State, or to keep the records, or to allow the Commissioner to examine his/her records as required by this law, or if he/she removes his/her records from the State; or

(3) If the broker places a surplus line coverage in an insurer other than as authorized under § 1907 of this title.

(b) The procedures provided by Chapter 17 of this title for suspension or revocation of licenses shall apply to suspension or revocation of a surplus line broker's license.

(c) Upon suspending or revoking the broker's surplus line license the Commissioner shall also suspend or revoke all other licenses of or as to the same individual under this title.

18 Del. C. 1953, § 1913; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1914. Broker may compensate agents and brokers.

A licensed surplus line broker may accept and place surplus line business for any insurance agent or broker licensed in this State for the kind of insurance involved, and may compensate the agent or broker therefor.

18 Del. C. 1953, § 1914; 56 Del. Laws, c. 380, § 1.;

§ 1915. Records of broker.

(a) Each broker shall keep in his/her office in this State a full and true record of each surplus line coverage procured by him/her, including a copy of each daily report, if any, a copy of each certificate of insurance issued by him/her, and such of the following items as may be applicable:

(1) Amount of the insurance;

(2) Gross premium charged;

(3) Return premium paid, if any;

(4) Rate of premium charged upon the several items of property;

(5) Effective date of the contract and the terms thereof;

(6) Name and address of each insurer on the direct risk and the proportion of the entire risk assumed by such insurer if less than the entire risk;

(7) Name and address of the insured;

(8) Brief general description of the property or risk insured and where located or to be performed; and

(9) Other information as may be required by the Commissioner.

(b) The record shall be open to examination by the Commissioner at all times within 5 years after issuance of the coverage to which it relates.

18 Del. C. 1953, § 1915; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; 73 Del. Laws, c. 69, § 2.;

§ 1916. Annual statement of broker.

(a) Each broker shall on or before the 1st day of March of each year file with the Commissioner a statement verified by the broker of all surplus line insurance transacted by him/her during the preceding calendar year.

(b) The statement shall be on forms as prescribed and furnished by the Commissioner and shall show:

(1) Gross amount of each kind of insurance transacted;

(2) Aggregate gross premiums charged;

(3) Aggregate of returned premiums paid to insureds;

(4) Aggregate of net premiums; and

(5) Additional information as required by the Commissioner.

18 Del. C. 1953, § 1916; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1917. Tax on surplus lines.

(a) At or before the time specified in § 702 of this title for payment of premium tax and estimated payments, each broker shall remit to the State Treasurer through the Commissioner a tax on surplus line insurance subject to tax transacted by him/her with unauthorized insurers during the next preceding calendar year as shown by his/her annual statement filed with the Commissioner. The tax shall be computed on premiums received, exclusive of sums collected to cover federal and state taxes and examination fees, if any, and at the same rate as applies to premiums for like kinds of insurance written by authorized insurers under this title.

(b) If a surplus line policy covers risks or exposures only partially in this State, the tax so payable shall be computed upon the proportion of the premium which is properly allocable to the risks or exposures located in this State.

18 Del. C. 1953, § 1917; 56 Del. Laws, c. 380, § 1; 66 Del. Laws, c. 382, § 6; 70 Del. Laws, c. 186, § 1.;

§ 1918. Failure to file statement or remit tax; penalty.

If any broker fails to file his/her annual statement or fails to remit the tax provided by § 1917 of this title prior to the 1st day of April after the tax is due, and, if in the Commissioner's opinion such failure is without just cause, he/she shall be liable for a fine of $25 for each day of delinquency commencing with the 1st day of April. The tax may be collected by distraint, or the tax and fine may be recovered by an action instituted by the Commissioner in any court of competent jurisdiction. Any fine collected by the Commissioner shall be paid to the State Treasurer and credited to the General Fund.

18 Del. C. 1953, § 1918; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1919. Legal process against surplus line insurer.

(a) An unauthorized insurer shall be sued, upon any cause of action arising in the State under any contract issued by it as a surplus line contract pursuant to this law, in the Superior Court of the State.

(b) Service of legal process against the insurer may be made in any such action by service of 2 copies thereof upon the Commissioner and payment of the service of process fee specified in § 701 (fee schedule) of this title. The Commissioner shall forthwith mail a copy of the process served to the person designated by the insurer in the policy for the purpose by prepaid registered or certified mail with return receipt requested. If no such person is so designated in the policy, the Commissioner shall in like manner mail a copy of the process to the broker through whom such insurance was procured, or to the insurer at its principal place of business, addressed to the address of the broker or insurer, as the case may be, last of record with the Commissioner. Upon service of process upon the Commissioner and mailing of the same in accordance with this provision, the Court shall be deemed to have jurisdiction in personam of the insurer.

(c) An unauthorized insurer issuing such policy shall be deemed thereby to have authorized service of process against it in the manner and to the effect as provided in this section. Any such policy shall contain a provision stating the substance of this section and designating the person to whom the Commissioner shall mail process as provided in subsection (b) of this section.

18 Del. C. 1953, § 1919; 56 Del. Laws, c. 380, § 1.;


State Codes and Statutes

State Codes and Statutes

Statutes > Delaware > Title18 > C019

TITLE 18

Insurance Code

Insurance

CHAPTER 19. SURPLUS LINES

§ 1901. Short title.

This chapter constitutes and may be cited as the "surplus lines" law.

18 Del. C. 1953, § 1901; 56 Del. Laws, c. 380, § 1.;

§ 1902. Exemptions.

This surplus lines law shall not apply to life insurance, health insurance or reinsurance or to the following insurances when so placed by licensed general lines agents or brokers or surplus line brokers of this State:

(1) Wet marine and transportation insurance;

(2) Insurance on subjects located, resident or to be performed wholly outside this State or on vehicles or aircraft owned and principally garaged outside this State;

(3) Insurance on operations of railroads engaged in transportation in interstate commerce and their property used in such operations;

(4) Insurance of aircraft owned or operated by manufacturers of aircraft or of aircraft operated in commercial interstate flight or cargo of such aircraft or against liability, other than worker's compensation and employer's liability, arising out of the ownership, maintenance or use of such aircraft.

18 Del. C. 1953, § 1902; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1903. Definitions; "broker," "export."

(a) "Broker," as used in this chapter and unless context otherwise requires, means a surplus line broker duly licensed as such under this chapter.

(b) To "export" means to place in an unauthorized insurer under this surplus lines law insurance covering a subject of insurance resident, located or to be performed in Delaware.

18 Del. C. 1953, § 1903; 56 Del. Laws, c. 380, § 1.;

§ 1904. Conditions for export.

If certain insurance coverages cannot be procured from authorized insurers, such coverages, hereinafter designated "surplus lines," may be procured from unauthorized insurers, subject to the following conditions:

(1) The insurance must be procured through a licensed surplus line broker;

(2) The full amount of insurance required must not be procurable, after diligent effort has been made to do so, from among the insurers authorized to transact and actually writing that kind and class of insurance in this State, and the amount of insurance exported shall be only the excess over or other than the amount procurable from authorized insurers;

(3) The insurance must not be so exported for the purpose of securing advantages either as to:

a. A lower premium rate than would be accepted by an authorized insurer; or

b. Terms of the insurance contract.

18 Del. C. 1953, § 1904; 56 Del. Laws, c. 380, § 1.;

§ 1905. Broker's affidavit.

At the time of effecting any such surplus line insurance, the broker shall execute an affidavit, in form prescribed or accepted by the Commissioner, setting forth facts from which it can be determined whether such insurance was eligible for export under § 1904 of this title. The broker shall file this affidavit with the Commissioner within 30 days after the insurance was so effected.

18 Del. C. 1953, § 1905; 56 Del. Laws, c. 380, § 1.;

§ 1906. Open lines for export.

(a) The Commissioner may by order declare eligible for export, generally and without compliance with the provisions of §§ 1904(2), 1904(3) and 1905 of this title, any class or classes of insurance coverage or risk for which the Commissioner finds, after a hearing of which notice was given to each insurer authorized to transact such class or classes in this State, that there is not a reasonable or adequate market among authorized insurers either as to acceptance of the risk, contract terms, or premium or premium rate. Any such order shall continue in effect during the existence of the conditions upon which predicated, but subject to earlier termination by the Commissioner.

(b) The broker shall file with or as directed by the Commissioner a memorandum as to each such coverage placed by him/her in an unauthorized insurer, in such form and context as the Commissioner may reasonably require for the identification of the coverage and determination of the tax payable to the State relative thereto.

(c) The broker or a licensed Delaware agent of the authorized insurer or a general lines broker may also place with authorized insurers any insurance coverage made eligible for export generally under subsection (a) above, and without regard to rate or form filings which may otherwise be applicable as to the authorized insurer. As to coverages so placed in an authorized insurer, the premium tax thereon shall be reported and paid by the insurer as required generally under Chapter 7 of this title.

18 Del. C. 1953, § 1906; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1907. Eligible surplus line insurers.

(a) A broker shall not knowingly place surplus line insurance with an insurer that is unsound financially or that is ineligible under this section.

(b) The Commissioner shall from time to time publish a list of all surplus lines insurers deemed by him/her to be eligible currently, and shall mail a copy of such list to each broker at his/her office last of record with the Commissioner. This subsection shall not be deemed to require the Commissioner to determine the actual financial condition or claims practices of any unauthorized insurer; and the status of eligibility, if granted by the Commissioner, shall indicate only that the insurer appears to be sound financially and to have satisfactory claims practices, and that the Commissioner has no credible evidence to the contrary. While any such list is in effect the broker shall restrict to the insurers so listed all surplus line business placed by him/her.

(c) An insurance company eligible to write surplus lines insurance pursuant to subsection (b) of this section may maintain offices in this State subject to the provisions of this chapter and to such regulations as the Commissioner may prescribe from time to time.

18 Del. C. 1953, § 1907; 56 Del. Laws, c. 380, § 1; 57 Del. Laws, c. 351; 70 Del. Laws, c. 186, § 1.;

§ 1908. Evidence of the insurance; changes; penalty.

(a) Upon placing a surplus line coverage, the broker shall promptly issue and deliver to the insured evidence of the insurance consisting either of the policy as issued by the insurer or, if such policy is not then available, the surplus line broker's certificate. Such a certificate shall be executed by the broker and shall show the description and location of the subject of the insurance, coverage, conditions and term of the insurance, the premium and rate charged and taxes collected from the insured, and the name and address of the insured and insurer. If the direct risk is assumed by more than 1 insurer, the certificate shall state the name and address and proportion of the entire direct risk assumed by each such insurer.

(b) No broker shall issue any such certificate or any cover note, or purport to insure or represent that insurance will be or has been granted by any unauthorized insurer, unless he/she has prior written authority from the insurer for the insurance, or has received information from the insurer in the regular course of business that such insurance has been granted, or an insurance policy providing the insurance actually has been issued by the insurer and delivered to the insured.

(c) If after the issuance and delivery of any such certificate there is any change as to the identity of the insurers, or the proportion of the direct risk assumed by an insurer as stated in the broker's original certificate, or in any other material respect as to the insurance evidenced by the certificate, the broker shall promptly issue and deliver to the insured a substitute certificate accurately showing the current status of the coverage and the insurers responsible thereunder.

(d) If a policy issued by the insurer is not available upon placement of the insurance and the broker has issued and delivered his/her certificate as hereinabove provided, upon request therefor by the insured the broker shall as soon as reasonably possible procure from the insurer its policy evidencing such insurance and deliver such policy to the insured in replacement of the broker's certificate theretofore issued.

(e) Any surplus line broker, who knowingly or negligently issues a false certificate of insurance or who fails promptly to notify the insured of any material change with respect to such insurance by delivery to the insured of a substitute certificate as provided in subsection (c) of this section, shall, upon conviction, be subject to the penalty provided by § 106 of this title or to any greater applicable penalty otherwise provided by law.

18 Del. C. 1953, § 1908; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1909. Endorsement of contract.

Every insurance contract procured and delivered as a surplus line coverage pursuant to this law shall have stamped upon it, initialed by or bearing the name of the surplus line broker who procured it, the following:

"This insurance contract is issued pursuant to the Delaware Insurance Laws by an insurer neither licensed by nor under the jurisdiction of the Delaware Insurance Department."

18 Del. C. 1953, § 1909; 56 Del. Laws, c. 380, § 1.;

§ 1910. Surplus line insurance valid.

Insurance contracts procured as surplus line coverage from unauthorized insurers in accordance with this law shall be fully valid and enforceable as to all parties, and shall be given recognition in all matters and respects to the same effect as like contracts issued by authorized insurers.

18 Del. C. 1953, § 1910; 56 Del. Laws, c. 380, § 1.;

§ 1911. Liability of insurer.

(a) As to a surplus line risk which has been assumed by an unauthorized insurer pursuant to this surplus lines insurance law, and if the premium thereon has been received by the surplus line broker who placed such insurance, in all questions thereafter arising under the coverage as between the insurer and the insured the insurer shall be deemed to have received the premium due to it for such coverage, and the insurer shall be liable to the insured as to losses covered by such insurance and for unearned premiums which may become payable to the insured upon cancellation of such insurance, whether or not in fact the broker is indebted to the insurer with respect to such insurance or for any other cause.

(b) Each unauthorized insurer assuming a surplus line risk under this surplus lines insurance law shall be deemed thereby to have subjected itself to the terms of this section.

18 Del. C. 1953, § 1911; 56 Del. Laws, c. 380, § 1.;

§ 1912. Surplus line brokers; licensing.

(a) Any person, while licensed in this State as a resident or nonresident producer for general lines, which includes all lines of authority defined in Chapter 17 of this title except life insurance, variable annuity and title insurance, who is deemed by the Commissioner to be competent and trustworthy with respect to the handling of surplus lines may be licensed as a surplus lines broker.

(b) Application for the license shall be made to the Commissioner on forms as designated and furnished by the Commissioner.

(c) The license fee shall be as specified in § 701 (fee schedule) of this title.

(d) The license and licensee shall be subject to the applicable provisions of Chapter 17 (Agents, Brokers, Consultants, Adjusters, Appraisers and Limited Representatives) of this title.

18 Del. C. 1953, § 1912; 56 Del. Laws, c. 380, § 1; 73 Del. Laws, c. 69, § 1.;

§ 1913. Suspension, revocation of broker's license.

(a) Subject to § 1733 (termination, suspension of certificate of authority) of this title, the Commissioner may also suspend or revoke any surplus line broker's license:

(1) If the broker fails to file the annual statement or to remit the tax as required by §§ 1916 and 1917 of this title; or

(2) If the broker fails to maintain an office in this State, or to keep the records, or to allow the Commissioner to examine his/her records as required by this law, or if he/she removes his/her records from the State; or

(3) If the broker places a surplus line coverage in an insurer other than as authorized under § 1907 of this title.

(b) The procedures provided by Chapter 17 of this title for suspension or revocation of licenses shall apply to suspension or revocation of a surplus line broker's license.

(c) Upon suspending or revoking the broker's surplus line license the Commissioner shall also suspend or revoke all other licenses of or as to the same individual under this title.

18 Del. C. 1953, § 1913; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1914. Broker may compensate agents and brokers.

A licensed surplus line broker may accept and place surplus line business for any insurance agent or broker licensed in this State for the kind of insurance involved, and may compensate the agent or broker therefor.

18 Del. C. 1953, § 1914; 56 Del. Laws, c. 380, § 1.;

§ 1915. Records of broker.

(a) Each broker shall keep in his/her office in this State a full and true record of each surplus line coverage procured by him/her, including a copy of each daily report, if any, a copy of each certificate of insurance issued by him/her, and such of the following items as may be applicable:

(1) Amount of the insurance;

(2) Gross premium charged;

(3) Return premium paid, if any;

(4) Rate of premium charged upon the several items of property;

(5) Effective date of the contract and the terms thereof;

(6) Name and address of each insurer on the direct risk and the proportion of the entire risk assumed by such insurer if less than the entire risk;

(7) Name and address of the insured;

(8) Brief general description of the property or risk insured and where located or to be performed; and

(9) Other information as may be required by the Commissioner.

(b) The record shall be open to examination by the Commissioner at all times within 5 years after issuance of the coverage to which it relates.

18 Del. C. 1953, § 1915; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; 73 Del. Laws, c. 69, § 2.;

§ 1916. Annual statement of broker.

(a) Each broker shall on or before the 1st day of March of each year file with the Commissioner a statement verified by the broker of all surplus line insurance transacted by him/her during the preceding calendar year.

(b) The statement shall be on forms as prescribed and furnished by the Commissioner and shall show:

(1) Gross amount of each kind of insurance transacted;

(2) Aggregate gross premiums charged;

(3) Aggregate of returned premiums paid to insureds;

(4) Aggregate of net premiums; and

(5) Additional information as required by the Commissioner.

18 Del. C. 1953, § 1916; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1917. Tax on surplus lines.

(a) At or before the time specified in § 702 of this title for payment of premium tax and estimated payments, each broker shall remit to the State Treasurer through the Commissioner a tax on surplus line insurance subject to tax transacted by him/her with unauthorized insurers during the next preceding calendar year as shown by his/her annual statement filed with the Commissioner. The tax shall be computed on premiums received, exclusive of sums collected to cover federal and state taxes and examination fees, if any, and at the same rate as applies to premiums for like kinds of insurance written by authorized insurers under this title.

(b) If a surplus line policy covers risks or exposures only partially in this State, the tax so payable shall be computed upon the proportion of the premium which is properly allocable to the risks or exposures located in this State.

18 Del. C. 1953, § 1917; 56 Del. Laws, c. 380, § 1; 66 Del. Laws, c. 382, § 6; 70 Del. Laws, c. 186, § 1.;

§ 1918. Failure to file statement or remit tax; penalty.

If any broker fails to file his/her annual statement or fails to remit the tax provided by § 1917 of this title prior to the 1st day of April after the tax is due, and, if in the Commissioner's opinion such failure is without just cause, he/she shall be liable for a fine of $25 for each day of delinquency commencing with the 1st day of April. The tax may be collected by distraint, or the tax and fine may be recovered by an action instituted by the Commissioner in any court of competent jurisdiction. Any fine collected by the Commissioner shall be paid to the State Treasurer and credited to the General Fund.

18 Del. C. 1953, § 1918; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 1919. Legal process against surplus line insurer.

(a) An unauthorized insurer shall be sued, upon any cause of action arising in the State under any contract issued by it as a surplus line contract pursuant to this law, in the Superior Court of the State.

(b) Service of legal process against the insurer may be made in any such action by service of 2 copies thereof upon the Commissioner and payment of the service of process fee specified in § 701 (fee schedule) of this title. The Commissioner shall forthwith mail a copy of the process served to the person designated by the insurer in the policy for the purpose by prepaid registered or certified mail with return receipt requested. If no such person is so designated in the policy, the Commissioner shall in like manner mail a copy of the process to the broker through whom such insurance was procured, or to the insurer at its principal place of business, addressed to the address of the broker or insurer, as the case may be, last of record with the Commissioner. Upon service of process upon the Commissioner and mailing of the same in accordance with this provision, the Court shall be deemed to have jurisdiction in personam of the insurer.

(c) An unauthorized insurer issuing such policy shall be deemed thereby to have authorized service of process against it in the manner and to the effect as provided in this section. Any such policy shall contain a provision stating the substance of this section and designating the person to whom the Commissioner shall mail process as provided in subsection (b) of this section.

18 Del. C. 1953, § 1919; 56 Del. Laws, c. 380, § 1.;

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