The bill SB46 amends the Code of Alabama 1975 to enhance regulations surrounding unauthorized insurers and surplus line insurance. Key insertions include a prohibition against individuals acting as agents for unauthorized insurers, with exceptions for surplus lines insurance and transactions not requiring a certificate of authority. It also clarifies that contracts made in violation of these provisions do not prevent the insured from enforcing their rights. The bill introduces penalties for those who willfully represent unauthorized insurers, making them liable for any losses incurred by the insured. Additionally, it modifies surplus line insurance procurement requirements, allowing exemptions from diligent effort requirements under certain conditions and mandating quarterly reports from surplus line brokers.

Further changes include the recognition of contracts from unauthorized insurers on par with those from authorized insurers, the establishment of a bond requirement for surplus line brokers, and the allowance for nonresident individuals to be licensed as surplus line brokers. The bill also stipulates that brokers must ensure the financial soundness of unauthorized insurers and outlines the criteria for placing insurance with them. It introduces a six percent tax on direct premiums from surplus line insurance for Alabama residents and repeals the Surplus Lines Insurance Multi-State Compliance Compact Act, indicating a shift in compliance handling. The act is set to take effect on July 1, 2024.

Statutes affected:
Introduced: 27-10-1, 27-10-2
Enrolled: 27-10-1, 27-10-2