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 and certain transactions. It clarifies that contracts made in violation of these provisions do not prevent the insured from enforcing their rights and introduces penalties for those who willfully represent unauthorized insurers. The bill also allows surplus line insurance to be procured from unauthorized insurers under specific conditions and exempts certain transactions from the diligent effort requirement if they comply with federal law. Additionally, surplus line brokers are required to file quarterly reports on their placements and maintain proper documentation.

Further modifications include updates to the licensing process for surplus line brokers, allowing licensed resident insurance producers to become brokers based on their experience. The bill establishes a bond requirement of at least $50,000 for brokers and outlines the criteria for placing insurance with unauthorized insurers. It also mandates that brokers file an annual verified statement of their transactions, with an exemption if no surplus line insurance was transacted in the previous year. A new six percent tax on direct premiums for surplus line insurance issued to Alabama residents is introduced, with deductions for examination expenses. The bill repeals a previous section of the law and 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