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 clarifies that contracts with unauthorized insurers do not prevent the insured from enforcing their rights and establishes liability for individuals who willfully represent unauthorized insurers. The bill also modifies surplus line insurance transaction requirements, allowing exemptions from diligent effort requirements under certain conditions and introducing a quarterly reporting requirement for surplus line brokers. Additionally, it repeals the Surplus Lines Insurance Multi-State Compliance Compact Act, indicating a shift in Alabama's approach to surplus line insurance.

Further changes in SB46 include updates to the licensing process for surplus line brokers, allowing licensed resident insurance producers to become brokers based on experience and requiring a bond of at least $50,000. The bill allows nonresident individuals to be licensed under similar conditions and stipulates that brokers can accept surplus line business for any licensed insurance producer while charging a disclosed per-policy fee. It emphasizes the need for brokers to ensure the financial soundness of unauthorized insurers and outlines criteria for placing insurance with them. The bill also establishes a six percent tax on direct premiums from surplus line insurance for Alabama residents and repeals previous provisions related to the Surplus Lines Insurance Multi-State Compliance Compact. 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