Section R20-6-204. Surplus Lines Brokers’ Filing Requirements; List of Unauthorized Insurers

A.      Definitions.

1.        “Alien insurer” has the meaning prescribed in A.R.S. § 20-201.

2.        “Foreign insurer” has the meaning prescribed in A.R.S. § 20-204.

3.        “Listed insurer” means an unauthorized insurer who is on the list created by the Director under subsection (C)(1) and A.R.S. § 20-413.

4.        “Surplus lines broker” means a person licensed under

A.R.S. § 20-411.

5.        “Surplus lines insurance” means the type of insurance described in A.R.S. § 20-407.

6.        “Unauthorized insurer” means an insurer that does not have a certificate of authority to transact insurance in Ari- zona.

B.       Filing requirements. An unauthorized insurer writing surplus lines insurance in Arizona and each surplus line broker shall comply with the filing requirements of this Section.

C.      List of unauthorized insurers.

1.        The Director shall create and maintain a list of unautho- rized insurers that may write surplus lines insurance in this state under A.R.S. § 20-413. The list shall contain the names of unauthorized insurers for which a surplus lines broker has made the filings required by this Section.

2.        The Director shall retain a listed insurer on the list until:

a.         The Director removes the insurer from the list under

A.R.S. § 20-413 or subsection (H) or (I) below, or

b.        The insurer requests the Director to remove its name from the list.

D.      Placing surplus lines insurance. A surplus lines broker shall place all surplus lines business with insurers listed under sub- section (C). An insurer’s removal from the list does not affect the validity of any contract existing at the time of removal.

E.       Requirements for foreign unauthorized insurers and insurance exchanges. A surplus lines broker shall file the following doc- uments for a foreign unauthorized insurer:

1.        An original or a certified copy of the insurer’s certificate of compliance from the supervisory official of the insurer’s state of domicile;

2.        A current Certificate of Deposit, Capital, and Surplus for Foreign Insurers from the public officials or other persons who have supervision over the insurer in any other state;

3.        A certification from the surplus lines broker of the insurer’s compliance with the financial requirements of

A.R.S. § 20-413;

4.        The insurer’s most recent report of financial examination, certified by the insurance supervisory official of its state of domicile; and

5.        A certified copy of a full-size National Association of Insurance Commissioners (N.A.I.C.) annual statement for the insurer as of December 31 of the preceding year.

F.       Requirements for initial listing of alien unauthorized insurers. A surplus lines broker shall file a certification of the insurer’s compliance with the financial requirements of A.R.S. § 20-

413. For all alien insurers other than title insurers, the surplus lines broker may rely on the information contained in the most recent N.A.I.C. Financial Review of Alien Insurers as prima facie evidence of the insurer’s compliance.

G.      Filing requirements to maintain listing. To ensure that a for- eign or alien unauthorized insurer remains on the Director’s list, a surplus lines broker shall file, before June 1 of each year:

1.        A copy of a full-size National Association of Insurance Commissioners (N.A.I.C.) convention blank annual state- ment (Form 2) for the insurer, as of December 31 of the preceding year; and

2.        An affidavit, on a form approved by the Director, that meets the following requirements:

a.         The surplus lines broker and a duly authorized offi- cer of the unauthorized insurer shall sign the affida- vit.

b.        The insurer’s officer shall state whether there have been any changes in the insurer’s name, address, state of domicile, statutory producer, and any mate- rial changes in its operations since the insurer’s ini- tial qualification for listing or the last annual filing under this subsection. If there have been material changes in operations, the officer shall describe the changes.  Material  changes  under  this  subsection

include a change in any one or more of the follow- ing:

i.         A director, officer, or controlling person;

ii.        The insurer’s holding company or affiliates;

iii.      The insurer’s charter documents, including its articles of incorporation, articles of agreement, or by-laws governing its conduct of business;

iv.       The insurer’s marketing or administration plans, operations, or agreements with third par- ties;

v.        Any other matter material to the insurer meet- ing its obligations to its policyholders; and

vi.       Any other matter that relates to any of the grounds for removal from the list as prescribed in A.R.S. § 20-413.

c.         The insurer’s officer shall state whether the insurer is in good standing in all jurisdictions where it con- ducts insurance business and whether the insurer has been, since the date of initial listing or the last annual filing under this subsection, or currently is, the subject of any action or order by any regulatory official in any jurisdiction. If the insurer has been or is the subject of a disciplinary action or order, the insurer’s officer shall describe the matter in the affi- davit and shall attach a copy of any applicable offi- cial document regarding the disciplinary action or order. Regulatory action or order under this subsec- tion includes any one or a combination of the fol- lowing:

i.         Denial, suspension, or revocation of a license, permit, or certificate of authority;

ii.        A corrective action or operation plan, consent order, memorandum of understanding, or cease and desist order;

iii.      Action against the insurer’s bond or securities held in trust by a regulatory official; and

iv.       Supervision, conservatorship, receivership, or any other form of possession or control by a regulatory official in any jurisdiction.

d.        The insurer’s officer shall state whether the report of examination, if any, previously filed with the Direc- tor under subsection (E)(4) or with a previous annual filing, remains the most current, filed report. If a more recent report of examination exists, the surplus lines broker shall file a copy of the report with the affidavit.

H.      Supplemental information; removal. A surplus lines broker and an unauthorized insurer shall provide any additional infor- mation the Director requests to determine whether the insurer meets the requirements of A.R.S. § 20-413, or to clarify infor- mation in documents filed under this Section. The Director may remove an insurer from the list if the surplus lines broker or insurer does not submit the requested information within 30 days after the date of a written request for information.

I.        Removal for failure to make annual filing. The Director shall remove an unauthorized insurer from the list if a surplus lines broker fails to timely file the documents required by subsec- tion (G). The Director shall not restore the insurer to the list until a  surplus lines broker files all applicable documents required under subsections (E) or (F) and the insurer requali- fies under A.R.S. § 20-413.

J.        Organizations of surplus lines brokers; unauthorized insurer.

1.        A surplus lines broker may file records or reports that are subject to examination by the director under A.R.S. § 20- 408 with any voluntary organization of surplus lines bro- kers. The Director may examine the records or reports

filed with an organization of surplus lines brokers to ascertain compliance with A.R.S. Title 20, Chapter 2, Article 5. An examination performed under this authority shall not preclude examination of records of a surplus lines broker.

2.        Nothing in this subsection requires that a surplus lines broker become a member of any surplus lines organiza- tion to file or preserve or maintain any affidavit or state- ment.

Historical Note

Former General Rule Number 71-24; Former Section R4- 14-204 repealed, new Section R4-14-204 adopted effec- tive January 1, 1981 (Supp. 80-6). R20-6-204 recodified from R4-14-204 (Supp. 95-1). Amended effective July  14, 1998 (Supp. 98-3). Amended by final rulemaking at 6

A.A.R. 475, effective January 5, 2000 (Supp. 00-1). Amended by final rulemaking at 13 A.A.R 2061, effec-

tive August 4, 2007 (Supp. 07-2).