(a)(1) No person or entity in this state shall act as agent or broker for or otherwise represent or aid any insurer, health maintenance organization, multiple employer welfare arrangement, multiple employer trust, association, or any other person or entity in the solicitation, negotiation, or effectuation of insurance, inspection of risks, fixing of rates, investigation or adjustment of losses, collection of premiums, or in any other manner in the transaction of insurance with respect to subjects of insurance resident, located, or to be performed in this state if that person or entity is not authorized or licensed by the State Insurance Department for those purposes.
(2)(A) No person or entity shall act as a producer, adjuster, or consultant without first obtaining appropriate licensure or registration as required by the insurance laws of this state for the transaction of insurance with respect to subjects of insurance or self-insurance resident, located, or to be performed in this state.
(B) No person or entity shall act as a multiple employer trust or multiple employer welfare arrangement without first obtaining appropriate registration or licensing as required by § 23-92-101.
(C) No person or entity shall act as a third-party administrator for a multiple employer trust, multiple employer welfare arrangement, collectively bargained trust, self-insurance plan, or any other plan providing accident and health insurance benefits to the citizens of this state without first obtaining appropriate registration as required by § 23-92-201 et seq.
(D) Any producer who knows or has reason to know that a health plan is not licensed in accordance with the Arkansas Insurance Code shall immediately report the health plan to the department.
(b)(1)(A) The Insurance Commissioner may summarily order a person or entity to cease and desist from an act or practice when the commissioner has reason to believe that the person or entity has not complied with the requirements of this section or any other provision of the Arkansas Insurance Code.
(B) Upon the entry of the cease and desist order, the commissioner shall promptly notify the person or entity named:
(i) That the order has been entered;
(ii) The reasons for the order; and
(iii) Of the person's or entity's right to a hearing on the order.
(2)(A) A hearing shall be held on the written request of the person or entity named in the cease and desist order if the commissioner receives the request within thirty (30) days of the date of the entry of the order or if otherwise ordered by the commissioner.
(B) If no hearing is requested and none is ordered by the commissioner, the order will remain in effect until it is modified or vacated by the commissioner.
(C) If a hearing is requested or ordered and after notice of an opportunity for hearing, the commissioner may affirm, modify, or vacate the cease and desist order.
(D) The person or entity named in the cease and desist order shall have the burden of proving:
(i) That the actions, methods, or practices described in the order are not in violation of the Arkansas Insurance Code; and
(ii) The grounds upon which the commissioner should modify or vacate an order issued under this section.
(3)(A) After issuance of an order under subdivision (b)(1)(B) of this section, the commissioner may apply to Pulaski County Circuit Court to temporarily or permanently enjoin the act or practice and to enforce compliance with the Arkansas Insurance Code or any rule or order under the Arkansas Insurance Code.
(B) However, the commissioner may apply directly to Pulaski County Circuit Court for a temporary or permanent injunction under subdivision (b)(3)(A) of this section.
(C) Upon a proper showing, the court shall enter a permanent or temporary injunction, restraining order, or writ of mandamus.
(D) The commissioner shall not be required to post a bond.
(c) The commissioner may also seek and the appropriate court may grant any other ancillary relief which may be in the public interest, including the appointment of a receiver, temporary receiver, conservator, or declaratory judgment, obtaining an accounting, disgorgement, assessment of a fine, or other relief as may be appropriate in the public interest.
(d) This section does not prohibit or restrict the informal disposition of a proceeding by stipulation, settlement, consent, or default.
(e) Any insurance producer licensed in this state, or any other person, who knowingly sells, solicits, or negotiates a product of an unauthorized person or entity in violation of this section or who knowingly represents or aids an unauthorized person or entity in violation of this section shall be guilty of a Class D felony.
(f) Any insurance producer licensed in this state, or any other person, who sells, solicits, or negotiates a product of an unauthorized person or entity in violation of this section or who represents or aids an unauthorized person or entity in violation of this section may be personally liable for all damages caused by the unauthorized person or entity, including claims unpaid by the unauthorized person or entity.
(g) Any person or entity who violates or otherwise fails to comply with a cease and desist order of the commissioner under this section while that order is in effect may be subject, at the discretion of the commissioner, to any one (1) or more of the following:
(1) A monetary penalty of not more than ten thousand dollars ($10,000);
(2) Suspension or revocation of the person's or entity's license or registration; and
(3) Upon the commissioner's petition filed in Pulaski County Circuit Court and upon good cause shown, that court may order injunctive relief.
(h) The following shall be applicable to hearings held, orders issued, and penalties levied by the commissioner under this section:
(1) The provisions of § 23-61-301, as to witnesses and evidence;
(2) The provisions of §§ 23-61-302 and 23-66-214, as to immunity from prosecution;
(3) The provisions of §§ 23-61-303 — 23-61-305, as to hearings;
(4) The provisions of §§ 23-61-306 and 23-61-307, as to orders on hearings and appeals of orders;
(5) The provisions of § 23-66-210(a)(1), as to monetary penalties; and
(6) The provisions of § 23-66-212, as to judicial review of cease and desist orders.
(i) The commissioner may promulgate such reasonable rules and regulations as are necessary to carry out the provisions of this section.
(j)(1) The commissioner shall have the power to examine and investigate the affairs of every person or entity suspected of engaging in activities which are prohibited by this section or by any other provision of the Arkansas Insurance Code.
(2) All licensees of the commissioner shall assist the commissioner in examinations and investigations conducted under this section.
(k) The powers vested in the commissioner by this section shall be additional to any other powers to enforce any penalties, fines, or forfeitures authorized by law or other provisions of the Arkansas Insurance Code with respect to activities that are prohibited by this section or the Arkansas Insurance Code.
(l) This section shall not apply to:
(1) Acceptance of service of process by the commissioner under § 23-65-203; and
(2) Surplus lines insurance and other transactions as to which a certificate of authority is not required of an insurer, as stated in § 23-63-201.
As to transactions not permitted under § 23-63-201, no unauthorized insurer shall institute or file, or cause to be instituted or filed, any suit, action, or proceeding in this state to enforce any right, claim, or demand arising out of any insurance transaction in this state until the insurer has obtained a certificate of authority to transact such insurance in this state.
(a)(1) Every insured or self-insured who in this state directly procures, causes to be procured, or continues or renews insurance in an unauthorized insurer, upon a subject of insurance resident, located, or to be performed within this state, including surplus line insurance when procured without use of a surplus lines broker pursuant to the surplus lines law of this state, within thirty (30) days after the date the insurance was so procured, continued, or renewed, shall file a written report with the Insurance Commissioner on forms designated by the commissioner and furnished to the insured upon request.
(2) The report shall show:
(A) The name and address of each named insured;
(B) The name and address of the insurer;
(C) The subject of the insurance;
(D) A general description of the coverage;
(E) The amount of premium currently charged; and
(F) Such additional pertinent information as is reasonably requested by the commissioner.
(3) If any insurance also covers subjects of insurance resident, located, or to be performed outside this state, a proper pro rata portion of the entire premium payable for all the insurance shall be allocated as to the subjects of insurance resident, located, or to be performed in this state, for the purposes of this section.
(b) Any insurance in an unauthorized insurer procured through negotiations or an application, in whole or in part, occurring or made within or from within this state, or for which premiums, in whole or in part, are remitted directly or indirectly from within this state, shall be deemed to be insurance procured, or continued, or renewed in this state within the intent of subsection (a) of this section.
(c)(1) For the general support of the government of this state there is levied upon the obligation, chose in action, or right represented by the premium charged or payable for the insurance a tax at the rate of two percent (2%) of the net direct amount of the premium.
(2) The insured shall withhold the amount of the tax from the amount of premium charged by and otherwise payable to the insurer for the insurance, and within thirty (30) days after the insurance was so procured, continued, or renewed, and coincidentally with the filing with the commissioner of the report provided for in subsection (a) of this section, the insured shall pay the amount of the tax to the Treasurer of State through the commissioner.
(d) If the insured fails to withhold from the premium the amount of tax levied pursuant to this section, the insured shall be liable for the amount thereof and shall pay the amount to the commissioner within the time stated in subsection (c) of this section.
(e) The tax imposed pursuant to this section if delinquent shall bear interest at the rate of six percent (6%) per annum, compounded annually.
(f) The tax shall be collectible from the insured by civil action brought by the commissioner.
(g) This section does not abrogate or modify and shall not be construed or deemed to abrogate or modify any provision of § 23-65-101, which is unauthorized insurance transactions prohibited, or § 23-65-102, which is suits by unauthorized insurers prohibited, or any other provision of the Arkansas Insurance Code.
(h) This section does not apply to life or accident and health insurance.
(i)(1) The tax specified in subsection (c) of this section shall not be due and payable to this state in the event the unlicensed or unauthorized insurer reports and pays premium tax to this state pursuant to § 26-57-603 et seq., or other applicable premium tax laws for these independently procured coverages.
(2) Upon receipt of duplicate payment of tax from the insured and the unlicensed or unauthorized insurer, this state shall refund to the insured the amount of the duplicate payment.
(a)(1) Every person as to whom insurance is placed with an unauthorized insurer, upon the Insurance Commissioner's order, shall produce for the commissioner's examination all policies and other documents evidencing the insurance and shall disclose to the commissioner the amount of gross premiums paid or agreed to be paid for the insurance.
(2) For each refusal to obey the order, the person shall be liable to a fine of not more than one hundred dollars ($100) for each day of disobedience.
(b) This section does not apply to life insurance and accident and health insurance.
(1) This subchapter constitutes and may be cited as the “Unauthorized Insurers Process Act”.
(2) This subchapter shall be so interpreted as to effectuate its general purpose to make uniform the law of those states which enact it.
Delivery, effectuation, or solicitation of any insurance contract, by mail or otherwise, within this state by an unauthorized insurer, or the performance within this state of any other service or transaction connected with such insurance by or on behalf of such insurer, shall be deemed to constitute an appointment by such insurer of the Insurance Commissioner and his successors in office as its attorney, upon whom may be served all lawful process issued within this state in any action or proceeding against such insurer arising out of any such contract or transaction; and shall be deemed to signify the insurer's agreement that any such service of process shall have the same legal effect and validity as personal service of process upon it in this state.
(1) Service of process upon any such insurer pursuant to § 23-65-202 shall be made by delivering to and leaving with the Insurance Commissioner or some person in apparent charge of his office two (2) copies thereof and the payment to him of such fees as may be prescribed by law. The commissioner shall forthwith mail by registered mail one (1) of the copies of such process to the defendant at its principal place of business last known to the commissioner, and shall keep a record of all process so served upon him. Such service of process is sufficient, provided notice of such service and a copy of the process are sent within ten (10) days thereafter by registered mail by plaintiff's attorney to the defendant at its last known principal place of business, and the defendant's receipt or receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the plaintiff's attorney showing a compliance herewith are filed with the clerk of the court in which such action is pending on or before the date the defendant is required to appear, or within such further time as the court may allow.
(2) Service of process in any such action, suit, or proceeding shall in addition to the manner provided in subsection (1) of this section be valid if served upon any person within this state, who in this state on behalf of such insurer is:
(a) Soliciting insurance; or
(b) Making any contract of insurance or issuing or delivering any policies or written contracts of insurance; or
(c) Collecting or receiving any premium for insurance and a copy of such process is sent within ten (10) days thereafter by registered mail by the plaintiff's attorney to the defendant at the last known principal place of business of the defendant, and the defendant's receipt, or the receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the plaintiff's attorney showing a compliance herewith are filed with the clerk of the court in which such action is pending on or before the date the defendant is required to appear, or within such further time as the court may allow.
(3) No plaintiff or complainant shall be entitled to a judgment by default under this section until the expiration of thirty (30) days from the date of the filing of the affidavit of compliance.
(4) Nothing in this section contained shall limit or abridge the right to serve any process, notice, or demand upon any insurer in any other manner now or hereafter permitted by law.
Sections 23-65-202, 23-65-203, and 23-65-205 shall not apply to surplus line insurance lawfully effectuated under this chapter, or to reinsurance, nor to any action or proceeding against an unauthorized insurer arising out of:
(1) Wet marine and foreign trade 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 property or operations of railroads engaged in interstate commerce; or
(4) Insurance on aircraft or cargo of such aircraft or against liability, other than employer's liability, arising out of the ownership, maintenance, or use of such aircraft, where the policy or contract contains a provision designating the Insurance Commissioner as its attorney for the acceptance of service of lawful process in any action or proceeding instituted by or on behalf of an insured or beneficiary arising out of any such policy, or where the insurer enters a general appearance in any such action.
(1) Before an unauthorized insurer shall file or cause to be filed any pleading in any action or proceeding instituted against it under §§ 23-65-202 and 23-65-203, such insurer shall:
(a) Procure a certificate of authority to transact insurance in this state; or
(b) Deposit with the clerk of the court in which such action or proceeding is pending cash or securities or file with such clerk a bond with good and sufficient sureties, to be approved by the court, in an amount to be fixed by the court sufficient to secure the payment of any final judgment which may be rendered in such action. The court may in its discretion make an order dispensing with such deposit or bond where the insurer makes a showing satisfactory to the court that it maintains in a state of the United States funds or securities, in trust or otherwise, sufficient and available to satisfy any final judgment which may be entered in such action or proceeding and that the insurer will pay any final judgment entered therein without requiring suit to be brought on such judgment in the state where such funds or securities are located.
(2) The court in any action or proceeding in which service is made in the manner provided in § 23-65-203 may, in its discretion, order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with the provisions of subsection (1), and to defend such action.
(3) Nothing in subsection (1) is to be construed to prevent an unauthorized insurer from filing a motion to quash or to set aside the service of any process made in the manner provided in § 23-65-203 hereof on the ground either:
(a) That such unauthorized insurer has not done any of the acts enumerated in § 23-65-202; or
(b) That the person on whom service was made pursuant to § 23-65-203(1) was not doing any of the acts therein enumerated.
(4) Any such insurer shall be subject to the provisions of § 23-79-208.
This subchapter constitutes and may be referred to as the “Surplus Lines Insurance Law”.
The provisions of this subchapter controlling the placing of insurance with unauthorized insurers shall not apply to reinsurance or to the following insurances when so placed by licensed agents or brokers of this state:
(1) Wet marine and foreign trade insurance;
(2) Insurance on subjects located, resident, or to be performed wholly outside of this state or on vehicles or aircraft owned and principally garaged outside this state;
(3) Insurance on property or operation of railroads engaged in interstate commerce; and
(4) Insurance of aircraft owned or operated by manufacturers of aircraft, or aircraft operated in scheduled interstate flight, or cargo of the aircraft, or against liability, other than workers' compensation and employer's liability, arising out of the ownership, maintenance, or use of the aircraft.
The permission granted in this law to place any insurance in a nonadmitted insurer shall not be deemed or construed to authorize that insurer to otherwise transact an insurance business in this state. Further, this limited permission shall not be deemed or construed so as to exempt nonadmitted insurers from the principles of the common law of insurance or from the same statutory and common law penalties which may attach in favor of insureds in the event of disputes or litigation between insureds and admitted insurers.
A contract of insurance effectuated by an unauthorized insurer in violation of the provisions of this subchapter shall be voidable except at the instance of the insurer.
If certain insurance coverages cannot be procured from authorized insurers, 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 lines broker;
(2) The full amount of insurance required must not be procurable, after diligent effort has been made to do so, from among authorized insurers who are actually marketing that kind or class of insurance in this state, and the amount of insurance placed in an unauthorized insurer is only the balance over the amount procurable from authorized insurers; and
(3) The soliciting agent or broker shall maintain written documentation of compliance with these requirements.
(a) At the time of the procuring of the insurance, the surplus lines broker shall execute an affidavit on a form prescribed by the Insurance Commissioner and containing any information which he or she shall require, as well as setting forth facts referred to in §§ 23-65-313 and 23-65-314, and shall promptly file the affidavit with the commissioner within sixty (60) days following the end of the month in which the insurance was procured.
(b) Affidavits or reports filed under this section shall not be subject to public inspection, unless the commissioner determines that the public interest or the welfare of the filing broker requires otherwise.
Every insurance contract procured and delivered as surplus line coverage pursuant to this subchapter shall be initiated by or bear the name of the surplus lines broker who procured it and shall contain a conspicuous statement substantially similar to the following:
“This contract is registered and delivered as a surplus line coverage under the Surplus Lines Insurance Law, and it may in some respects be different from contracts issued by insurers in the admitted markets, and, accordingly, it may, depending upon the circumstances, be more or less favorable to an insured than a contract from an admitted carrier might be. The protection of the Arkansas Property and Casualty Guaranty Act does not apply to this contract. A tax of four percent (4%) is required to be collected from the insured on all surplus lines premiums.”
Any person, while licensed as a resident insurance producer of this state as to property, casualty, surety, and marine insurance, who has held the license in this or another state, or both, for three (3) years prior to application for a surplus lines broker's license, and who is deemed by the Insurance Commissioner to be competent and trustworthy, or a nonresident applicant holding a surplus lines broker license in his or her country of residency, may be licensed as a surplus lines broker as follows:
(1) Application to the commissioner for the license shall be made on forms furnished by the commissioner;
(2) The license fee shall be in the amount stated in § 23-61-401(10) for each license year during any part of which the license is in force and shall be paid to the commissioner. The license year shall be from the date of issuance of the license to January 1 next after its issue;
(3)(A) Prior to issuance of the license, a resident
applicant shall file with the commissioner securities acceptable to the
commissioner in favor of the State of
(B) The securities shall be conditioned that the broker will conduct business under the license in accordance with the provisions of this subchapter and that he or she will promptly remit the taxes provided by the law.
(C) No securities shall be terminated unless not less than sixty (60) days' prior written notice thereof is filed with the commissioner.
(D) No security shall be required of a nonresident applicant licensed in the applicant's state of residency.
(4)(A)(i) Prior to issuance of the license, the applicant must pass a written examination as to his or her competence to act as a surplus lines broker, which shall be required by the commissioner.
(ii) No examination shall be required of a nonresident applicant duly licensed in the applicant's state of residency.
(B) The commissioner shall give, conduct, and grade all examinations, or he or she may arrange to have examinations administered and graded by an independent testing service as specified by contract in a fair and impartial manner and without unfair discrimination between individuals examined.
(C) The commissioner may require a reasonable waiting period before reexamination of an applicant who failed to pass a previous similar examination.
(D) The examination fee shall be the same as that charged an applicant for license as an agent, broker, or solicitor under § 23-61-401.
A licensed surplus lines broker may accept and place surplus lines business for any insurance agent or broker licensed in this state for the kind and class of insurance involved and may compensate the agent or broker therefor.
(a) A surplus lines broker shall place surplus lines insurance only with insurers which have been approved by the Insurance Commissioner. The commissioner may maintain a list of approved foreign and alien surplus lines insurers in addition to those alien insurers maintaining status on the current National Association of Insurance Commissioners' nonadmitted insurers' quarterly listing. The approved list shall not contain:
(1) Any insurer which is not licensed in at least
one (1) state of the
(2) Any stock insurer having capital and surplus amounting to less than three million dollars ($3,000,000);
(3) Any type of insurer, other than stock insurers, having surplus of less than three million dollars ($3,000,000);
(4) An alien insurer, unless the insurer shall
have an established and effective trust fund within the
(5) Any insurer owned or controlled by a political sovereign or any agency of a political sovereign; or
(6) Any insurer which does not maintain on deposit in accordance with §§ 23-63-901 et seq. eligible securities having a market value at all times of not less than one hundred thousand dollars ($100,000) conditioned on the payment of creditors, or obligees, of the insurer in this state and the prompt payment of all claims arising and accruing to any persons during the term of the securities under any policy issued by the insurer.
(b)(1) Each foreign and alien surplus lines insurer on the approved list maintained by the commissioner shall, annually on or before March 1 or within any extension of time therefor which the commissioner for good cause may have granted, file with the commissioner a full and true statement of its financial condition, transactions, and affairs as of the December 31 preceding. The statement shall be in such general form and context, as required or not disapproved by the commissioner, as is in current use for similar reports to states in general with respect to the type of insurer and kinds of insurance to be reported on, and as supplemented for additional information required by the commissioner. The statement shall be verified by the oath of the insurer's president or vice president and secretary or actuary as applicable.
(2) The statement of an alien insurer shall be verified by the oath of the insurer's United States manager or other officer duly authorized and shall relate only to its transactions and affairs in the United States unless the commissioner requires otherwise. If the commissioner requires a statement as to the alien insurer's affairs throughout the world, the insurer shall file the statement with the commissioner as soon as reasonably possible.
(3) The commissioner may waive any requirement under this subsection for verification under oath.
(4) The insurer shall be subject to a penalty of one hundred dollars ($100) for each day of delinquency, such penalty to be collected by the commissioner, if necessary, by a civil suit therefor brought by the commissioner in the Circuit Court of Pulaski County unless the penalty is waived by the commissioner upon a showing by the insurer of good cause for its failure to file its report on or before the date due.
(5) At the time of filing, the insurer shall pay the fee for filing its annual statement as prescribed by § 23-61-401.
(6) In addition to information called for and furnished in connection with its annual statement, an insurer shall furnish to the commissioner as soon as reasonably possible such information with respect to any of its transactions or affairs as the commissioner may from time to time request in writing.
(a) Upon placing a surplus lines 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 the policy is not then available, the surplus lines broker's certificate. The certificate shall be executed by the broker and show the subject, coverage, conditions, and term of the insurance, the premium charged and taxes collected from the insured, and the name and address of the insurer. If the direct risk is assumed by more than one (1) insurer, the certificate shall state the name and address and proportion of the entire direct risk assumed by each such insurer.
(b) If after the issuance and delivery of the certificate there is any change as to the identity of the insurers, or the proportion of the direct risk assumed by the insurers as stated in the broker's original certificate, or in any other material respect as to the insurance coverage evidenced by the certificate, the broker shall promptly issue and deliver to the insured a substitute certificate accurately showing the current status of the coverages and the insurers responsible thereunder.
(c) If a policy issued by the insurer is not available upon placement of the insurance and the broker has issued and delivered his or her certificate as provided in subsection (a) of this section, 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 the policy to the insured in replacement of the broker's certificate theretofore issued.
(d) Any surplus lines 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 the insurance by delivery to the insured of a substitute certificate as provided in subsection (b) of this section, upon conviction, shall be subject to the penalties provided by § 23-60-108 or to any greater applicable penalty otherwise provided by law.
(e)(1)(A) Upon written request, each approved but nonadmitted surplus lines insurer shall mail or deliver the policyholder’s claim loss information to the policyholder or his or her surplus lines broker within thirty (30) days from the date of receipt of the request from the policyholder.
(B) If the claim loss information is provided to the surplus lines broker, the surplus lines broker shall deliver the claim loss information to the policyholder within seven (7) days from the date of receipt of the claim loss information from the surplus lines insurer.
(C) If the surplus lines broker generates the claim loss information for the surplus lines insurer, the claim loss information shall be provided to the policyholder within thirty (30) days from the date of receipt of the request from the policyholder.
(2)(A) “Claim loss information” as used in this subsection means the:
(i) Date of loss;
(ii) Property insured; and
(iii) Amount paid.
(B) “Claim loss information” as used in this subsection does not include supporting claim file documentation, including without limitation copies of claim files, investigation reports, evaluation statements, insured’s statements, and documents protected by a common law or statutory privilege.
(3) The surplus lines insurer or the surplus lines broker may charge a reasonable fee for providing the claim loss information as part of the expense of underwriting the policy.
(4) The surplus lines insurer and the surplus lines broker are not required to maintain claim loss information for more than five (5) years following the termination of coverage.
(a) As to a surplus lines risk which has been assumed by an unauthorized insurer pursuant to this subchapter, and if the premium thereon has been received by the surplus lines broker who placed the 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 the coverage. The insurer shall be liable to the insured as to losses covered by the insurance and for unearned premiums which may become payable to the insured upon cancellation of the insurance, whether or not in fact the broker is indebted to the insurer with respect to the insurance or for any other cause.
(b) Each unauthorized insurer assuming a surplus lines direct risk under this surplus lines insurance law shall be deemed thereby to have subjected itself to the terms of this section.
(c) Nothing in this section shall deprive the surplus lines insurer of any right of action against the surplus lines broker.
(a) Each surplus lines broker shall keep in his or her office a full and true record of each Arkansas surplus lines contract procured by him or her, including a copy of the daily report, if any, and showing 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 the insurer;
(7) Name and address of the insured;
(8) Brief general description of property insured and where located; and
(9) Other information as may be required by the Insurance Commissioner.
(b) The records shall at all times be open to examination by the commissioner and shall be kept available and open to inspection by the commissioner for five (5) years next following the termination of the contracts.
(a) Each surplus lines broker shall on or before March 1 of each year file with the Insurance Commissioner a statement for the preceding calendar year.
(b) The statement shall be on forms as prescribed and furnished by the commissioner and shall show:
(1) The gross amount of each kind of insurance transacted;
(2) The aggregate gross premiums charged, exclusive of sums collected to cover state or federal taxes;
(3) The aggregate of returned premiums and taxes paid to insureds;
(4) The aggregate of net premiums; and
(5) Additional information as required by the commissioner.
(a) No later than sixty (60) days following the end of the month in which surplus line insurance was procured, the surplus lines broker shall remit to the Treasurer of State, through the Insurance Commissioner, as a tax imposed for the privilege of transacting business as a surplus lines broker in this state, a tax of four percent (4%) on the direct premiums written, less return premiums and exclusive of sums collected to cover state or federal taxes, on surplus lines insurance subject to tax transacted by the surplus lines broker during the preceding months as shown by his or her affidavit filed with the commissioner.
(b) If a surplus lines policy covers risks or exposures only partially in this state, the tax so payable shall be computed on the proportion of the premium which is properly allocable to the risks or exposures located in this state.
(a)(1) If any surplus lines broker fails to file his or her annual statement by March 1, he or she shall be liable for a fine of fifty dollars ($50.00) for each day of delinquency commencing with March 1.
(2) For good cause shown and after a written request, the Insurance Commissioner may grant a reasonable extension of time within which the statement may be filed.
(3) The fine may be recovered by an action instituted by the commissioner in any court of competent jurisdiction.
(4) The commissioner shall pay to the Treasurer of State any fine so collected.
(b)(1) If any surplus lines broker fails to remit the tax as provided by law when the tax is due, the surplus lines broker shall be liable for a fine of fifty dollars ($50.00) for each day of delinquency commencing with the sixty-first day after the end of the month in which surplus lines insurance was procured.
(2) However, for good cause shown, the commissioner after a written request may grant a reasonable extension of time within which the tax may be paid.
(3) 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.
(4) The commissioner shall pay to the Treasurer of State any fine so collected.
(a) The Insurance Commissioner shall revoke any surplus lines broker's license:
(1) If the broker fails to file his or her annual statement or to remit the tax as required by law;
(2) If the broker fails to maintain an office, or to keep records, or to allow the commissioner to examine his or her records as required by law; or
(3) For any of the causes for which an agent's license may be revoked.
(b) The commissioner may suspend or revoke any or all licenses whenever he or she deems the suspension or revocation to be for the best interest of the people of this state.
(c) The procedures provided by § 23-64-218 for the suspension or revocation of agents' licenses shall be applicable to suspension or revocation of a surplus lines broker's license.
(d) No broker whose license has been so revoked shall again be so licensed within one (1) year thereafter, nor until any fines or delinquent taxes owed by him or her have been paid.
(a) An unauthorized insurer may be sued upon any cause of action arising in this state under any contract issued by it as a surplus lines contract, or certificate thereof issued by the surplus lines broker, pursuant to the procedure provided in Acts 1939, No. 181 [repealed].
(b) An unauthorized insurer issuing the policy or accepting the risk shall be deemed to have authorized service of process against it in the manner and to the effect as provided in this section and to have appointed the Insurance Commissioner as its agent for service of process issuing upon any cause of action arising in this state under any policy. The policy shall contain a provision stating the substance of this section and designating the person to whom the commissioner shall mail process.
(a) The Insurance Commissioner may remove an approved surplus lines insurer if, at any time, the commissioner has reason to believe that the insurer:
(1) Is in unsound financial condition;
(2) Is no longer eligible under § 23-65-310;
(3) Has willfully violated the laws of this state;
(4) Does not make reasonably prompt payment of just losses and claims in this state or elsewhere; or
(5) Has failed to file its annual statement when due.
(b) The commissioner shall promptly mail notice of all removals to each surplus lines broker which is currently licensed.