Current through Register Vol. 56, No. 18, September 16, 2024
(a) Except for
coverages on the Exportable List or with respect to the procurement of
insurance for an exempt commercial purchaser subject to (g) below, any licensed
New Jersey insurance producer who may be placing coverage on behalf of a New
Jersey insured shall first make a diligent effort to place the coverage with an
authorized insurer. As evidence of having made such an effort, the producer
shall complete form SLPS-6 CERT1, incorporated herein by reference as
subchapter Appendix Exhibit B. Only that coverage not so procurable from an
authorized insurer may be placed with a surplus lines insurer, provided,
however, that if the unprocurable coverage appears on the Exportable List, the
associated commercial general liability and commercial property coverages may
be exported along with the unprocurable coverage.
1. If a licensed producer has a bona fide
written renewal quote or coverage exists from an authorized insurer for any
class or risk that is on the exportable list and that coverage is placed in the
surplus lines market, the surplus lines agent shall stamp the policy as
"Exportable."
2. The surplus lines
agent shall maintain the records of each surplus lines contract and shall make
these records available for inspection by the Commissioner for a period of at
least five years.
3. At the time of
quotation, the originating producer shall provide to the applicant a copy of
the form incorporated herein by reference as Exhibit A-1 in the Appendix to
this chapter and retain a signed copy.
4. At the time of issuing or delivering a
surplus lines policy, evidence of coverage, or a renewal policy, the surplus
lines producer shall place upon the policy, or provide as a stand alone notice,
the statement incorporated herein by reference as Exhibit A-2 in the Appendix
for this subchapter. This paragraph shall not apply to insurance procured from
a domestic surplus lines insurer. The notice required to be provided with
respect to insurance procured from a domestic surplus lines insurer is set
forth in 11:1-28.4A(f).
(b) When coverage on behalf of a
New Jersey insured cannot be placed with an authorized insurer or a surplus
lines insurer as set forth in (a) above, a New Jersey licensed surplus lines
agent may place the coverage with an ineligible unauthorized insurer.
Procurement of insurance from an ineligible unauthorized insurer may be made
only when it is not otherwise procurable from admitted insurers or a surplus
lines insurer and only if the express conditions in (b)1 through 5 below are
fully satisfied at least five working days prior to the binding of insurance
coverage.
1. The producer shall complete form
SLPS-6 CERT1, incorporated herein by reference as Exhibit B in the Appendix to
this subchapter, file it with the surplus lines agent and retain a
copy.
2. The surplus lines agent
shall complete form SLPS-8 AFF3 Supplemental Certification, incorporated herein
by reference as Exhibit C in the Appendix to this subchapter, and attach form
SLPS-6 CERT1 from the producer pursuant to (b)1 above.
3. The ineligible unauthorized insurer shall
have made a deposit or deposits with the Commissioner as follows:
i. The amount of the deposit must be 125
percent of expected losses, but not less than $ 100,000, in United States
Government Bonds pursuant to the instructions set forth in N.J.A.C. 11:2-32,
including all supporting documents and calculations used to determine the
amount of the deposit; and
ii. The
deposit set forth in (b)3i above shall be separately made for each individual
policy; in the case of a group or plan of insurance, a deposit shall be
separately made for each individual New Jersey citizen or resident who is
insured through such policy or plan or who has received a certificate or other
evidence of coverage under such policy or plan; and
iii. Upon good cause shown, the amount of the
deposit provided in (b)3i above shall be reduced or waived, in the
Commissioner's discretion. A showing of good cause requires:
(1) A rating in one of the four highest
rating categories from a company listed in
11:1-41.3; except that a Weiss
Rating must be in its highest category;
(2) Domicile in a National Association of
Insurance Commissioners (NAIC) accredited jurisdiction; and
(3) No more than five new or renewal
placements per year.
4. The surplus lines agent shall file a
certified copy of the ineligible unauthorized insurer's annual statement of
financial condition, current as of the date of filing, which evidences net
assets of at least $ 5,000,000, consisting of at least $ 1,500,000 liquid
assets with: Surplus Lines Examining Office (SLEO)
New Jersey Department of Banking and Insurance
20 West State Street
PO Box 325
Trenton, New Jersey 08625-0325
5. The surplus lines agent shall maintain the
records of each placement with an ineligible unauthorized insurer and shall
make these records available for inspection by the Commissioner for a period of
at least five years.
(c) When an insurance risk or any part
thereof is placed with an ineligible unauthorized insurer pursuant to (b)
above, the policy, binder or cover note shall be clearly stamped in boldface
type with the following:
"All or part of the insurers participating in this risk have
not been admitted to transact business in the State of New Jersey, nor have
they been approved as surplus lines insurers by the Commissioner of Banking and
Insurance of New Jersey. The placing of such insurance by a duly licensed
surplus lines agent in this State, shall not be construed as approval of such
insurer by the Commissioner of Banking and Insurance of the State of New Jersey
and insurance coverage provided by such insurer is not protected by either the
New Jersey Guaranty Fund or by the New Jersey Surplus Lines Insurance Guaranty
Fund."
(d) Upon renewal of
any placement pursuant to (b) above, a diligent effort shall be made to place
the business with an authorized insurer or a surplus lines insurer in
accordance with (a) above. If the business cannot be placed with an authorized
insurer or a surplus lines insurer, the following conditions shall be met at
least five business days prior to the effective date of the renewal policy:
1. The surplus lines agent shall, in
accordance with
11:1-33.3(b) 1,
complete forms SLPS-6-Certl and SLPS-8-AFF3, prior to each renewal;
2. The most recent certified annual statement
of the insurer's financial condition shall be filed with the SLEO;
and
3. The policy shall be stamped
clearly in boldface type with the filing "All or part of the insurers
participating in this risk have not been admitted to transact business in the
State of New Jersey, nor have they been approved as a surplus lines insurer by
the Commissioner of Banking and Insurance of New Jersey. The placing of such
insurance by a duly licensed surplus lines agent in this State, shall not be
construed as approval of such insurer by the Commissioner of Banking and
Insurance of the State of New Jersey and insurance coverage provided by such
insurer is not protected by either the New Jersey Insurance Guaranty Fund or by
the New Jersey Surplus Lines Guaranty Fund."
(e) The New Jersey Surplus Lines Insurance
Guaranty Fund Act, N.J.S.A. 17:22-6.7 0 et seq., does not provide protection
for New Jersey insureds who are insured by policies procured from ineligible
unauthorized insurers as described in (b) and (c) above. Therefore, no Guaranty
Fund surcharge shall be charged or added to premiums related to these
policies.
(f) A surplus lines agent
may receive a commission for his or her services rendered on behalf of an
ineligible unauthorized insurer, pursuant to insurance placements which conform
to (b) and (c) above.
(g) The
requirements in (a) above shall not apply with the respect to the procurement
of insurance for an "exempt commercial purchaser" provided:
1. The surplus lines producer procuring or
placing the surplus lines insurance has disclosed to the exempt commercial
purchaser that such insurance may or may not be available from the admitted
market that may provide greater protection with more regulatory oversight;
and
2. The exempt commercial
purchaser has subsequently requested in writing the producer to procure or
place such insurance from a nonadmitted insurer.
