The California Legislature has passed two surplus lines insurance bills that have been sent to Calif. Gov. Arnold Schwarzenegger.
AB 1708 (Villines), sponsored by the California Department of Insurance, would require the total capital and surplus requirements for nonadmitted insurers in California to be at least $45 million, up from $15 million. The bill would require $25 million of this amount to be held in forms that meet the requirements of Department of Insurance statutes relative to the general investment law. AB 1708 would authorize the balance of the required minimum capital to be held in instruments that are allowable under either the General Investments Law or the Excess Funds Investments Law. If a nonadmitted insurer on the List of Eligible Surplus Line insurers does not meet the capital and surplus requirements as of Jan. 1, 2011, the insurer would be required to have at least $30 million in capital and surplus as of Dec. 31, 2011, and at least $45 million by Dec. 31, 2013.
The Assembly also passed AB 1837, which would authorize admitted affiliates of California domestic insurers to provide administrative services to nonadmitted affiliates approved by the DOI to accept surplus lines placements in California. Administrative services include computer operations, clerical and administrative staffing support, human resources, claims adjusting and investing services.
The last day for the governor to sign or veto bills passed by the legislature is September 30.
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