- Alabama does not maintain a list of eligible surplus lines insurers but does publish a list of certain unauthorized insurers that are known to be ineligible either as to financial requirements or as to claims practices.
- Alabama does have a Surplus Lines Association.
- Alabama does not have an Export List called Placement List.
- Alabama does have an industrial insured exemption that will remain in effect (see Appendix C). As of 7/21/2011, the exempt commercial purchaser exemption also became effective but is not yet codified.
- Surplus lines tax: 6%, payable by broker.
- Alabama has adopted SLIMPACT (HB 76, Act 2011-537) Effective: September 1, 2011.
- Alabama does not allow domestic surplus lines insurers in the state.
Eligibility and Filing Requirements (Alien Insurers Only):
Alabama may not prohibit a surplus lines broker from placing nonadmitted insurance with, or procuring nonadmitted insurance from, a nonadmitted insurer domiciled outside the U.S. that is listed on the Quarterly Listing of Alien Insurers maintained by the International Insurers Department of the NAIC.
Eligibility and Filing Requirements (Foreign Insurers Only):
Alabama may not impose eligibility requirements on, or otherwise establish eligibility criteria for, nonadmitted insurers domiciled in a U.S. jurisdiction, except:
- Alabama may require that the insurer be authorized to write the type of insurance in its domiciliary jurisdiction; and
- Alabama may require that the insurer have capital and surplus or its equivalent under the laws of its domiciliary jurisdiction which equals the greater of:
- The minimum capital and surplus requirements under the law of Alabama; or
The insurance commissioner may waive the minimum capital and surplus requirements if the commissioner makes an affirmative finding of acceptability after considering: quality of management, capital and surplus of a parent company, company underwriting profit and investment trends, market availability, and company record and reputation within the industry. The commissioner may not make a finding of acceptability of the insurer’s capital and surplus is under $4.5 million.
Types of Insurance Exempted from Surplus Lines Regulation:
- Wet marine and transportation insurance.
- Insurance on subjects located, resident or to be performed wholly outside Alabama or on vehicles or aircraft owned and principally garaged outside Alabama.
- Insurance on property or operation of railroads engaged in interstate commerce.
- Insurance of aircraft owned or operated by manufacturers of aircraft or aircraft operated in scheduled interstate flight, or cargo of such aircraft or against liability, other than workmen’s compensation and employer’s liability, arising out of the ownership, maintenance or use of such aircraft.
- The property and operations of the shipbuilding and ship repair industry engaged in interstate or foreign commerce and vessels, cargoes, watercraft, piers, wharves, graving docks, drydocks, marine railways and building ways, commonly known as wet marine.
- Industrial insurance.
Other Comments or Requirements:
- The Alabama Department of Insurance (“ALDOI”) has instituted a system to electronically capture data reported by surplus lines brokers and surplus lines insurers, the purpose of which is to ensure that all policies written in Alabama on a surplus lines basis are reported to the ALDOI and all taxes due to the state of Alabama are paid.The program compares data collected from surplus lines companies doing business in Alabama against the data collected from Alabama brokers, thus surplus lines companies need to ensure that they have the correct name and license number of Alabama brokers placing business on their behalf.Any surplus lines company failing to cooperate with the ALDOI in this program will be deemed to be conducting “its affairs in a manner as to result in the avoidance of payment of tax,” in violation of Section 27.10.26, Code of Alabama 1975, and will be subject to the penalties thereof, which in effect would mean being “blacklisted” as an acceptable surplus line insurer in Alabama.For information as to what information must be included in the electronic report, please refer to the ‘Instructions for Formatting the Excel Spreadsheet’ and the ‘Surplus Lines Unauthorized Insurance Policy Data’ example located on the ALDOI homepage at www.aldoi.gov under ‘Online Services’ then ‘Surplus Line Information.’Form PR can be found on the ALDOI homepage under ‘Companies/Filing Requirements/Annual Audit Exam Transmittal Form PR.’
- Onus is on broker to ascertain if insurer:
- Is financially secure;
- Has transacted business for 5 years in its domiciliary country or state unless it is a wholly owned subsidiary of an insurer authorized in Alabama;
- Is not controlled by a foreign government;
- Has not been declared ineligible; and
- Has appropriate trust fund (if alien).
- Alabama enacted legislation in 2010 which allows a surplus lines broker to place part of an insurance risk with a non-admitted insurer which otherwise satisfies the requirements for a surplus lines insurer in the state, except for the five year seasoning requirement in its domiciliary jurisdiction, by making a special deposit in the state of not less than $1,000,000 for the benefit of Alabama policyholders.
- The Alabama DOI issued a Bulletin in 2013 clarifying that the written disclosure statement required to be sent to insureds to the effect that the insurance coverage provided is not written by an authorized (licensed) insurer and not subject to guaranty fund protection, no longer applies to commercial insurance. The 1992 Bulletin which imposes the disclosure requirement will continue to apply to personal lines property, primary personal lines auto, homeowners (owner occupied), renters/tenants, farm owners, condo (unit owner), dwelling fire, and mobile home manufactured homes. The requirements of this Bulletin apply to new or renewed surplus lines policies which became effective on or after May 1, 2013.
- Every insurance contract procured and delivered as a surplus lines coverage must be initialed by, or bear the name and license number of, the surplus lines broker who procured it and must have stamped upon it the following:
“This contract is registered and delivered as a surplus line coverage under the Alabama Surplus Line Insurance Law.”