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Two bills relative to surplus line insurance were sent to the Governor this week.
AB 1708 (Villines), sponsored by the California Department of Insurance, would increase the minimum capital and surplus requirement for surplus lines companies from $15 million to $45 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. The bill would require, for a surplus lines carrier on the Department of Insurance's LESLI list which does not, as of January 1, 2011, meet the capital and surplus requirements imposed by this act, to have at least 30 million dollars of capital and surplus as of December 31, 2011 and at least 45 million dollars of capital and surplus by December 31, 2013. Lastly, AB 1708 provides for a staged transition to the new capital and surplus requirements by December 31, 2013.
AB 1708 passed the Senate with a vote of 34-0 and the Assembly with a vote of 63-0.
The Assembly also passed AB 1837 (Gaines), sponsored by the Pacific Association of Domestic Insurance Companies. AB 1837 would permit a California domestic insurer to provide designated administrative services to an affiliated non-admitted insurer which is approved by the California Department of Insurance for accepting surplus lines placements in California. Administrative services include computer operations, clerical and administrative staffing support, human resources, claims adjusting and investing services.
AB 1837 passed the Senate with a vote of 32-0 and the Assembly with a vote of 60-0.