HB220 Alabama 2010 Session

Summary

Primary Sponsor

Yvonne Kennedy

Democrat

Co-Sponsors

Jamie IsonSteve McMillanAlan BakerChad FincherJoe FaustHarry ShiverGerald H. AllenVictor GastonRandy DavisWilliam E. ThigpenJames E. BuskeyLesley VanceSpencer Collier

Session

Regular Session 2010

Title

Surplus line insurance, foreign and alien insurers, requirement for transacting insurance for minimum of five years in its state or country of domicile, exception under certain conditions, Sec. 27-10-26 am'd.

Summary

HB220 would let certain foreign and alien surplus line insurers transact in Alabama even if they’ve been authorized for less than five years in their domicile, so long as they place a qualifying deposit in Alabama, and it tightens other financial eligibility rules for surplus line insurers.

What This Bill Does

It amends the surplus line rules to create an exception to the five-year domicile requirement for insurers that place a deposit in Alabama. It establishes minimum financial thresholds that surplus line brokers must verify before placing coverage with certain insurers, including requirements for capital, surplus, or trust funds. It allows a process for using named unauthorized insurers for parts of a risk, if a deposit of at least $1,000,000 is made in Alabama to protect policyholders, and it authorizes the Insurance Commissioner to adopt implementing rules and issue ineligibility orders when insurers fail to meet requirements.

Who It Affects

• Foreign and alien surplus line insurers that want to transact in Alabama and may qualify for the five-year-domicile exception by placing a deposit in Alabama.
• Surplus line brokers who must verify financial condition before placing business and may use the supplemental statement process with deposits for named unauthorized insurers.
• Alabama policyholders, who are protected by deposits held by the department for the benefit of Alabama policyholders when unauthorized insurers are used.
• Alabama Department of Insurance, which will administer deposits, implement rules, and issue eligibility decisions.

Key Provisions

• Adds an exception to the five-year domicile requirement for foreign/alien surplus line insurers if they place a qualifying deposit in Alabama.
• Sets financial thresholds to prevent placing risk with unsound or ineligible insurers, including: (a) not authorized in the US for the type of coverage and with at least $5,000,000 in capital/surplus or a $5,000,000 guaranteed trust fund; (b) alien insurers not authorized in the US must have a U.S. trust fund of at least $2,500,000 and capital/surplus of at least $15,000,000; (c) foreign/alien insurers with less than five years since authorization face conditions or deposits as allowed under subsection (c); (d) insurers with voting control by government are disallowed; (e) ineligibility orders can be issued for financial failure, failure to pay valid claims, or tax avoidance.
• If a risk qualifying under the surplus line law cannot be procured from compliant insurers except for the five-year issue, brokers may file a supplemental signed statement to place that portion with named unauthorized insurers that meet most requirements, provided these insurers deposit at least $1,000,000 in cash or securities for the benefit of Alabama policyholders.
• Authorized deposits for named unauthorized insurers must be held by the department for the benefit of Alabama policyholders and follow the department’s deposit rules, with the commissioner empowered to adopt implementing rules.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance