SB46 Alabama 2024 Session

Summary

Primary Sponsor

Shay ShelnuttSenator

Republican

Session

Regular Session 2024

Title

Insurance Department insurers required to be licensed, unauthorized insurers, exceptions for surplus line brokers, further provided for, authority for membership in the Surplus Line Insurance Multi-State Compliance Compact Act repealed.

Summary

Alabama SB46 updates surplus line insurance rules to align with NAIC model acts, requiring broker licensing and bonding, new reporting and tax rules, and repeal of the state’s surplus line multi-state compact.

What This Bill Does

SB46 updates Alabama's surplus line laws to match NAIC revisions. It requires surplus line brokers to be licensed and bonded, ensures coverage is placed with eligible insurers, and adds quarterly reporting and consumer fee disclosures. It imposes a 6% tax on surplus line direct premiums and adopts the federal home-state definition, while repealing the Surplus Lines Multi-State Compliance Compact Act; the changes take effect July 1, 2024.

Who It Affects

• Surplus line brokers (both resident and nonresident) who must obtain licenses, post bonds, designate responsible individuals for entity compliance, and file periodic reports and fees.
• Policyholders/insureds purchasing surplus line coverage who must receive clear disclosures of per-policy fees and understand contract labeling and tax implications.
• Authorized, unauthorized, alien, and foreign insurers who must meet new financial and eligibility requirements or face ineligibility orders.
• The Alabama Department of Insurance, which will administer licensing, reporting, financial stability reviews, and enforcement under the new rules.

Key Provisions

• Adopts NAIC Nonadmitted Insurance Model Act revisions and clarifies exemptions from diligent search requirements (including a federal exemption under 15 U.S.C. 8205) and that life/disability insurance is not covered.
• Requires surplus line brokers to file quarterly reports on surplus line placements (or affidavits where required) and to disclose insured consent when applicable.
• Imposes labeling and identification on surplus line contracts (initialing or bearing broker name/license and stamping with a surplus line notice).
• Sets licensing and bonding requirements for surplus line brokers (including bonds of at least $50,000 and an annual license process with process-service provisions for nonresidents).
• Establishes insurer eligibility standards for surplus lines (minimum capital/surplus or trust funds; restrictions on alien/foreign insurers; and possible commissioner orders of ineligibility).
• Imposes a 6% tax on direct surplus line premiums (with specific exclusions), requires annual reporting by March 1, and deposits tax revenue to the State General Fund; permits certain administrative rules and ties to the Surplus Lines Multi-State Compliance Compact act.
• Repeals Chapter 61 of Title 27 (Surplus Lines Multi-State Compliance Compact Act) and makes the new rules effective July 1, 2024.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance