S.F. _____ Section 1. Section 515I.2, Code 2019, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 6A. “Domestic surplus lines insurer” means 3 a domestic insurer that has been authorized by the commissioner 4 pursuant to chapter 515I to do business as a domestic surplus 5 lines insurer with which a surplus lines insurance producer may 6 place surplus lines insurance. 7 Sec. 2. Section 515I.2, subsection 7, Code 2019, is amended 8 to read as follows: 9 7. “Eligible surplus lines insurer” means either any of the 10 following: 11 a. A nonadmitted insurer that has filed an application with 12 the commissioner and been approved for placement of surplus 13 lines insurance and appears on the Iowa listing of nonadmitted 14 companies. 15 b. A nonadmitted insurer domiciled outside of the United 16 States that is listed on the quarterly listing of alien 17 insurers maintained by the national association of insurance 18 commissioners. 19 c. A domestic surplus lines insurer authorized by the 20 commissioner. 21 Sec. 3. Section 515I.3, Code 2019, is amended to read as 22 follows: 23 515I.3 Placement of surplus lines insurance business with 24 nonadmitted insurers and domestic surplus lines insurers . 25 1. Surplus lines insurance may be placed by a surplus lines 26 insurance producer with a nonadmitted insurer or domestic 27 surplus lines insurer only if all of the following requirements 28 are met: 29 a. The proposed nonadmitted insurer or domestic surplus 30 lines insurer is an eligible surplus lines insurer. 31 b. The proposed nonadmitted insurer or domestic surplus 32 lines insurer is authorized to write the type of insurance 33 sought in this state in its domiciliary jurisdiction. 34 c. Unless otherwise exempt from this requirement, after a 35 -1- LSB 2378XC (1) 88 ko/rn 1/ 5

S.F. _____ diligent search the full amount or type of insurance cannot be 1 obtained from an admitted insurer. 2 d. All other requirements of this chapter are met. 3 2. a. In addition to the full amount of gross premiums 4 charged by the nonadmitted insurer or domestic surplus lines 5 insurer for the insurance on which a premium tax is imposed 6 for surplus lines insurance for which the insured’s home state 7 is Iowa, a surplus lines insurance producer shall collect and 8 pay to the state of Iowa the appropriate amount of premium tax 9 as provided in section 432.1 for surplus lines insurance. The 10 commissioner shall adopt rules to specify the use of credits or 11 deductions that may be applied to the premium tax. 12 b. The tax on any portion of the premium unearned at the 13 termination of the surplus lines insurance that has been 14 credited by the state shall be returned to the policyholder 15 directly by the surplus lines insurance producer. The surplus 16 lines insurance producer is prohibited from rebating, for any 17 reason, any part of the tax. 18 3. This section shall not apply to a person properly 19 licensed as an insurance producer, who, for a fee and pursuant 20 to a written agreement, is engaged solely to offer advice, 21 counsel, opinion, or service to an insured with respect to 22 the benefits, advantages, or disadvantages promised under 23 any proposed or in-force policy of insurance if the person 24 does not, directly or indirectly, participate in the sale, 25 solicitation, or negotiation of insurance on behalf of the 26 insured. 27 4. Insurance placed under this section shall be valid and 28 enforceable as to all parties. 29 Sec. 4. NEW SECTION . 515I.4A Requirements for domestic 30 surplus lines insurers. 31 1. An insurer that is domiciled in this state may apply 32 to the commissioner for licensure as a domestic surplus lines 33 insurer if all of the following requirements are met: 34 a. The insurer possesses policyholder surplus of the greater 35 -2- LSB 2378XC (1) 88 ko/rn 2/ 5

S.F. _____ of either fifteen million dollars or three hundred percent of 1 authorized-control-level risk-based capital pursuant to chapter 2 521E. 3 b. The insurer is an eligible surplus lines insurer in at 4 least one jurisdiction other than this state. 5 c. The board of directors of the insurer has passed a 6 resolution seeking approval as a domestic surplus lines insurer 7 in this state and stating that the insurer shall only write 8 surplus line business. The resolution shall not be amended 9 without approval of the commissioner. 10 d. The commissioner has approved the insurer as a domestic 11 surplus lines insurer in this state. 12 2. For the purposes of the federal Nonadmitted and 13 Reinsurance Reform Act of 2010, 15 U.S.C. §8201 et seq., 14 a domestic surplus lines insurer shall be considered a 15 nonadmitted insurer as the term is referenced in the Act, with 16 respect to risks insured in this state. 17 3. A domestic surplus lines insurer shall be deemed 18 an eligible surplus lines insurer and is subject to all 19 requirements of this chapter that are applicable to an eligible 20 surplus lines insurer. A domestic surplus lines insurer is 21 authorized to write any kind of insurance that a nonadmitted 22 insurer not domiciled in this state is eligible to write. 23 4. Notwithstanding any other provision of law to the 24 contrary, a policy or contract issued in this state by a 25 domestic surplus lines insurer shall be subject to taxes 26 assessed on a surplus lines policy or contract issued by a 27 nonadmitted insurer, including the premium tax on surplus lines 28 insurance, but shall not be subject to other taxes levied on an 29 admitted insurer, whether domestic or foreign. 30 5. A policy or contract issued by a domestic surplus lines 31 insurer is not a policy or contract for which coverage is 32 provided under the Iowa insurance guaranty association pursuant 33 to chapter 515B or the Iowa life and health insurance guaranty 34 association pursuant to chapter 508C. 35 -3- LSB 2378XC (1) 88 ko/rn 3/ 5

S.F. _____ 6. All financial and solvency requirements imposed in this 1 state upon a domestic admitted insurer are applicable to a 2 domestic surplus lines insurer unless a domestic surplus lines 3 insurer is specifically exempted from such requirements. 4 7. A policy or contract issued by a domestic surplus lines 5 insurer in this state is exempt from all requirements imposed 6 in this state relating to insurance rating plans, policy or 7 contract forms, policy or contract cancellation and nonrenewal, 8 or premiums charged to the insured in the same manner and to 9 the same extent as a policy or contract issued by a nonadmitted 10 insurer domiciled in another state. 11 EXPLANATION 12 The inclusion of this explanation does not constitute agreement with 13 the explanation’s substance by the members of the general assembly. 14 This bill establishes requirements for domestic surplus 15 lines insurers in the state. A “domestic surplus lines 16 insurer” is an insurer that is domiciled in this state and has 17 been authorized by the insurance commission to do business as 18 a domestic surplus lines insurer with which a surplus lines 19 insurance producer may place surplus lines insurance. The bill 20 specifies requirements that a nonadmitted insurer domiciled in 21 this state must meet to be considered a domestic surplus lines 22 insurer. 23 A domestic surplus lines insurer is considered a nonadmitted 24 insurer as that term is used in the federal Nonadmitted 25 and Reinsurance Reform Act of 2010. A domestic surplus 26 lines insurer that has been authorized by the commissioner 27 is an eligible surplus lines insurer and is subject to all 28 requirements of Code chapter 515I that are applicable to an 29 eligible surplus lines insurer. A domestic surplus lines 30 insurer is authorized to write any kind of insurance that a 31 nonadmitted insurer not domiciled in this state is eligible to 32 write. 33 Notwithstanding any other provision of law to the contrary, 34 a policy or contract issued in this state by a domestic surplus 35 -4- LSB 2378XC (1) 88 ko/rn 4/ 5

S.F. _____ lines insurer is subject to the same taxes as are assessed on a 1 policy or contract issued by a nonadmitted insurer, including 2 the premium tax on surplus lines insurance, but is not subject 3 to other taxes levied on an admitted insurer, whether domestic 4 or foreign. A policy or contract issued by a domestic surplus 5 lines insurer is not subject to the jurisdiction of the Iowa 6 insurance guaranty association pursuant to Code chapter 515B 7 or the Iowa life and health insurance guaranty association 8 pursuant to Code chapter 508C. 9 All financial and solvency requirements imposed in this 10 state upon a domestic admitted insurer are applicable to a 11 domestic surplus lines insurer unless a domestic surplus lines 12 insurer is specifically exempted from such requirements. The 13 bill exempts a policy or contract issued by a domestic surplus 14 lines insurer from all requirements imposed in this state 15 relating to insurance rating plans, policy or contract forms, 16 policy or contract cancellation and nonrenewal, and premiums 17 charged to the insured in the same manner and to the same 18 extent as a policy or contract issued by a nonadmitted insurer 19 domiciled in another state. 20 -5- LSB 2378XC (1) 88 ko/rn 5/ 5