Surplus Lines Insurance Amendments Bill, 2014 Legislative Session (HB129)

State Office Building Suite 3110, Salt Lake City, UT 84114-6901 (801) 538-3800 Facsimile (801) 538-3829 www.insurance.utah.gov State of Utah GARY R. HERBERT Governor SPENCER J. COX Lieutenant Governor Insurance Department TODD E. KISER Insurance Commissioner Bulletin 2014-5 To: All surplus lines insurers and surplus lines producers/brokers From: Todd E. Kiser, Utah Insurance Commissioner Date: May 15, 2014 Subject: Surplus Lines Insurance Amendments Bill, 2014 Legislative Session (HB 129) The Utah Insurance Department (Department) and Surplus Line Association of Utah (SLAU) is issuing this Bulletin to inform all insurers, producers and brokers writing surplus lines insurance in Utah of changes made to Utah Code Annotated (U.C.A.) §31A-15-103 by the Utah Legislature in the 2014 Legislative Session. House Bill 1291 (HB 129) was passed by the Utah Legislature during its 2014 Legislative Session. The bill makes certain changes to surplus lines policies, the rates of which are subject to adjustment (auditable policy) that are issued or renewed in Utah on or after the May 13, 2014 effective date of the bill. The bill adds three new subsections to U.C.A. § 31A-15-103(12), (13) and (14). Those subsections provide that: Subsection (12)  If a surplus lines insurer elects to audit a surplus lines policy it issued, the audit must be initiated within six months after the expiration of the term for which the premium is paid.  An audit must be completed within three years after the surplus lines insurance transaction expires.  If an audit is not initiated within six months after the policy’s expiration or completed within three years, the surplus lines insurer cannot charge premium in excess of the terms of the original policy ated within six months after the expiration of the term for which the premium is paid.  An audit must be completed within three years after the surplus lines insurance transaction expires.  If an audit is not initiated within six months after the policy’s expiration or completed within three years, the surplus lines insurer cannot charge premium in excess of the terms of the original policy. Subsection (13)  A surplus lines insurer may not count as earned premium an amount in excess of fifty percent (50%) of the initial premium until the earlier of: (i) the completion of an audit; or (ii) the term for which the auditable policy was written has expired and the time to conduct an audit has passed. 1 http:/ / le.utah.gov/ ~2014/ bills/ static/ HB0129.html