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60A.206 QUALIFICATION AS ELIGIBLE SURPLUS LINES INSURER.
    Subdivision 1. Insurers to be recognized by commissioner. A surplus lines licensee shall
place surplus lines insurance only with insurers which are in a stable and unimpaired financial
condition. An insurer recognized by the commissioner as an eligible surplus lines insurer pursuant
to subdivision 2 shall be considered to meet the requirements of this subdivision. Recognition
as an eligible surplus lines insurer shall be conditioned upon the insurers continued compliance
with sections 60A.195 to 60A.209.
    Subd. 2. Application for recognition. An insurer not otherwise licensed to engage in
the business of insurance in Minnesota may apply for recognition as an eligible surplus lines
insurer by filing an application in the form and with the information as reasonably required by
the commissioner regarding the insurer's financial stability, reputation, integrity and operating
plans, accompanied by a license fee of $500. The commissioner may delegate to an association
the power to process and make recommendations on applications for recognition as an eligible
surplus lines insurer. Notwithstanding delegation by the commissioner, an applicant may file an
application directly with the commissioner.
    Subd. 3. Standards to be met by insurers. (a) The commissioner shall recognize the insurer
as an eligible surplus lines insurer when satisfied that the insurer is in a stable, unimpaired
financial condition and that the insurer is qualified to provide coverage in compliance with
sections 60A.195 to 60A.209. If filed with full supporting documentation before July 1 of any
year, applications submitted under subdivision 2 shall be acted upon by the commissioner before
December 31 of the year of submission.
(b) The commissioner shall not authorize an insurer as an eligible surplus lines insurer unless
the insurer continuously maintains capital and surplus of at least $3,000,000 and transaction
of business by the insurer is not hazardous, financially or otherwise, to its policyholders, its
creditors, or the public. Each alien surplus lines insurer shall have current financial data filed with
the National Association of Insurance Commissioners Nonadmitted Insurers Information Office.
(c) Eligible surplus lines insurers domiciled within the United States shall file an annual
statement and an annual financial audit, under the terms and conditions of section 60A.13,
subdivisions 1, 3a, and 6
, and are subject to the penalties of section 72A.061, and are subject to
section 60A.03, subdivision 5, in regard to those requirements. The commissioner also has the
powers provided in section 60A.13, subdivision 2, in regard to eligible surplus lines insurers.
(d) Eligible surplus lines insurers domiciled outside the United States shall file an annual
statement on the standard nonadmitted insurers information office financial reporting format as
prescribed by the National Association of Insurance Commissioners and an annual financial audit
performed by an independent accounting firm.
    Subd. 4. Removal of insurers. When the commissioner considers it necessary, the
commissioner may request information about or examine the affairs of any eligible surplus lines
insurer at the expense of the insurer, to determine whether the insurer should continue to remain
on the list of eligible surplus lines insurers. If the commissioner determines that it is in the public
interest to remove an insurer from the list because the insurer no longer meets the requirements
of sections 60A.195 to 60A.209, or is no longer qualified to provide coverage under sections
60A.195 to 60A.209, the commissioner shall do so. If an insurer removed from the list desires a
hearing pursuant to the Administrative Procedure Act, the hearing shall be scheduled within 30
days following request for the hearing.
    Subd. 5. Trust fund to be maintained. Before recognition as an eligible surplus lines
insurer in this state, an alien insurer shall maintain a trust fund in the United States in cash,
marketable securities, or other substantially equivalent instruments of at least $1,500,000 with a
United States bank which is a member of the Federal Reserve System or which is on deposit with
regulatory authorities in this or another state for the benefit of all United States policyholders and
beneficiaries. A trust fund required under this subdivision shall not have an expiration date which
is at any time less than five years in the future, on a continuing basis.
    Subd. 6. Alternative means of compliance. Subdivisions 3 and 5 shall not apply to a group
including incorporated and unincorporated, individual alien insurers which, in place of the
requirements prescribed in subdivisions 3 and 5, maintain assets as provided in subdivision 3 and
hold in trust for all policyholders and beneficiaries in the United States not less than $50,000,000 in
the aggregate. The incorporated members of the group shall not be engaged in any business other
than underwriting as a member of the group and must be subject to the same level of solvency
regulation and control by the group's domiciliary regulator as are the unincorporated members.
    Subd. 7. Appointment of agent for service of process. Each eligible surplus lines insurer
shall appoint the commissioner as its resident agent, for purposes of service of process.
History: 1981 c 221 s 11; 1986 c 444; 1987 c 358 s 95; 1992 c 564 art 1 s 23; 1994 c 426
s 8; 1994 c 485 s 11

Official Publication of the State of Minnesota
Revisor of Statutes