2006 Massachusetts Code - Chapter 175 — Section 168. Special brokers; licensing; contracts for unauthorized companies; penalty.

Section 168. The commissioner may, upon the payment of the fee prescribed by section fourteen, issue to any suitable person of full age, a license to act as a special insurance broker to negotiate, continue or renew contracts of insurance against any of the hazards specified in any of the clauses of section forty-seven excepting the fifteenth clause thereof, and except accident and health, workers’ compensation, compulsory motor vehicle liability and life insurance on property or interests in this commonwealth in foreign companies not authorized to transact such business therein, upon the following conditions: The applicant for the license shall file with the commissioner a written application as prescribed by section 162L, which shall be executed on oath by the applicant and kept on file by the commissioner. If the commissioner is satisfied that the applicant is trustworthy and competent, he shall issue the license, subject to suspension or revocation at the pleasure of the commissioner, which shall expire in one year from its date, unless sooner suspended or revoked as aforesaid. The license may, in the discretion of the commissioner, be renewed for each succeeding year, upon the payment of the fee prescribed by section fourteen, without requiring anew the detailed information specified by section 162L. Whenever the person named in such license shall procure any insurance in such companies on any such property or interest, he shall in every case execute, and within twenty days thereafter, file with the commissioner an affidavit stating that the full amount of insurance required to protect said property or interest is not procurable, after a diligent effort has been made to do so, from among companies admitted to transact insurance in the commonwealth against the hazard or hazards involved, and that the amount of insurance procured in foreign companies not authorized to transact such business in the commonwealth is only the excess over the amount so procurable from such admitted companies. Said affidavit shall have force and effect for one year only from the date thereof or expiration of policy, whichever comes later. The affidavit shall not be required in connection with a transaction with an exempt commercial risk or policyholder as defined in section 224, if the commercial risk or policyholder acknowledges in writing its understanding, that: (1) the company from which insurance is procured is not admitted to transact insurance in the commonwealth; and (2) in the event of the insolvency of the company, a loss shall not be paid by the Massachusetts Insurers Insolvency Fund under chapter 175D. Each licensed special insurance broker shall maintain a copy of the acknowledgement for inspection by the commissioner with respect to all policies of insurance so procured by the licensee for exempt commercial risks or policyholders. Such licensed person shall not be required to file such affidavit if one relative to the same property or interests has been filed within the preceding twelve months by any broker licensed under this section, nor to offer any portion of such insurance to any company not possessed of net cash assets of at least two hundred thousand dollars, nor to one which has within the preceding twelve months been in an impaired condition, nor shall such licensed person procure any such insurance on said property or interests from any foreign company not authorized to transact business in the commonwealth unless (a) such company is possessed of net cash assets of at least three hundred thousand dollars computed on the basis fixed by sections ten to twelve, inclusive, and on the form prescribed by section twenty-five, and has satisfied the commissioner that its officers and directors are of good repute and competent to manage an insurance company and that the management of the company is carrying out its insurance contracts in good faith and has filed with the commissioner an examination report of the affairs of the company completed within the previous three years and made by the proper supervisory official of its home state, and has made a deposit of not less than four hundred thousand dollars with the state treasurer or with the proper board or officer of some other state of the United States in accordance with the terms and conditions hereinafter specified, or (b) such company has filed a financial statement on a form satisfactory to the commissioner and conforms to and maintains the financial requirements specified in subparagraph (i) of paragraph (D) of subsection (1) of section 20A. Such deposit shall be made in exclusive trust for the benefit and security of all its policyholders in the United States including obligees of bonds executed by such company as surety, and when made with the state treasurer may be made in the securities and subject to the limitations specified in sections sixty-three and sixty-six, or in cash or in such other securities as the commissioner may approve, provided that bonds need not be accepted by the state treasurer unless in registered form and of denominations satisfactory to him, and shall not be returned to the company until it has ceased to transact business in the commonwealth nor until the commissioner is satisfied that the company is under no obligation to such policyholders or obligees in the United States for whose benefit such deposit was made, nor until he has given his written consent to such return; provided, that the commissioner may, in any case, authorize in writing the return to the company of any excess of any deposit made under this section over the amount required thereby, if he is satisfied that such return will not be prejudicial to the interests of such policyholders or obligees. Each person so licensed shall keep a separate account of the business done under the license, a certified copy of which account he shall forthwith file with the commissioner, showing the exact amount of such insurance placed for each person, the gross premium charged thereon, the companies in which the same is placed, the date of the policies and the term thereof, and also a report in the same detail of all such policies cancelled, with the gross return premiums thereon, and will annually, in January, file with the state treasurer a sworn statement of the gross premiums charged for insurance procured or placed and the gross return premiums on such insurance cancelled under such license during the year ending on December thirty-first last preceding, and at the time of filing such statement will pay to the commonwealth an amount equal to four per cent of such gross premiums, less such return premiums so reported.

A person licensed under this section who negotiates, continues or renews any such contracts of insurance in any unauthorized foreign company, and who neglects to make and file the affidavit and statements required by this section, or who wilfully makes a false affidavit or statement, or who negotiates, continues or renews any such contracts of insurance after the revocation or during the suspension of his license, shall forfeit his license if not previously revoked and be punished by a fine of not less than one hundred nor more than five hundred dollars or by imprisonment for not more than one year, or both.

Nothing in this section shall be deemed to amend or modify any of the provisions of, or any of the exemptions specified in, section one hundred and sixty.

A license to act as a special insurance broker may, upon the payment of the fees prescribed by section 14, be issued to any voluntary organization, as defined in section 1 of chapter 182, for the purpose of acting as a special insurance broker, subject to the conditions specified in section 172A.

The commissioner may, upon the payment of the fees prescribed by section 14, issue to a partnership, a license to act as a special insurance broker subject to the conditions specified in section 173.

A license to act as a special insurance broker may, upon the payment of the fees prescribed by section 14, be issued to any corporation, subject to the conditions specified in section 174.