2005 Nevada Revised Statutes - Chapter 685A — Surplus Lines

CHAPTER 685A - SURPLUS LINES

NRS 685A.010 Shorttitle.

NRS 685A.020 Exemptions.

NRS 685A.030 Definitions.

NRS 685A.040 Conditionsfor export.

NRS 685A.050 Brokersaffidavit.

NRS 685A.060 Openlines for export.

NRS 685A.070 Eligibleinsurers.

NRS 685A.075 Nonprofitorganization of brokers: Formation; board of directors; records filed withCommissioner; examination by Commissioner.

NRS 685A.077 Immunityfrom civil liability given to Commissioner, Division and nonprofitorganizations for certain acts; Commissioner authorized to classify certaincommunications as confidential; limitations.

NRS 685A.080 Evidenceof insurance; changes; penalty.

NRS 685A.090 Contractsfor surplus lines coverage: Requirements.

NRS 685A.100 Coveragefrom unauthorized insurer valid.

NRS 685A.110 Liabilityof insurer.

NRS 685A.120 Licensingof brokers; expiration and renewal of license. [Effective until the date of therepeal of the federal law requiring each state to establish procedures forwithholding, suspending and restricting the professional, occupational andrecreational licenses for child support arrearages and for noncompliance withcertain processes relating to paternity or child support proceedings.]

NRS 685A.120 Licensingof brokers; expiration and renewal of license. [Effective on the date of therepeal of the federal law requiring each state to establish procedures forwithholding, suspending and restricting the professional, occupational andrecreational licenses for child support arrearages and for noncompliance withcertain processes relating to paternity or child support proceedings.]

NRS 685A.127 Paymentof child support: Statement by applicant for license; grounds for denial oflicense; duty of Commissioner. [Expires by limitation on the date of the repealof the federal law requiring each state to establish procedures for withholding,suspending and restricting the professional, occupational and recreationallicenses for child support arrearages and for noncompliance with certainprocesses relating to paternity or child support proceedings.]

NRS 685A.133 Suspensionof license for failure to pay child support or comply with certain subpoenas orwarrants; reinstatement of license. [Expires by limitation on the date of therepeal of the federal law requiring each state to establish procedures for withholding,suspending and restricting the professional, occupational and recreationallicenses for child support arrearages and for noncompliance with certainprocesses relating to paternity or child support proceedings.]

NRS 685A.140 Suspensionor revocation of brokers license.

NRS 685A.150 Brokermay accept business from licensed agent or broker; compensation.

NRS 685A.155 Brokermay charge fee for procuring coverage; maximum amount of fee.

NRS 685A.160 Recordsof broker.

NRS 685A.170 Annualstatement of broker.

NRS 685A.175 Quarterlyreport and payment of tax by certain brokers.

NRS 685A.180 Taxon surplus lines.

NRS 685A.190 Failureto file statement or pay tax; penalties; statute of limitations.

NRS 685A.200 Suitagainst surplus lines insurers; venue; process.

NRS 685A.210 Regulations;penalty.

NRS 685A.220 Otherprovisions applicable.

_________

NRS 685A.010 Shorttitle. This chapter constitutes and may becited as the Surplus Lines Law.

(Added to NRS by 1971, 1673)

NRS 685A.020 Exemptions. The Surplus Lines Law shall not apply to reinsurance, orto the following insurances when placed by general lines agents or generallines brokers or surplus lines brokers licensed as such by this state:

1. Wet marine and transportation insurance;

2. Insurance of subjects located, resident or to beperformed wholly outside of this state, or on vehicles or aircraft owned andprincipally garaged outside this state;

3. Insurance of property and operations of railroadsengaged in interstate commerce;

4. Insurance of aircraft of common carriers, or cargoof such aircraft, or against liability, other than employers liability,arising out of the ownership, maintenance or use of such aircraft; or

5. Insurance of automobile bodily injury and propertydamage liability risks when written in Mexican insurers and covering in Mexicoand not in the United States of America.

(Added to NRS by 1971, 1673)

NRS 685A.030 Definitions. As used in this chapter:

1. Unless the context otherwise requires, brokermeans a surplus lines broker duly licensed as such under this chapter.

2. To export means to place in an unauthorizedinsurer under this chapter insurance covering a subject of insurance resident,located or to be performed in Nevada.

(Added to NRS by 1971, 1673)

NRS 685A.040 Conditionsfor export. If certain insurance coverages cannotbe procured from authorized insurers, such coverages, designated in thischapter as surplus lines, may be procured from unauthorized insurers, subjectto the following conditions:

1. The insurance must be procured through a surpluslines broker licensed as such under this chapter.

2. The full amount of insurance required must not beprocurable, after diligent effort has been made to do so.

3. The insurance must not be so exported for thepurpose of procuring it at a premium rate lower than would be accepted by anyauthorized insurer; difference in rates alone will not support the export ofthe insurance if any authorized insurer is able and willing to carry the risk.

4. Differences, bearing directly upon the cost ofinsurance, in the terms of policies which otherwise provide substantially thesame coverage will not support the export of the insurance.

(Added to NRS by 1971, 1673; A 1971, 1939)

 

NRS 685A.050 Brokersaffidavit.

1. At the time of effecting any surplus linesinsurance the broker shall execute an affidavit, in the form prescribed oraccepted by the Commissioner, setting forth facts from which it can bedetermined whether such insurance is eligible for export under NRS 685A.040.

2. The broker shall file this affidavit with thereport of coverage and any other information the Commissioner requires within90 days after the insurance is so effected, as required under regulationsadopted pursuant to NRS 685A.210.

(Added to NRS by 1971, 1674; A 1987, 1149)

NRS 685A.060 Openlines for export.

1. The Commissioner may by order declare eligible forexport generally and without compliance with subsections 2, 3 and 4 of NRS 685A.040 and NRS 685A.050, any class or classes ofinsurance coverage or risk for which he finds that there is not a reasonable oradequate market among authorized insurers either as to acceptance of the risk,contract terms, or premium or premium rate. Any such order shall continue ineffect during the existence of the conditions upon which predicated, butsubject to earlier termination by the Commissioner.

2. The broker shall file with or as directed by theCommissioner a memorandum as to each such coverage placed by him in anunauthorized insurer, in such form and context as the Commissioner mayreasonably require for the identification of the coverage and determination ofthe tax payable to the State relative thereto.

3. The broker, or a licensed Nevada agent of theauthorized insurer or a general lines broker, may also place with authorizedinsurers any insurance coverage made eligible for export generally undersubsection 1, and without regard to rate or form filings which may otherwise beapplicable to the authorized insurer. As to coverages so placed in anauthorized insurer the premium tax thereon shall be reported and paid by theinsurer as required generally under chapter 680Bof NRS.

(Added to NRS by 1971, 1674)

NRS 685A.070 Eligibleinsurers.

1. A broker shall not knowingly place surplus linesinsurance with an insurer which is unsound financially or ineligible pursuantto this section.

2. Except as otherwise provided in this section, aninsurer is not eligible to accept surplus lines risks pursuant to this chapterunless it has surplus as to policyholders in an amount of not less than$15,000,000 and, if an alien insurer, unless it has and maintains in a bank ortrust company which is a member of the United States Federal Reserve System atrust fund established pursuant to terms that are reasonably adequate toprotect all of its policyholders in the United States. Such a trust fund mustnot have an expiration date which is at any time less than 5 years in the future,on a continuing basis. In the case of:

(a) A single alien insurer, such a trust fund must notbe less than the greater of $5,400,000 or 30 percent of the gross liabilitiesof the alien insurer for surplus lines in the United States, excluding any liabilitiesfor aviation, wet marine and transportation insurance, not to exceed$60,000,000, to be determined annually on the basis of accounting practices andprocedures that are substantially equivalent to the accounting practices andprocedures applicable in this State as of December 31 of the year immediatelypreceding the date of the determination where:

(1) The liabilities are maintained in anirrevocable trust account in a qualified financial institution in the UnitedStates, on behalf of policyholders in the United States, consisting of cash,securities, letters of credit or any other investments of substantially thesame character and quality as investments that are eligible investmentspursuant to chapter 682A of NRS for thecapital and statutory reserves of admitted insurers to write like kinds ofinsurance in this State. The trust fund, which must be included in anycalculation of capital and surplus or its equivalent, must comply with therequirements set forth in the Standard Trust Agreement required for listingwith the International Insurers Department of the National Association ofInsurance Commissioners;

(2) The alien insurer may request approval bythe Commissioner to use the trust fund to pay any valid claim against a surplusline if the balance of the trust fund is not, during any period, less than$5,400,000 or 30 percent of the alien insurers current gross liabilities forsurplus lines in the United States, excluding any liabilities for aviation, wetmarine and transportation insurance; and

(3) In calculating the amount of the trust fundrequired by this subsection, credit must be given for any deposits for anysurplus lines that are separately required and maintained within a state orterritory of the United States, not to exceed the amount of the alien insurersloss and loss adjustment reserves maintained in that state or territory.

(b) A group of insurers which includes individualunincorporated insurers, such a trust fund must not be less than $100,000,000.

(c) A group of incorporated insurers under commonadministration, such a trust fund must not be less than $100,000,000. Each insurerwithin the group must individually maintain capital and surplus of not lessthan $25,000,000. The group of incorporated insurers must:

(1) Operate under the supervision of theDepartment of Trade and Industry of the United Kingdom;

(2) Possess aggregate policyholders surplus of$10,000,000,000, which must consist of money in trust in an amount not lessthan the assuming insurers liabilities attributable to insurance written inthe United States; and

(3) Maintain a joint trusteed surplus of which $100,000,000must be held jointly for the benefit of United States ceding insurers of anymember of the group.

(d) An insurance exchange created by the laws of astate, the insurance exchange shall have and maintain a trust fund in an amountof not less than $75,000,000 or have a surplus as to policyholders in an amountof not less than $75,000,000. If an insurance exchange maintains money for theprotection of all policyholders, each syndicate shall maintain minimum capitaland surplus of not less than $15,000,000 and must qualify separately to beeligible for the acceptance of surplus lines risks pursuant to this chapter.

TheCommissioner may require larger trust funds or surplus as to policyholders thanthose set forth in this section if, in his judgment, the volume of businessbeing transacted or proposed to be transacted warrants larger amounts.

3. An insurer is not eligible to write surplus linesof insurance unless it has established a reputation for financial integrity andsatisfactory practices in underwriting and handling claims. In addition, aforeign insurer must be authorized in the state of its domicile to write thekinds of insurance which it intends to write in Nevada.

4. The Commissioner may from time to time compile orapprove a list of all surplus lines insurers deemed by him to be eligiblecurrently, and may mail a copy of the list to each broker at his office last ofrecord with the Commissioner. To be placed on the list, a surplus lines insurermust file an application with the Commissioner. The application must beaccompanied by a nonrefundable fee of $2,450. This subsection does not requirethe Commissioner to determine the actual financial condition or claimspractices of any unauthorized insurer. The status of eligibility, if granted bythe Commissioner, indicates only that the insurer appears to be soundfinancially and to have satisfactory claims practices, and that theCommissioner has no credible evidence to the contrary. While any such list isin effect, the broker shall restrict to the insurers so listed all surpluslines business placed by him.

(Added to NRS by 1971, 1674; A 1979, 1921; 1981,1018, 1325; 1985, 610; 1991, 1627, 2031; 1993, 597, 2389; 1997, 3029; 1999, 2797; 2003, 3299)

NRS 685A.075 Nonprofitorganization of brokers: Formation; board of directors; records filed withCommissioner; examination by Commissioner.

1. A nonprofit organization of surplus lines brokersmay be formed to:

(a) Facilitate and encourage compliance by its memberswith the laws of this State and the rules and regulations of the Commissionerconcerning surplus lines insurance;

(b) Provide a means for the review of all surplus linescoverage written in this State;

(c) Communicate with organizations of admitted insurerswith respect to the proper use of the surplus lines market;

(d) Receive and disseminate to brokers informationrelative to surplus lines coverages; and

(e) Charge members a filing fee, approved by theCommissioner, for the review of surplus lines coverages.

2. Every such organization shall exercise its powersthrough a board of directors and shall file with the Commissioner:

(a) A copy of its constitution, articles of agreementor association or certificate of incorporation;

(b) A copy of its bylaws, rules and regulationsgoverning its activities;

(c) A copy of its plan of operations established andapproved by the Commissioner;

(d) A current list of its members;

(e) The name and address of a resident of this Stateupon whom notices or orders of the Commissioner or processes issued at hisdirection may be served; and

(f) An agreement that the Commissioner may examine theorganization in accordance with the provisions of this section.

3. The Commissioner shall make an examination of theaffairs, transactions, accounts, records and assets of such an organization andany of its members as often as he deems necessary for the protection of theinterests of the people of this State, but no less frequently than once every 3years. The officers, managers, agents and employees of such an organization maybe examined at any time, under oath, and shall provide to the Commissioner allbooks, records, accounts, documents or agreements governing its method ofoperation. The Commissioner shall furnish two copies of his examination reportto the organization examined and shall notify the organization that it may,within 20 days thereof, request a hearing on the report or on any facts orrecommendations set forth therein. If the Commissioner finds such anorganization or any member thereof to be in violation of this chapter, he may,in addition to any administrative fine or penalty imposed pursuant to thisCode, issue an order requiring the discontinuance of such violations.

4. The board of directors of such an organization mustconsist of not fewer than five persons. The members of the board must beappointed by the Commissioner and serve at his pleasure.

5. A broker must be a member of such an organizationas a condition of continued licensure under this chapter.

(Added to NRS by 1995, 1616)

NRS 685A.077 Immunityfrom civil liability given to Commissioner, Division and nonprofitorganizations for certain acts; Commissioner authorized to classify certaincommunications as confidential; limitations.

1. The Commissioner, the Division and employees of theDivision, and any nonprofit organization of surplus lines brokers formedpursuant to NRS 685A.075 and itsmembers, officers, committee members, agents and employees are not liable in acivil action for any act performed in good faith and within the scope of theirduties or the exercise of their authority pursuant to this chapter.

2. The Commissioner may, pursuant to NRS 679B.190, classify as confidential:

(a) Any investigation conducted by a nonprofitorganization of surplus lines brokers formed pursuant to NRS 685A.075; and

(b) Any communications between such an organization andthe Commissioner and other appropriate authorities pursuant to this chapter.

3. The immunities and privileges provided by thissection do not affect:

(a) The availability of any other immunities orprivileges otherwise provided by law; or

(b) Any rights of hearing and review otherwise providedin this chapter.

(Added to NRS by 1997, 3028)

NRS 685A.080 Evidenceof insurance; changes; penalty.

1. Upon placing a surplus lines coverage, the brokershall promptly issue and deliver to the insured evidence of the insuranceconsisting either of the policy as issued by the insurer or, if such a policyis not then available, the surplus lines brokers certificate executed by thebroker or a cover note. Such a certificate or cover note must show thedescription and location of the subject of the insurance, coverage, conditionsand term of the insurance, the premium and rate charged and taxes collected fromthe insured, and the name and address of the insured and insurer and must statethat the broker has verified that the insurance described has been granted orissued. If the direct risk is assumed by more than one insurer, the certificatemust state the name and address and proportion of the entire direct riskassumed by each such insurer.

2. A broker shall not issue any such certificate orany cover note, or purport to insure or represent that insurance will be or hasbeen granted by any unauthorized insurer, unless he has prior written authorityfrom the insurer for the insurance, or has received information from theinsurer in the regular course of business that the insurance has been granted,or an insurance policy providing the insurance actually has been issued by theinsurer and delivered to the insured.

3. If after the issuance and delivery of any suchcertificate there is any change as to the identity of the insurers, or theproportion of the direct risk assumed by an insurer as stated in the brokersoriginal certificate, or in any other material respect as to the insuranceevidenced by the certificate, the broker shall promptly issue and deliver tothe insured a substitute certificate accurately showing the current status ofthe coverage and the insurers responsible thereunder.

4. If a policy issued by the insurer is not availableupon placement of the insurance and the broker has issued and delivered hiscertificate as provided in this section, upon request therefor by the insuredthe broker shall as soon as reasonably possible procure from the insurer itspolicy evidencing the insurance and deliver the policy to the insured inreplacement of the brokers certificate theretofore issued.

5. Any surplus lines broker who knowingly ornegligently issues a false certificate of insurance or who fails promptly tonotify the insured of any material change with respect to the insurance bydelivery to the insured of a substitute certificate as provided in subsection 3is subject to the penalty provided by NRS679A.180 or to any greater applicable penalty otherwise provided by law.

(Added to NRS by 1971, 1675; A 1979, 1922; 2003, 3301)

NRS 685A.090 Contractsfor surplus lines coverage: Requirements. Eachinsurance contract procured and delivered as a surplus lines coverage pursuantto this chapter must have conspicuously stamped upon it:

 

This insurance contract is issuedpursuant to the Nevada insurance laws by an insurer neither licensed by norunder the supervision of the Division of Insurance of the Department ofBusiness and Industry of the State of Nevada. If the insurer is foundinsolvent, a claim under this contract is not covered by the Nevada InsuranceGuaranty Association Act.

 

(Added to NRS by 1971, 1676; A 1981, 676; 1991, 1628;1993, 1917; 2003,3301)

NRS 685A.100 Coveragefrom unauthorized insurer valid. Insurancecontracts procured as surplus lines coverage from unauthorized insurers in accordancewith this chapter shall be fully valid and enforceable as to all parties, andshall be given recognition in all matters and respects to the same effect aslike contracts issued by authorized insurers.

(Added to NRS by 1971, 1676)

NRS 685A.110 Liabilityof insurer.

1. As to a surplus lines risk which has been assumedby an unauthorized insurer pursuant to the Surplus Lines Law, and if thepremium thereon has been received by the surplus lines broker who placed suchinsurance, in all questions thereafter arising under the coverage between theinsurer and the insured the insurer shall be deemed to have received thepremium due to it for such coverage; and the insurer shall be liable to theinsured for losses covered by such insurance, and for unearned premiums whichmay become payable to the insured upon cancellation of such insurance, whetheror not in fact the broker is indebted to the insurer with respect to such insuranceor for any other cause.

2. Each unauthorized insurer assuming a surplus linesrisk under the Surplus Lines Law shall be deemed thereby to have subjecteditself to the terms of this section.

(Added to NRS by 1971, 1676)

NRS 685A.120 Licensingof brokers; expiration and renewal of license. [Effective until the date of therepeal of the federal law requiring each state to establish procedures forwithholding, suspending and restricting the professional, occupational andrecreational licenses for child support arrearages and for noncompliance withcertain processes relating to paternity or child support proceedings.]

1. No person may act as, hold himself out as or be asurplus lines broker with respect to subjects of insurance resident, located orto be performed in this State or elsewhere unless he is licensed as such by theCommissioner pursuant to this chapter.

2. Any person who has been licensed by this State as aproducer of insurance for general lines for at least 6 months, or has beenlicensed in another state as a surplus lines broker and continues to belicensed in that state, and who is deemed by the Commissioner to be competentand trustworthy with respect to the handling of surplus lines may be licensedas a surplus lines broker upon:

(a) Application for a license and payment of theapplicable fee for a license and a fee established by the Commissioner of notmore than $15 for deposit in the Insurance Recovery Account created by NRS 679B.305;

(b) Submitting the statement required pursuant to NRS 685A.127; and

(c) Passing any examination prescribed by theCommissioner on the subject of surplus lines.

3. An application for a license must be submitted tothe Commissioner on a form designated and furnished by him. The applicationmust include the social security number of the applicant.

4. A license issued pursuant to this chapter continuesin force for 3 years unless it is suspended, revoked or otherwise terminated.The license may be renewed upon submission of the statement required pursuantto NRS 685A.127 and payment of theapplicable fee for renewal and a fee established by the Commissioner of notmore than $15 for deposit in the Insurance Recovery Account created by NRS 679B.305 to the Commissioner on orbefore the last day of the month in which the license is renewable.

5. A license which is not renewed expires at midnighton the last day specified for its renewal. The Commissioner may accept arequest for renewal received by him within 30 days after the expiration of thelicense if the request is accompanied by:

(a) The statement required pursuant to NRS 685A.127;

(b) The applicable fee for renewal;

(c) A penalty in an amount that is equal to 50 percentof the applicable fee for renewal; and

(d) A fee established by the Commissioner of not morethan $15 for deposit in the Insurance Recovery Account created by NRS 679B.305.

(Added to NRS by 1971, 1677; A 1977, 1329; 1981,1019; 1985, 600; 1987, 462; 1995, 1102, 1617; 1997, 516, 2195; 1999, 2798; 2003, 3302; 2005, 2129)

NRS 685A.120 Licensing of brokers; expiration andrenewal of license. [Effective on the date of the repeal of the federal lawrequiring each state to establish procedures for withholding, suspending andrestricting the professional, occupational and recreational licenses for childsupport arrearages and for noncompliance with certain processes relating topaternity or child support proceedings.]

1. No person may act as, hold himself out as or be asurplus lines broker with respect to subjects of insurance resident, located orto be performed in this State or elsewhere unless he is licensed as such by theCommissioner pursuant to this chapter.

2. Any person who has been licensed by this State as aproducer of insurance for general lines for at least 6 months, or has beenlicensed in another state as a surplus lines broker and continues to belicensed in that state, and who is deemed by the Commissioner to be competentand trustworthy with respect to the handling of surplus lines may be licensedas a surplus lines broker upon:

(a) Application for a license and payment of theapplicable fee for a license and a fee established by the Commissioner of notmore than $15 for deposit in the Insurance Recovery Account created by NRS 679B.305; and

(b) Passing any examination prescribed by theCommissioner on the subject of surplus lines.

3. Application for the license must be made to theCommissioner on forms designated and furnished by him.

4. A license issued pursuant to this chapter continuesin force for 3 years unless it is suspended, revoked or otherwise terminated.The license may be renewed by payment of the applicable fee for renewal and afee established by the Commissioner of not more than $15 for deposit in theInsurance Recovery Account created by NRS679B.305 to the Commissioner on or before the last day of the month inwhich the license is renewable.

5. A license which is not renewed expires at midnighton the last day specified for its renewal. The Commissioner may accept arequest for renewal received by him within 30 days after the expiration of thelicense if the request is accompanied by:

(a) The applicable fee for renewal;

(b) A penalty in an amount that is equal to 50 percentof the applicable fee for renewal; and

(c) A fee established by the Commissioner of not morethan $15 for deposit in the Insurance Recovery Account created by NRS 679B.305.

(Added to NRS by 1971, 1677; A 1977, 1329; 1981,1019; 1985, 600; 1987, 462; 1995, 1102, 1617; 1997, 516, 2195; 1999, 2798; 2003, 3302; 2005, 2129, 2130, effective onthe date of the repeal of the federal law requiring each state to establishprocedures for withholding, suspending and restricting the professional,occupational and recreational licenses for child support arrearages and fornoncompliance with certain processes relating to paternity or child supportproceedings)

NRS 685A.127 Paymentof child support: Statement by applicant for license; grounds for denial oflicense; duty of Commissioner. [Expires by limitation on the date of the repealof the federal law requiring each state to establish procedures forwithholding, suspending and restricting the professional, occupational andrecreational licenses for child support arrearages and for noncompliance withcertain processes relating to paternity or child support proceedings.]

1. An applicant for the issuance or renewal of asurplus lines brokers license shall submit to the Commissioner the statementprescribed by the Division of Welfare and Supportive Services of the Departmentof Health and Human Services pursuant to NRS425.520. The statement must be completed and signed by the applicant.

2. The Commissioner shall include the statementrequired pursuant to subsection 1 in:

(a) The application or any other forms that must besubmitted for the issuance or renewal of the license; or

(b) A separate form prescribed by the Commissioner.

3. A surplus lines brokers license may not be issuedor renewed by the Commissioner if the applicant:

(a) Fails to submit the statement required pursuant tosubsection 1; or

(b) Indicates on the statement submitted pursuant tosubsection 1 that he is subject to a court order for the support of a child andis not in compliance with the order or a plan approved by the district attorneyor other public agency enforcing the order for the repayment of the amount owedpursuant to the order.

4. If an applicant indicates on the statementsubmitted pursuant to subsection 1 that he is subject to a court order for thesupport of a child and is not in compliance with the order or a plan approvedby the district attorney or other public agency enforcing the order for therepayment of the amount owed pursuant to the order, the Commissioner shalladvise the applicant to contact the district attorney or other public agencyenforcing the order to determine the actions that the applicant may take tosatisfy the arrearage.

(Added to NRS by 1997, 2194)

NRS 685A.133 Suspensionof license for failure to pay child support or comply with certain subpoenas orwarrants; reinstatement of license. [Expires by limitation on the date of therepeal of the federal law requiring each state to establish procedures forwithholding, suspending and restricting the professional, occupational andrecreational licenses for child support arrearages and for noncompliance withcertain processes relating to paternity or child support proceedings.]

1. If the Commissioner receives a copy of a courtorder issued pursuant to NRS 425.540that provides for the suspension of all professional, occupational and recreationallicenses, certificates and permits issued to a person who is the holder of a surpluslines brokers license, the Commissioner shall deem the license issued to thatperson to be suspended at the end of the 30th day after the date on which thecourt order was issued unless the Commissioner receives a letter issued to theholder of the license by the district attorney or other public agency pursuantto NRS 425.550 stating that the holderof the license has complied with the subpoena or warrant or has satisfied thearrearage pursuant to NRS 425.560.

2. The Commissioner shall reinstate a surplus linesbrokers license that has been suspended by a district court pursuant to NRS 425.540 if the Commissioner receives aletter issued by the district attorney or other public agency pursuant to NRS 425.550 to the person whose license wassuspended stating that the person whose license was suspended has complied withthe subpoena or warrant or has satisfied the arrearage pursuant to NRS 425.560.

(Added to NRS by 1997, 2195)

NRS 685A.140 Suspensionor revocation of brokers license.

1. In addition to other grounds therefor, theCommissioner may suspend or revoke any surplus lines brokers license:

(a) If the broker fails to file the annual statement orto remit the tax as required by NRS685A.170 and 685A.180;

(b) If the broker fails to maintain an office in thisstate or in the state where he was issued a license as a resident broker, or tokeep the records, or to allow the Commissioner to examine his records asrequired by this chapter, or if he removes his records from the state; or

(c) If the broker places a surplus lines coverage in aninsurer other than as authorized under this chapter.

2. Upon suspending or revoking the brokers surpluslines license the Commissioner may also suspend or revoke all other licenses ofor as to the same individual under this Code.

(Added to NRS by 1971, 1677; A 1999, 2798)

NRS 685A.150 Brokermay accept business from licensed agent or broker; compensation. A licensed surplus lines broker may accept surplus linesbusiness from any agent or broker licensed in this state for the kind ofinsurance involved and may compensate the agent or broker therefor.

(Added to NRS by 1971, 1678; A 1979, 1923)

NRS 685A.155 Brokermay charge fee for procuring coverage; maximum amount of fee. A broker may charge a fee for procuring surplus linescoverage. Except as otherwise provided by agreement between the insurer andbroker, the fee must not exceed 20 percent of the premium charged, afterdeduction of any other commissions, fees and charges payable to the broker.

(Added to NRS by 1987, 1149)

NRS 685A.160 Recordsof broker.

1. Each broker shall keep in his office a full andtrue record of each surplus lines coverage procured by him, including a copy ofeach daily report, if any, a copy of each certificate of insurance issued byhim, and such of the following items as may be applicable:

(a) The amount of the insurance;

(b) The gross premium charged;

(c) The return premium paid, if any;

(d) The rate of premium charged upon the several itemsof property;

(e) The effective date of the contract, and the termsthereof;

(f) The name and address of each insurer on the directrisk and the proportion of the entire risk assumed by that insurer if less thanthe entire risk;

(g) The name and address of the insured;

(h) A brief general description of the property or riskinsured and where located or to be performed; and

(i) Any other information as may be required by theCommissioner.

2. The record must not be removed from the office ofthe broker and must be open to examination by the Commissioner or hisrepresentative at all times within 5 years after issuance of the coverage towhich it relates.

(Added to NRS by 1971, 1678; A 1999, 2799)

NRS 685A.170 Annualstatement of broker.

1. Each broker shall on or before March 1 of each yearfile with the Commissioner a statement verified by the broker of all surpluslines insurance transacted by him during the preceding calendar year. Astatement must be filed whether or not the broker has transacted any businessduring the preceding year.

2. The statement must be on forms as prescribed andfurnished by the Commissioner, and must contain such information as theCommissioner may reasonably require.

3. If a broker has filed any reports pursuant to NRS 685A.175, the annual statement mustinclude any necessary reconciliation of the quarterly reports.

(Added to NRS by 1971, 1678; A 1985, 600)

NRS 685A.175 Quarterlyreport and payment of tax by certain brokers. Within45 days after the end of each calendar quarter, a broker who has written coveragewhich will require him to pay more than $1,000 in taxes for coverage written inthat calendar quarter shall pay the tax for the quarter to the Commissioner andshall file with the Commissioner, or with a nonprofit organization of brokersin accordance with regulations adopted by the Commissioner pursuant to NRS 685A.210, a copy of a quarterlyreport which includes an accounting of:

1. The aggregate gross premiums for the quarter;

2. The aggregate of the return premiums received;

3. The amount of tax remitted to the Commissioner; and

4. The amount of aggregate tax remitted to each otherstate for which an allocation is made pursuant to NRS 680B.030.

The reportmust be on a form approved by the Commissioner.

(Added to NRS by 1985, 600; A 1995, 1617)

NRS 685A.180 Taxon surplus lines.

1. On or before March 1 of each year, each brokershall pay to the Commissioner a tax on surplus lines coverages written by himin unauthorized insurers during the preceding calendar year at the same rate oftax as imposed by law on the premiums of similar coverages written byauthorized insurers. If a broker has paid any taxes pursuant to NRS 685A.175, he shall deduct the totalpaid from the tax due and pay the remainder, if any.

2. For the purposes of this section, the premium onsurplus lines coverages includes:

(a) The gross amount charged by the insurer for theinsurance, less any return premium;

(b) Any fee allowed by NRS 685A.155;

(c) Any policy fee;

(d) Any membership fee;

(e) Any inspection fee; and

(f) Any other fees or assessments charged by theinsurer as consideration for the insurance.

Premium doesnot include any additional amount charged for state or federal tax, or forfiling affidavits or reports of coverage.

3. If a contract for surplus lines insurance coversrisks or exposures only partially in this State, the tax so payable must becomputed on that portion of the premium properly allocable to the risks orexposures located in this State. The Commissioner may adopt regulations whichestablish standards for allocating premiums for risks located in this State inthe same manner as premiums are allocated pursuant to NRS 680B.030.

4. The Commissioner shall promptly deposit all taxescollected by him pursuant to this section with the State Treasurer, to thecredit of the State General Fund.

5. A broker who receives a credit for tax paid shallrefund to each insured the amount of the credit attributable to the insuredwhen the insurer pays a return premium or within 30 days, whichever is earlier.

(Added to NRS by 1971, 1678; A 1983, 827; 1985, 601;1995, 1618; 2003,3302)

NRS 685A.190 Failureto file statement or pay tax; penalties; statute of limitations.

1. A broker who fails to make and file the annualstatement required pursuant to NRS685A.170 before April 1 after the due date of the statement, is liable fora penalty of $500.

2. Except as otherwise provided in this subsection, abroker who fails to pay the tax required by NRS685A.180 before April 1 after the date upon which the tax is due is liable:

(a) If the aggregate amount of the tax owed by thebroker is more than $50, for a penalty in the first year of delinquency in theamount of $1,000 or 125 percent of the delinquent tax, whichever is larger; or

(b) If the aggregate amount of the tax owed by thebroker is $50 or less, for a penalty in the first year of delinquency in an amountequal to the amount of the delinquent tax.

3. Interest must be charged on all penalties imposedpursuant to subsection 2 in an amount equal to the prime rate at the largestbank in the State of Nevada, as ascertained by the Commissioner of FinancialInstitutions on January 1 of the year in which the tax became due, plus 2percent. The rate must be adjusted on July 1 and January 1 thereafter. Theinterest charged must be compounded monthly and must continue to accrue untilthe penalty and interest are paid in full.

4. The tax may be collected by distraint, or the taxand penalty may be recovered by an action instituted by the Commissioner, inthe name of the State, the Attorney General representing him, in any court ofcompetent jurisdiction. The penalty, when so collected, must be paid to theState Treasurer for credit to the State General Fund.

5. No proceeding to recover taxes, penalties or finespursuant to this section may be maintained unless it is commenced by the givingof notice to the person against whom the proceeding is brought within 5 yearsafter the occurrence of the charged act or omission. This limitation does notapply if the Commissioner finds fraudulent or willful evasion of taxes.

(Added to NRS by 1971, 1679; A 1985, 601; 1995, 1618,2676)

NRS 685A.200 Suitagainst surplus lines insurers; venue; process.

1. An unauthorized insurer effecting insurance underthe provisions of the Surplus Lines Law shall be deemed to be transactinginsurance in this state as an unlicensed insurer and may be sued in a districtcourt of this state upon any cause of action arising against it in this stateunder any insurance contract entered into by it under this chapter.

2. Service of legal process against the insurer may bemade in any such action by service of two copies thereof upon the Commissioneror his authorized representative and payment of the fee specified in NRS 680B.010. The Commissioner or hisauthorized representative shall forthwith mail a copy of the process served tothe person designated by the insurer in the policy for the purpose by prepaidregistered or certified mail with return receipt requested. If no such personis so designated in the policy, the Commissioner or his authorizedrepresentative shall in like manner mail a copy of the process to the brokerthrough whom the insurance was procured, or to the insurer at its principalplace of business, addressed to the address of the broker or insurer, as the casemay be, last of record with the Commissioner. Upon service of process upon theCommissioner or his authorized representative and its mailing in accordancewith this subsection, the court shall be deemed to have jurisdiction inpersonam of the insurer.

3. The defendant insurer has 40 days from the date ofservice of the summons and complaint upon the Commissioner or his authorizedrepresentative within which to plead, answer or defend any such suit.

4. An unauthorized insurer entering into such an insurancecontract shall be deemed thereby to have authorized service of process againstit in the manner and to the effect provided in this section. Any such contract,if issued, must contain a provision stating the substance of this section anddesignating the person to whom the Commissioner or his authorizedrepresentative shall mail process as provided in subsection 2.

5. For the purposes of this section, processincludes only a summons or the initial documents served in an action. TheCommissioner or his authorized representative is not required to serve anydocuments after the initial service of process.

(Added to NRS by 1971, 1679; A 1985, 610; 1995, 1619)

NRS 685A.210 Regulations;penalty.

1. The Commissioner may adopt reasonable regulations, consistentwith the provisions of this chapter, for any of the following purposes:

(a) Effectuation of the law;

(b) Establishment of procedures through whichdetermination is to be made as to the eligibility of particular proposedcoverages for export; and

(c) Establishment of procedures for the operation of anonprofit organization of brokers designed to assist brokers in complying withthe provisions of this chapter.

2. Such regulations carry the penalty provided by NRS 679B.130.

(Added to NRS by 1971, 1680; A 1977, 99; 1979, 1923;1995, 1619)

NRS 685A.220 Otherprovisions applicable. In addition to thosereferred to in other provisions of this chapter, the following provisions of chapter 683A of NRS, to the extent applicableand not inconsistent with the express provisions of this chapter, also apply tosurplus lines brokers:

1. NRS 683A.341;

2. NRS 683A.361;

3. NRS 683A.400;

4. NRS 683A.451;

5. NRS 683A.461;

6. NRS 683A.480;

7. NRS 683A.490;and

8. NRS 683A.520.

(Added to NRS by 1971, 1680; A 2001, 2214; 2005, 2131)

 

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