THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY D. WHITE, STACK, ERICKSON AND RAFFERTY, JUNE 6, 2011

SENATOR D. WHITE, BANKING AND INSURANCE, AS AMENDED, JUNE 7, 2011   

AN ACT

Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An

act relating to insurance; amending, revising, and

consolidating the law providing for the incorporation of

insurance companies, and the regulation, supervision, and

protection of home and foreign insurance companies, Lloyds

associations, reciprocal and inter-insurance exchanges, and

fire insurance rating bureaus, and the regulation and

supervision of insurance carried by such companies,

associations, and exchanges, including insurance carried by

the State Workmen's Insurance Fund; providing penalties; and

repealing existing laws," further providing for purpose, for

definitions, for acting for or aiding nonadmitted insurers,

for requirements for eligible surplus lines insurers, for

surplus lines licensee's duty to notify insured, for exempt

risks, for surplus lines advisory organizations, for

licensing of surplus lines licensee, for surplus lines

licensees may accept business from insurance producer, for

surplus lines tax, for tax on independently procured

insurance and for suspension, revocation or nonrenewal of

surplus lines licensee's license.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 1601 of the act of May 17, 1921 (P.L.682,

No.284), known as The Insurance Company Law of 1921, added

December 18, 1992 (P.L.1519, No.178), is amended to read:

Section 1601.  Purpose and scope.--(a)  The purpose of this

article is to protect the public interest by:

(1)  Protecting persons seeking insurance in this

Commonwealth.

(2)  Permitting surplus lines insurance to be placed with

reputable and financially sound nonadmitted insurers and

exported from this Commonwealth pursuant to this article.

(3)  Establishing a system of regulation which will permit

orderly access to surplus lines insurance in this Commonwealth

and encouraging insurers to make new and innovative types of

insurance available to consumers in this Commonwealth.

(4)  Protecting revenues of this Commonwealth.

(b)  (1)  The provisions of this article, in so far as they

relate to the placement of surplus lines insurance and

independently procured insurance, shall apply when this

Commonwealth is the home state of the insured.

(2)  The provisions of this article, in so far as they relate

to the imposition of surplus lines and independently procured

premium tax and penalties for policies placed after June 30,

2011, shall apply when this Commonwealth is the home state of

the insured.

(3)  The provisions of this article, in so far as they relate

to the collection, reporting and remittance of surplus lines

insurance and independently procured insurance premium tax for

policies placed after June 30, 2011, shall apply when this

Commonwealth is the home state of the insured.

Section 2.  Sections 1602, 1603(c)(6), 1605(a) and 1608 of

the act, amended March 22, 2010 (P.L.147, No.14), are amended to

read:

Section 1602.  Definitions.--As used in this article the

following words and phrases shall have the meanings given to

them in this section:

"Admitted insurer."  An insurer licensed to do an insurance

business in this Commonwealth.

"Affiliate."  With respect to an insured, any entity that

controls, is controlled by or is under common control with the

insured.

"Affiliated group."  Any group of entities that are all

affiliated.

"Business entity."  A corporation, a partnership, a limited

liability company, a limited liability partnership, a business

trust or any other entity doing business other than as a natural

person.

"Capital."  The term, as used in the financial requirements

of section 1605, means funds paid for stock or other evidence of

ownership.

"Commissioner."  The Insurance Commissioner of the

Commonwealth.

"Control."  An entity has control over another entity if:

(1)  the entity directly or indirectly or acting through one

or more other persons owns, controls or has the power to vote

twenty-five per centum (25%) or more of any class of voting

securities of the other entity; or

(2)  the entity controls in any manner the election of a

majority of the directors or trustees of the other entity.

"Department."  The Insurance Department of the Commonwealth.

"Eligible surplus lines insurer."  A nonadmitted insurer with

which a surplus lines licensee may place surplus lines insurance

under section 1604.

"Export."  To place surplus lines insurance with either a

nonadmitted insurer or an eligible surplus lines insurer in

accordance with this article.

"Home state."

(1)  (i)  Except as provided under paragraph (2), with

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respect to an insured:

(A) (i)  the state in which an insured maintains its

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principal place of business or, in the case of an individual,

the individual's principal residence; or

(B) (ii)  if one hundred per centum (100%) of the insured

<--

risk is located out of the state referred to under clause (A) 

<--

subparagraph (i), the state to which the greatest percentage of

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the insured's taxable premium for that insurance contract is

allocated.

(ii) (2)  If more than one insured from an affiliated group

<--

are named insureds on a single nonadmitted insurance contract,

the term means the home state, as determined under subparagraph

<--

(i) paragraph (1), of the member of the affiliated group that

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has the largest percentage of premium attributed to it under the

insurance contract.

(2) (3)  This definition shall not apply to section 1615(g).

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"Independently procured insurance."  Any insurance [which a

resident of this Commonwealth directly negotiates with and

purchases, continues or renews from a nonadmitted insurer

without securing the services of an insurance producer or

surplus lines licensee] directly procured by an insured from a

nonadmitted insurer.

"Insurance producer."  A person that is licensed to sell,

solicit or negotiate contracts of insurance with admitted

insurers.

"Kind of insurance."  One of the types of insurance required

to be reported in the annual statement which must be filed with

the department by admitted insurers.

"Nonadmitted insurer."  An insurer not authorized and not

licensed to do an insurance business in this Commonwealth. The

term includes insurance exchanges as authorized under the laws

of various states. The term does not include a risk retention

group.

"Person."  A natural person or business entity.

"Purchasing group."  An entity formed to purchase liability

insurance under the Risk Retention Amendments of 1986 (Public

Law 99-563, 100 Stat. 3170).

"Risk retention group."  An insurer organized to do business

under the Risk Retention Amendments of 1986 (Public Law 99-563,

100 Stat. 3170).

"State."  Any state of the United States, the District of

Columbia, the Commonwealth of Puerto Rico, Guam, the Northern

Mariana Islands, the Virgin Islands and American Samoa.

"Surplus."  The term, as used in the financial requirements

of section 1605, means funds over and above liabilities and

capital of the company for the protection of its policyholders.

"Surplus lines insurance."  Any insurance [of risks resident,

located or to be performed in this Commonwealth,] permitted to

be placed through a surplus lines licensee with a nonadmitted

insurer eligible to accept such insurance, other than

reinsurance, wet marine and transportation insurance,

independently procured insurance, life insurance and annuities

and coverage obtained from risk retention groups under the Risk

Retention Amendments of 1986 (Public Law 99-563, 100 Stat.

3170).

"Surplus lines licensee."  A person licensed as a surplus

lines producer under section 1615 to place surplus lines

insurance with nonadmitted insurers eligible to accept such

insurance.

"Type of insurance."  Coverage afforded under the particular

policy that is being placed.

"Wet marine and transportation insurance."  Any of the

following:

(1)  Insurance upon vessels, crafts or hulls and of interests

therein or with relation thereto.

(2)  Insurance of marine builder's risks, marine war risks

and contracts of marine protection and indemnity insurance.

(3)  Insurance of freights and disbursements pertaining to a

subject of insurance coming within this definition.

(4)  Insurance of personal property and interest therein, in

the course of exportation from or importation into any country,

or in the course of transportation coastwise or on inland

waters, including transportation by land, water or air from

point of origin to final destination, in connection with any and

all risks or perils of navigation, transit or transportation,

and while being prepared for and while awaiting shipment, and

during any delays, transshipment or reshipment. Insurance of

personal property and interests therein shall not be considered

wet marine and transportation insurance if:

(i)  the property has been transported solely by land;

(ii)  the property has reached its final destination as

specified in the bill of lading or other shipping document; or

(iii)  the insured no longer has an insurable interest in the

property.

(5)  Any insurance associated with transportation of property

listed under this definition.

"Writing producer."  The insurance producer which brings

about or negotiates contracts of insurance directly on behalf of

the consumer seeking insurance.

Section 1603.  Acting for or Aiding Nonadmitted Insurers.--*

* *

(c)  This section does not apply to any of the following:

* * *

(6)  Transactions subsequent to issuance of a policy [not

covering domestic risks at time of issuance and lawfully

solicited, written or delivered outside of this Commonwealth] in

which this Commonwealth becomes the home state.

* * *

Section 1605.  Requirements for Eligible Surplus Lines

Insurers.--(a)  No surplus lines licensee shall place any

coverage with a nonadmitted insurer unless, at the time of

placement, such nonadmitted insurer[:

(1)  Is of good repute and financial integrity.

(2)  Qualifies under any of the following subparagraphs:

(i)  Has policyholder surplus equal to or greater than two

times the minimum capital and surplus required to be fully

licensed in this Commonwealth. Two (2) years from the effective

date of this article is granted to allow those nonadmitted

insurers which are eligible surplus lines insurers on the

effective date of this article to achieve this capital and

surplus requirement. If an alien insurer, as defined by the act

of December 10, 1974 (P.L.804, No.266), referred to as the Alien

Insurer Domestication Law, it shall maintain in the United

States an irrevocable trust fund in either a national bank or a

member of the Federal Reserve System, in an amount not less than

that currently required by the National Association of Insurance

Commissioners' International Insurers Department or its

successor for the protection of all of its policyholders in the

United States, and such trust fund consists of cash, securities,

letters of credit or investments of substantially the same

character and quality as those which are eligible investments

for admitted insurers authorized to write like kinds of

insurance in this Commonwealth. Such trust fund will be in

addition to the capital and surplus required in this

subparagraph and shall have an expiration date which at no time

shall be less than five (5) years.

(ii)  Is any Lloyd's or other similar group of insurers which

includes unincorporated individual insurers that maintains a

trust fund of not less than fifty million ($50,000,000) dollars

as security to the full amount thereof for all policyholders and

creditors in the United States of each member of the group. Such

trust funds shall likewise comply with the terms and conditions

established in subparagraph (i) for alien insurers.

(iii)  Is an insurance exchange created by the laws of

individual states that maintains capital and surplus or the

substantial equivalent thereof of not less than fifteen million

($15,000,000) dollars in the aggregate. For insurance exchanges

which maintain funds for the protection of all insurance

exchange policyholders, each individual syndicate shall maintain

minimum capital and surplus or the substantial equivalent

thereof of not less than one million five hundred thousand

($1,500,000) dollars. In the event the insurance exchange does

not maintain funds for the protection of all insurance exchange

policyholders, each individual syndicate shall meet the minimum

capital and surplus requirements of subparagraph (i).

(3)  Has provided to the department a copy of its current

annual financial statement certified by such insurer, such

statement to be provided no more than thirty (30) days after the

date required for filing an annual financial statement in its

domiciliary jurisdiction and which is either:

(i)  certified by the regulatory authority in the domicile of

the insurer; or

(ii)  certified by an accounting or auditing firm licensed in

the jurisdiction of the insurer's domicile.

In the case of an insurance exchange, the statement may be an

aggregate statement of all underwriting syndicates operating

during the period reported.] qualifies under one of the

following:

(1)  (i)  is authorized to write the type of insurance in its

domiciliary jurisdiction; and

(ii)  has capital and surplus or its equivalent under the

laws of its domiciliary jurisdiction which is greater than or

equal to fifteen million ($15,000,000) dollars. The requirement

of this subparagraph may be satisfied by an insurer's possessing

less than the minimum capital and surplus upon an affirmative

finding of acceptability by the commissioner. The finding shall

be based upon such factors as quality of management, capital and

surplus of any parent company, company underwriting profit and

investment income trends, market availability and company record

and reputation within the industry. In no event shall the

commissioner make an affirmative finding of acceptability when

the nonadmitted insurer's capital and surplus is less than four

million five hundred thousand ($4,500,000) dollars.

(2)  If domiciled outside the United States, is listed on the

Quarterly Listing of Alien Insurers maintained by the

International Insurers Department of the National Association of

Insurance Commissioners.

* * *

Section 1608.  Surplus Lines Licensee's Duty to Notify

Insured.--At the time of presenting a quotation to the insured,

the surplus lines licensee shall present to the insured or to

the writing producer written notice that the insurance or a

portion thereof involves placement with nonadmitted insurers.

The surplus lines licensee shall, either directly or through the

writing producer, give notice to the insured that:

(1)  the insurer with which the licensee places the insurance

is not licensed by the [Pennsylvania Insurance Department] 

department and is subject to its limited regulation; and

(2)  in the event of the insolvency of an eligible surplus

lines insurer, losses will not be paid by the Pennsylvania

Property and Casualty Insurance Guaranty Association.

Section 3.  Section 1610(a) of the act, added December 18,

1992 (P.L.1519, No.178), is amended and the section is amended

by adding subsections to read:

Section 1610.  Exempt Risks.--[(a)  The diligent search

requirements of section 1604(2), the reporting requirements of

section 1609(a) and the twenty-five per centum (25%) limitation

of section 1606 are not applicable to placements of insurance

with nonadmitted insurers for risks of an insured which meets at

least three of the following requirements:

(1)  The insured employs a full-time risk manager or

contracts for services from a qualified risk management service.

(2)  The insured has gross sales in excess of one hundred

million ($100,000,000) dollars.

(3)  The insured regularly employs in excess of two hundred

fifty (250) full-time employes.

(4)  The insured has assets in excess of one hundred million

($100,000,000) dollars.

(5)  The insured has insurance premiums for property and

casualty insurance, excluding employe benefits, in excess of two

hundred fifty thousand ($250,000) dollars.

(6)  The insured is seeking insurance for risks resident,

located or to be performed in one or more states other than this

Commonwealth and the portion of the total risk ascribable to

states other than this Commonwealth exceeds fifty per centum

(50%).]

(a.1)  The diligent search requirements of section 1604(2),

the reporting requirements of section 1609(a) and the twenty-

five per centum (25%) limitation of section 1606 shall not apply

to placements of insurance with nonadmitted insurers for an

exempt commercial purchaser if:

(1)  the surplus lines licensee procuring or placing the

surplus lines insurance has disclosed to the exempt commercial

purchaser that the insurance may be available from the admitted

market that may provide greater protection with more regulatory

oversight; and

(2)  the exempt commercial purchaser has subsequently

requested in writing the surplus lines licensee to procure or

place the insurance from a nonadmitted insurer.

* * *

(c)  The following words and phrases when used in this

section shall have the meanings given to them in this subsection

unless the context clearly indicates otherwise:

"Exempt commercial purchaser."  Any person purchasing

commercial insurance that, at the time of placement, meets the

following requirements:

(1)  The person employs or retains a qualified risk manager

to negotiate insurance coverage.

(2)  The person has paid aggregate nationwide commercial

property and casualty insurance premiums in excess of one

hundred thousand ($100,000) dollars in the immediately preceding

twelve (12) months.

(3)  (i)  The person meets at least one of the following

criteria:

(A)  The person possesses a net worth in excess of twenty

million ($20,000,000) dollars, as adjusted under subparagraph

(ii).

(B)  The person generates annual revenues in excess of fifty

million ($50,000,000) dollars, as adjusted under subparagraph

(ii).

(C)  The person employs more than five hundred (500) full-

time or full-time equivalent employees per individual insured or

is a member of an affiliated group employing more than one

thousand (1,000) employees in the aggregate.

(D)  The person is a not-for-profit organization or public

entity generating annual budgeted expenditures of at least

thirty million ($30,000,000) dollars, as adjusted under

subparagraph (ii).

(E)  The person is a municipality with a population in excess

of fifty thousand (50,000) persons.

(ii)  Beginning January 1, 2015 and every five years

thereafter, the amounts under clauses (A), (B) and (D) shall be

adjusted to reflect the percentage change for the five-year

period in the Consumer Price Index for All Urban Consumers

published by the Bureau of Labor Statistics of the Department of

Labor and Industry.

"Qualified risk manager."  With respect to a policyholder of

commercial insurance, a person who meets all of the following

requirements:

(1)  The person is an employee of, or third-party consultant

retained by, the commercial policyholder.

(2)  The person provides skilled services in loss prevention,

loss reduction or risk and insurance coverage analysis and

purchase of insurance.

(3)  The person:

(i)  (A)  has a bachelor's degree or higher from an

accredited college or university in risk management, business

administration, finance, economics or any other field determined

by the commissioner to demonstrate minimum competence in risk

management; and

(B)  (I)  has three (3) years of experience in risk

financing, claims administration, loss prevention, risk and

insurance analysis or purchasing commercial lines of insurance;

or 

(II)  has:

(a)  a designation as a Chartered Property and Casualty

Underwriter issued by the American Institute for Chartered

Property and Casualty Underwriter/Insurance Institute of

America;

(b)  a designation as an Associate in Risk Management issued

by the American Institute for Chartered Property and Casualty

Underwriter/Insurance Institute of America;

(c)  a designation as Certified Risk Manager issued by the

National Alliance for Insurance Education & Research;

(d)  a designation as a RIMS Fellow issued by the Global Risk

Management Institute; or

(e)  any other designation, certification or license

determined by the commissioner to demonstrate minimum competency

in risk management;

(ii)  (A)  has at least seven (7) years of experience in risk

financing, claims administration, loss prevention, risk and

insurance coverage analysis or purchasing commercial lines of

insurance; and

(B)  has any one of the designations specified under clauses

(a), (b), (c), (d) and (e);

(iii)  has at least ten (10) years of experience in risk

financing, claims administration, loss prevention, risk and

insurance coverage analysis or purchasing commercial lines of

insurance; or

(iv)  has a graduate degree from an accredited college or

university in risk management, business administration, finance,

economics or any other field determined by the commissioner to

demonstrate minimum competence in risk management.

Section 4.  Section 1611(f) of the act, amended March 22,

2010 (P.L.147, No.14), is amended to read:

Section 1611.  Surplus Lines Advisory Organizations.--* * *

(f)  The advisory organization may submit reports and make

recommendations to the department regarding the financial

condition of any eligible surplus lines insurer. These reports

and recommendations shall not be considered to be public

information or subject to any Federal or [State] state freedom

of information law. There shall be no liability on the part of

nor shall any cause of action of any nature be sustained against

eligible surplus lines insurers, the advisory organization or

its members, agents, employes, officers or directors or the

department or authorized representatives of the department for

statements and any reports or recommendations made by them in

good faith under this section.

* * *

Section 5.  Section 1615(a) of the act, amended March 22,

2010 (P.L.147, No.14), is amended and the section is amended by

adding subsections to read:

Section 1615.  Licensing of Surplus Lines Licensee.--(a)

[No] For insureds whose home state is this Commonwealth, no

insurance producer licensed by the department shall transact

surplus lines insurance with any nonadmitted insurer unless the

insurance producer possesses a valid surplus lines producer's 

license issued by the department.

* * *

(c.2)  The commissioner may participate with the National

Association of Insurance Commissioners or its affiliates in a

centralized insurance producer registry for the purpose of

submitting or obtaining information on insurance producers,

surplus lines producers and other licensees, including licensing

history, lines of authority and regulatory actions.

* * *

(g)  As used in subsection (c.1), the term "home state" for

an insurance producer or surplus lines producer shall be as

defined as in section 601-A of the act of May 17, 1921 (P.L.789,

No.285), known as "The Insurance Department Act of 1921."

Section 6.  Sections 1616, 1621, 1622 and 1623 of the act,

amended March 22, 2010 (P.L.147, No.14), are amended to read:

Section 1616.  Surplus Lines Licensees May Accept Business

from Insurance [Producer] Producers.--A surplus lines licensee

may originate surplus lines insurance or accept such insurance

from an insurance producer duly licensed as to the kind or kinds

of insurance involved, and the surplus lines licensee may

compensate the insurance producer.

Section 1621.  Surplus Lines Tax.--(a)  (1)  There is hereby

levied a tax of three per centum (3%) on all premiums charged

for insurance which is placed with either an eligible surplus

lines insurer, other than a risk retention group, or other

nonadmitted insurer in accordance with this article, such taxes

to be based on the gross premiums charged less any return

premiums. This tax shall be in addition to the full amount of

the gross premium charged by the insurer for the insurance. The

tax on any unearned portion of the premium shall be returned to

the insured.

[(b)  Neither the surplus lines licensee nor the writing

producer shall pay directly or indirectly such tax or any

portion thereof, either as an inducement to the insured to

purchase the insurance or for any other reason.

(c)  The surplus lines licensee shall collect from the

insured or the writing producer the amount of the tax at the

time of delivery of the initial policy, cover note or other

evidence of insurance or at such time thereafter as is

reasonably consistent with normal credit terms customary in the

business. Each surplus lines licensee shall, on or before

January 31 of each year, file with the Department of Revenue a

report of all transactions involving the placement of insurance

with either an eligible surplus lines insurer or other

nonadmitted insurers during the previous calendar year. The

report shall set forth the name of the insured, identification

of the insurer, the type of insurance, gross premiums charged

less any return premiums allowed and the tax due as provided in

this section. The remittance for the taxes due shall accompany

this report. Such report shall be made on forms prescribed and

furnished by the Department of Revenue. A copy of the report

shall be filed with the department by the surplus lines

licensee. A surplus lines licensee that is a business entity

licensee which files the annual premium tax return with the

Department of Revenue shall include in its return the premium

taxes generated during the year subject to reporting by all

licensees associated with said business entity during the

reporting period.]

[(d)] (2)  In the event that a placement of insurance

involves subjects of insurance resident, located or to be

performed in one or more states other than this Commonwealth,

then the premium taxes provided for in this section shall be

levied:

(i)  For policies placed before July 1, 2011, only on that

portion of the premium reasonably ascribable to that portion of

the risk situated in this Commonwealth.

(ii)  For policies placed after June 30, 2011, upon the gross

premium charged less any return premiums where this Commonwealth

is the home state of the insured.

(d.1)  (1)  Each surplus lines licensee shall, on or before

January 31 of each year, file a report of all premiums

transacted from the placement of insurance with either an

eligible surplus lines insurer or other nonadmitted insurers

during the previous calendar year. The report shall be filed as

prescribed by the Department of Revenue with any payment. A full

copy of the report shall be filed with the department by the

surplus lines licensee.

(2)  The report described under this subsection shall set

forth the name of the insured, the home state of the insured, if

required by the department, identification of the insurer, the

type of insurance, gross premiums charged less any return

premiums allowed, the tax due as provided in this section and

any other information as required by the Department of Revenue.

A surplus lines licensee that is a business entity licensee

which files the annual premium tax return with the Department of

Revenue shall include in its return the premium taxes generated

during the year subject to reporting by all licensees associated

with said business entity during the reporting period. The

report shall be made on forms prescribed by the Department of

Revenue.

(3)  The remittance for the taxes due shall accompany the

report described under this subsection. Neither the surplus

lines licensee nor the writing producer shall pay directly or

indirectly the tax or any portion of the tax, either as an

inducement to the insured to purchase the insurance or for any

other reason. The surplus lines licensee shall collect from the

insured or the writing producer the amount of the tax at the

time of delivery of the initial policy, cover note or other

evidence of insurance or at the time thereafter as is reasonably

consistent with normal credit terms customary in the business.

(4)  A penalty shall be imposed for failure to file the

report required under this subsection on or before the due date

in accordance with the rules of section 403(d) of the act of

March 4, 1971 (P.L.6, No.2), known as the "Tax Reform Code of

1971."

(e)  With respect to insurance placed with or issued by a

risk retention group which is an eligible surplus lines insurer,

there is hereby levied a tax of two per centum (2%) on all

premiums charged for risks resident, located or to be performed

in this Commonwealth. The risk retention group shall be

responsible for the payment of the taxes levied in this article

in accordance with procedures set forth in Article XV.

(f)  The [settlement and resettlement] assessment of taxes

imposed by this article, including the granting of extensions of

time to file reports and the rights of the taxpayers to present

and prosecute a petition for [resettlement] assessment, a

petition for review or an appeal to court or to file a petition

for refund and the imposition of interest and penalties, shall

be governed by the provisions of the act of March 4, 1971

(P.L.6, No.2), known as the "Tax Reform Code of 1971," as

approved in the case of [capital stock and franchise taxes] 

corporate net income tax.

Section 1622.  Tax on Independently Procured Insurance.--(a)

(1)  The tax provided by section 1621(a) is imposed upon an

insured whose home state is this Commonwealth who independently

procures insurance [on a subject of insurance resident, located

or to be performed in this Commonwealth] from a nonadmitted

insurer or continues or renews such independently procured

insurance. [The insured shall, within thirty (30) days after the

date when such insurance was independently procured, continued

or renewed, report such transaction on forms prescribed by the

Department of Revenue. This report shall set forth the

information required of surplus lines licensees as required in

section 1621(c). The tax of three per centum (3%) shall be paid

on the date the report is due as provided in this section. If

the independently procured insurance covers risks resident,

located or to be performed in one or more states other than this

Commonwealth, the premium taxes shall be prorated in accordance

with provisions in section 1621(d). A copy of such report shall

be filed with the department by the insured.]

(2)  If the independently procured insurance covers risks

resident, located or to be performed in one or more states other

than this Commonwealth, the premium taxes shall be payable as

computed in accordance with section 1621(a).

(b)  The insured shall, within thirty (30) days after the

last day of the month in which the insurance was independently

procured, continued or renewed, report the transaction on the

forms and in the manner prescribed by the Department of Revenue.

The report shall set forth the information required of surplus

lines licensees as required in any report described under

section 1621. The tax of three per centum (3%) shall be paid on

the date the report is due as provided under this section. The

insured shall file a copy of the report with the department upon

its request.

(c)  A penalty shall be imposed for failure to file the

report required under this section on or before the due date in

accordance with the rules of section 403(d) of the act of March

4, 1971 (P.L.6, No.2), known as the "Tax Reform Code of 1971."

Section 1623.  Suspension, Revocation or Nonrenewal of

Surplus Lines Licensee's License.--The department may suspend,

revoke or refuse to renew the license of a surplus lines

licensee after notice and a hearing, as provided under the

applicable provision of the laws of this Commonwealth, upon any

one or more of the following grounds:

(3)  Closing of the surplus lines licensee's office for a

period of more than thirty (30) business days, unless permission

is granted by the department.

(4)  Failure to make and file required reports.

(5)  Failure to collect or transmit required tax on surplus

lines premiums.

(7)  Failure to remit premiums due insurers or return

premiums due insureds in the normal course of business and

within reasonable time limits.

(8)  Violation of any provision of this [article] act.

(9)  For any other cause for which an insurance producer's 

license could be denied, revoked or suspended or refused upon

renewal.

Section 7.  This act shall take effect immediately.