Insurance transactions: nonadmitted insurers.

Existing law limits the ability of a surplus line broker to place any coverage with a nonadmitted insurer, as specified. In order for a nonadmitted insurer to qualify for coverage it must demonstrate financial stability, as defined. This bill would authorize an insurer domiciled in California to have common directors with an affiliated nonadmitted insurer provided those common directors do not constitute the majority of the voting authority of the nonadmitted insurer and do not perform any management functions for the nonadmitted insurer in California. The bill would also authorize an insurer domiciled in California to perform specified administrative, claims adjusting, and investment management services on behalf of an affiliated nonadmitted insurer that has qualified as an eligible surplus line insurer. The bill would incorporate additional changes to Section 1765.1 of the Insurance Code, proposed by AB 1708 of the 2009–10 Regular Session, to be operative only if both bills are chaptered and become effective on or before January 1, 2011, and this bill is chaptered last.