Success Highlights Legislative Session
The one area which has caused the greatest amount of harm to the legitimate surplus line market in recent history has been private auto insurance. In just four years (1988 to 1991) the percentage of private auto insurance placed in the non-admitted market to total non-admitted insurance went from almost 0% to 13.5%. This dramatic increase brought along a tremendous escalation in- consumer complaints which in turn got the attention of the DOI and the California legislators. After all the dust had settled a new law, which in essence prohibits the exportation of private auto liability insurance and produced an enhanced working relationship between the DOI and the SLA, has brought the percentage of private auto insurance placed in the non-admitted market back to almost 0% for the first half of 1994.
With the historic codification last year of a surplus line advisory organization, as the SLA has officially been designated, means that once again California is the model when it comes to surplus lines.
The activity over the past four years has finally created an environment in 1994 where sweeping changes to existing laws are not needed. There are two bills on the legislative agenda which affect the surplus line market; SB959 and AB3058.
SB959 will legislate most of the provision of Permanent Regulation 2174, which we have all been living with for over a year, and make permanent the codification of the surplus line advisory organization (AB865). Based on ongoing discussion with the DOI and Senator Patrick Johnston, the bill's author, there is no substantive opposition to this bill, and it should therefore pass during this year's legislative session.
AB3058 would require the payment of the surplus line tax to be made monthly based on the invoice date, so long as the invoice date is within 60 days of the effective date of the policy. The SLA has worked with the DOI to ensure that, in its final form, this bill is operationally feasible.
As long as the lines of communication between the SLA, the DOI, and the California legislature remain clear and free flowing, the level of legislative activity in 1994 should be repeated in the years to come. AU this means we can now go back to the business of business.