(a) A surplus lines licensee may not exercise
binding authority in this Commonwealth on behalf of an eligible surplus lines
insurer unless there is in force a written contract executed by all parties to
the contract setting forth the terms, conditions and limitations governing the
exercise of binding authority by the surplus lines licensee. The written
contract must, at a minimum, contain the following:
(1) A description of the classes of insurance
for which the surplus lines licensee holds binding authority.
(2) The geographical limits of the binding
authority.
(3) The maximum dollar
limitations on the binding authority for any one risk for each class of
insurance.
(4) The maximum policy
period for which the surplus lines licensee may bind a risk.
(5) A prohibition against delegation of
binding authority by the surplus lines licensee or, if the binding authority is
delegable by the surplus lines licensee, a prohibition against delegation of
binding authority by the surplus lines licensee without the prior written
approval of the eligible surplus lines insurer.
(6) A provision in the following or
substantially similar language:
It is understood and agreed that all insurance placed
pursuant to this agreement on risks resident, located, or to be performed in
this Commonwealth, shall be effected and written in accordance with Article XVI
of the act of May 17, 1921 (P. L. 682, No. 284) (40 P. S. §§
991.1601-991.1625).
(b) An executed copy of the written contract
shall be maintained by the surplus lines licensee in its office. The copy shall
be available at all reasonable times for examination by the Department without
notice for at least 5 years following termination of the contract.
(c) If a surplus lines licensee, who is
qualified under this chapter to exercise binding authority on behalf of the
eligible surplus lines insurer, delegates binding authority to any other
surplus lines licensee, the instrument delegating binding authority shall
specifically identify the binding authority agreement between the delegating
surplus lines licensee and the eligible surplus lines insurer. An executed copy
of the instrument delegating binding authority shall be maintained by both the
surplus lines licensee delegating binding authority and the surplus lines
licensee to whom the authority is delegated in their offices. The copy shall be
available at all reasonable times for examination by the Department without
notice for at least 5 years following termination of the contract.
