New Insurance Surplus Lines
License Requirement in California

As of January 1, 2008, all individuals currently transacting business on behalf of Surplus Line Broker Organizations will be required to be individually licensed as a Surplus Line Broker. This change applies to both California residents and non-residents.

Assembly Bill 1639 (Duvall, Chapter 122, Statutes of 2007) became law and will take effect on January 1, 2008. This legislation, in part, makes significant changes to the surplus line broker licensing requirements and fees contained in Sections 1765 and 1765.3 of the California Insurance Code (CIC). A few of those changes are as follows:

• All individuals transacting surplus lines business in California must hold an individual Surplus Line Broker license. Effective January 1, 2008, individuals licensed as a Fire and Casualty Broker-Agent may not transact surplus lines business on behalf of a surplus line broker’s organizational license, without also holding an individual surplus line broker license;
  
  
• Applicants for a Surplus Line Broker license must be currently licensed as a Fire and Casualty Broker-Agent, (license issued by the CDI), to be considered for a Surplus Line Broker license;
  
  
• Surplus Line Brokers who are only transacting on behalf of a licensed surplus line broker organization will not be required to file a $50,000 surplus line broker bond.
  
  
• Per Section 1760.5 (b) of the CIC, all of the above changes also apply to special lines’ surplus line brokers.

Individuals most likely to be affected by these changes include:

• Fire and Casualty Broker-Agents who transact on behalf of a Surplus Line Broker Organization but are not themselves licensed as a Surplus Line Broker.
  
  
• Individuals licensed as a Surplus Line Broker but who are not also licensed as a Fire and Casualty Broker-Agent.
  
  
• New applicants for a Surplus Line Broker license who are not currently licensed by the California Department of Insurance in any capacity.