§ 124.3. Conditions of binding authority.
(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. § § 991.1601991.1625).
(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.
The provisions of this § 124.3 amended under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. § § 66, 186, 411 and 412); and Articvle XVI of The Insurance Company Law of 1921 (40 P. S. § § 991.1601991.1626).
The provisions of this § 124.3 amended October 25, 2013, effective November 25, 2013, 43 Pa.B. 6345. Immediately preceding text appears at serial pages (263780) to (263781).
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