SLA Quarterly

Chairman's Note

New regulations this year on Disclosure requirements, Diligent Search efforts and new financial requirements certainly made 1993 a year of change. We know that our members have many questions concerning the intent and mandates of the new regulations and we believe the following article is of such importance that we are pleased to publish a special issue of the SLA Quarterly.

The article should give you a perspective and appreciation as to our industry abuses, problems, and importantly the needed solutions. The exclusive article from Insurance Commissioner John Garamendi should prove informative to you and your staff. If you have additional questions concerning the new regulations, or need information concerning any aspect of the surplus lines business please give the SLA a call at (415) 434-4900 or fax us a note at (415) 434-3716.

In the future, as issues warrant, we may deviate from our normal quarterly publishing schedule to bring you special editions of the SLA Quarterly. This will be done as one of the many services offered to members of the SLA.

- Jim Widgren

John Garamendi Provides Update of Surplus Lines' Legislation & Regulations

Since taking office two years ago, California Insurance Commissioner John Garamendi has waged an aggressive battle against unscrupulous non-admitted surplus lines insurers writing business in the State. Garamendi recently took the case to the national stage with an appearance on "Dateline NBC," where he denounced under-capitalized insurers operating out of such outlandish locales as Antigua, Barbados, and the Turks and Caicos Islands. The Commissioner's real progress has been demonstrated in the successful implementation of strict new regulations and legislation designed to curb abuses.

Despite the existence of a comprehensive regulatory scheme, some surplus lines insurance placement has been subject to abuse. Many surplus lines carriers are domiciled in small countries with liberal insurance laws. These companies often collect minions in premium but are not required to maintain corresponding reserves for the payment of claims. If large claims arise, these non-admitted carriers often become insolvent, leaving the insured with little or no recourse. ( continued )

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