Silvers

I. INTRODUCTION

Two categories of insurance carriers provide property and casualty insurance in California: insurers licensed by the Department of Insurance (DOI) and “surplus line insurers.” Licensed insurers, also known as “admitted insurers,” have a presence in California, have full access to the insurance market, and are statutorily “entitled to transact insurance business” in California (Ins. Code, § 24). On the other hand, surplus line insurers, a subset of the “nonadmitted” insurance market, are not licensed by California and have no presence in California. Although a surplus line insurer is generally precluded from transacting insurance business in California, the company may issue policies to California residents when (a) the insurance to be provided is statutorily sanctioned as appropriate for surplus line insurers; (b) the coverage sought to be provided (e.g., amusement parks, movie/entertainment ventures) is not available from an admitted insurer; and (c) the Insurance Commissioner has determined that the company is of satisfactory financial stability and reputation to protect the public interest. (See §§ 1763, 1765.1.)

The issue presented is whether surplus…