(a) When assessed under Insurance Code §2210.6132,
the contingent surcharges must apply to all policies with insured
property in the catastrophe area that are issued or renewed with effective
dates in the surcharge period specified in the commissioner's order.
(b) For association policies that meet the requirements
of §5.4912 of Division 10 of this subchapter (relating to Filing
and Issuance of Policy Forms Relating to Premium Surcharges under
Insurance Code §§2210.612, 2210.613, and 2210.6131), association
surcharges must apply to all association policies that are in effect
on the surcharge date. For association policies that do not yet meet
the requirements of §5.4912 of Division 10 of this subchapter,
association surcharges must apply to all association policies that
are issued or renewed with effective dates in the surcharge period
determined under §5.4126 of this division (relating to Determination
of the Association Surcharge Percentage).
(c) There are two exceptions to the requirements of
subsections (a) and (b) of this section:
(1) insurers must not surcharge policies, and are not
responsible for collecting premium surcharges on policies that did
not go into effect or were canceled as of the inception date of the
policy; and
(2) for multiyear policies, the premium surcharge in
effect on the effective date of the policy, or the anniversary date
of the policy, must be applied to the 12-month premium for the applicable
policy period.
(d) Premium surcharges collected under Insurance Code §2210.6132
are refundable.
(1) If the policy is canceled, an amount of the contingent
surcharge that is proportionate to the returned premium must be refunded
to the policyholder; however,
(2) instead of a refund of the contingent surcharge,
the insurer may credit the return contingent surcharge against amounts
due the insurer but unpaid by the policyholder; and
(3) an additional contingent surcharge will not apply
to a policy that was canceled after the effective date of the policy,
and is later reinstated, if the contingent surcharge was paid in full.
If the policyholder did not pay the contingent surcharge in full,
the policyholder must pay the contingent surcharge that is due but
unpaid before the insurer may reinstate the policy. For purposes of
this section a policy is reinstated if it covers the same period as
the original policy without a lapse in coverage, except as provided
in Insurance Code §551.106.
(e) If a midterm policy change increases the premium
on the policy, the policyholder must pay an additional contingent
surcharge for the increased premium attributable to insured property
located in the catastrophe area, which will be determined by applying
the applicable contingent surcharge percentage to that portion of
the additional premium attributable to insured property located in
the catastrophe area.
(f) If a midterm policy change decreases the premium,
the policyholder is due a refund of the contingent surcharge for the
decreased premium attributable to insured property located in the
catastrophe area, which must be determined by applying the applicable
contingent surcharge percentage to that portion of the return premium
attributable to insured property located in the catastrophe area.
The insurer must credit or refund the excess contingent surcharge
to the policyholder within 20 days of the date of the transaction,
except as provided by subsection (g) of this section. The insurer,
or surplus lines agent allowed by an affiliated surplus lines insurer
to credit or refund excess surcharges, may credit any refund paid
or credited to the policyholder to the association through the offset
process described in §5.4187 of this division (relating to Offsets).
(g) Surcharges or refunds must apply to all premium
changes resulting from exposure or premium audits, retrospective rating
adjustments, or other similar adjustments that occur after policy
expiration. On inception of the policy, the contingent surcharge must
be collected on the deposit premium paid. If, after exposure or premium
audit, retrospective rating adjustment, or similar adjustment after
policy expiration, an additional premium is required, an additional
contingent surcharge must be paid. If, after exposure or premium audit,
retrospective rating adjustment, or other similar adjustment after
policy expiration, the deposit premium exceeds the actual premium,
the excess contingent surcharge must be refunded to the policyholder,
and the insurer, or surplus lines agent allowed by an affiliated surplus
lines insurer to credit or refund excess surcharges, may credit any
refund paid to the association through the offset process described
in §5.4187 of this division. Additional contingent surcharges
and refunds must be determined by applying the contingent surcharge
percentage in effect on the inception date of the policy, or the anniversary
date of the policy in the case of multiyear policies, to the additional
premium (or return premium) attributable to insured property located
in the catastrophe area.
(h) Even if a contingent surcharge was in effect on
the inception date of the policy, or the anniversary date in the case
of multiyear policies, no additional contingent surcharges or refunds
will apply to premium changes resulting from exposure or premium audits,
retrospective rating adjustments, or other similar adjustments that
occur when there is no contingent surcharge in effect.
(i) An affiliated surplus lines insurer may allow a
surplus lines agent to credit or refund contingent surcharges on its
behalf. An affiliated surplus lines insurer, or surplus lines agent
allowed to credit or refund contingent surcharges on its behalf, must
credit or refund the excess surcharge to the policyholder under subsections
(f) and (g) of this section not later than the last day of the month
following the month in which the corresponding transaction was effective.
(j) An affiliated surplus lines insurer that allows
an agent to credit or refund contingent surcharges on its behalf under
subsection (g) of this section may be held liable by the department
for the failure of its agent to comply with this section.
|