Plan of Operation
Surplus Lines Association of Minnesota
Adopted August 18, 2008
Surplus Line Association of Minnesota
PLAN OF OPERATION
263.199line
ARTICLE I Plan of Operation
A. Plan of Operation.
1.The plan of operation shall provide for the formation, operation, and governance of the Association. The plan of operation must provide for the election of a board of directors by the members of the Association. The board of directors shall elect officers as provided for in the plan of operation. The plan of operation shall establish the manner of voting and may weigh each member's vote to reflect the annual surplus lines insurance premium written by the member. Members employed by the same or affiliated employers may consolidate their premiums written and delegate an individual officer or partner to represent the member in the exercise of Association affairs, including service on the board of directors.
2. The plan of operation and any amendments to the plan of operation shall be submitted to the commissioner and shall be effective upon approval in writing by the commissioner. The Association and all members shall comply with the plan of operation or any amendments to it. Failure to comply with the plan of operation or any amendments shall constitute a violation for which the commissioner of commerce may issue an order requiring discontinuance of the violation.
3. If the interim board of directors fails to submit a suitable plan of operation
within 60 days following the creation of the interim board, or if at any time thereafter the Association fails to submit required amendments to the plan, the commissioner may submit to the Association a plan of operation or amendments to the plan, which the Association must follow. The plan of operation or amendments submitted by the commissioner shall continue in force until amended by the commissioner or superseded by a plan of operation or amendment submitted by the Association and approved by the commissioner. A plan of operation or an amendment submitted by the commissioner constitutes an order of the commissioner.
MINN LAW 2008, Chp. 366, Art. 17, Sec. 2, sub 3
B. Scope of Operation.The Association shall perform its functions under the plan of operation established under Article I and must exercise its powers through a board of directors established under Article III. The Association shall be authorized and have the duty to:
1.Receive, record, and stamp all surplus lines insurance documents that surplus lines licensees are required to file with the Association;
2.Prepare and deliver monthly to the commissioners of revenue and commerce a report regarding surplus lines business. The report must include a list of all the business procured during the preceding month, in the form the commissioners prescribe;
3. Educate its members regarding the surplus lines law of this state including insurance tax responsibilities and the rules and regulations of the commissioners of revenue and commerce relative to surplus lines insurance;
4.Communicate with organizations of agents, brokers, and admitted insurers with respect to the proper use of the surplus lines market;
5.Employ and retain persons necessary to carry out the duties of the Association;
6.Borrow money necessary to affect the purposes of the Association;
7.Enter contracts necessary to affect the purposes of the Association;
8.Provide other services to its members that are incidental or related to the purposes of the Association; and
9.Take other actions reasonably required to implement the provisions of this section.
MINN LAW 2008, Chp. 366, Art. 17, Sec. 2, Subd. 1
ARTICLE II Membership
A. Members. All Minnesotaeligible surplus lines licensees are members of the Association. Eligible surplus lines insure means an insurer recognized as eligible to write insurance business under Minnesota Statutes 60A.195 to 60A.209 but not licensed by any other Minnesota law to transact the business of insurance
B. Member Obligation. A surplus lines licensee shall submit every insurance policy or contract issued under the licensee's license to the Surplus Lines Associationof Minnesota for recording and stamping.The submission and stamping must be effected through electronic means. The submission must include:
1.The name of the insured;
2.A description and location of the insured property or risk;
3.The amount insured;
4.The gross premiums charged or returned;
5.The name of the surplus lines insurer from whom coverage has
beenprocured;
6.The kind or kinds of insurance procured; and
7.The amount of premium subject to tax.
The submission of insurance policies or contracts to the Surplus Lines
Association of Minnesota constitutes a certification by the surplus lines licensee, or by the insurance producer who presented the risk to the surplus lines licensee for placement as a surplus lines risk, that the insurance policies or contracts were procured in accordance with Minnesota Statutes 60A.195 to 60A.209.
MINN. LAW 2008, Chp. 366, Art. 17, Sec. 3, Subd. 1.
It shall be unlawful for an insurance agent, broker, or surplus lines licensee to deliver in this state any surplus lines insurance policy or contract unless the insurance document is stamped by the Association. A licensee's failure to comply with the requirements of this Subdivision shall not affect the validity of the coverage.
MINN LAW 2008, Chp. 366, Art. 17, Sec. 2, Subd. 2.
B. Voting. Each member shall have one vote and shall be entitled to additional voteson the basis of one vote for each $1,000 ($500 or more is rounded to the nearest$1,000) of net surplus line insurance premium written in the State of Minnesota duringthe previous calendar year as shown by the Association’s records provided thatthe maximum number of additional votes a member may be entitled to shall notexceed the votes that would be evaluated on the basis of five per cent (5%) of thetotal net surplus line insurance premium written in Minnesota during the previouscalendar year.
C. Consolidation. Members employed by the same or affiliated employers may consolidate their premiums written and delegatean individual officer or partner to represent the member in the exercise of Association affairs, including service on the board of directors.In the event of such consolidation, the member shall make a writtendelegation,with a copy supplied to the Associationof all powers hereunder including the determination of aquorum, the right to vote and to serve as a Director. Consolidation and delegation under this provision does not relieve themember of the responsibility for compliance with this Plan, the Association’sprocedures, or with the Minnesota Insurance laws, rules and regulationspromulgated thereunder.
D. Annual Meeting. There shall be an annual meeting of members which shall takeplace at a place to be designated in the State of Minnesota by the boardof directorsonthe second Tuesday in May, unless the board, upon proper notice, shall designatesome other date. Twenty days written notice of such annual meeting shall be givento all members. Such notice shall incorporate or be accompanied by an agenda forthe meeting.
E. Quorum.Themembers present in person or represented by proxy shall constitute a quorum forthe transaction of business and the acts of a majority of the membership present inperson or represented by proxy at a meeting at which a quorum is present shall bethe acts of the full membership.
F. Membership Revocation.The membership of a member not in compliance with the articles of corporation, by-laws and membership requirement of the Association shall be revoked by a majority vote of the board of directors.
ARTICLE III Directors
A. Board of Directors. An interim board shall be appointed by the commissioner of commerce directors within 30 days of enactment of the Surplus Lines legislation. The interim board must
1. Establish a plan of operation within 60 days after the appointment of the interim board;
2. Create a stamping office that is operational no later than December 31, 2008; and
3.Conduct an election for a board of directors by the membership after December 31, 2008, and no later than one year after the appointment of the interim board.
Once the responsibilities of the interim board are fulfilled, the
Association shall function through a board of directors composed of the following:
1.One director appointed by the commissioner of revenue;
2. One director appointed by the commissioner of commerce; and
3 At least five but no more than seven directors elected by the members
The elected directors must be members of the Association.Directors may serve until their successors are appointed or elected and their terms are completed as outlined in the plan of operation.
MINN LAW 2008, Chp. 366, Art. 17, Sec. 2, Subd. 2.
B. Term.The term for each who is also an officer of the Association shall be for one (1) year or until a successor is elected or appointed. At the first annual meeting of the Members of the Association a majority of the directors who are not officers shall be elected for a term one (1) year or until their successors are elected or appointed; the remaining directors shall be elected for a term of two(2) years until their successors are elected or appointed. Thereafter directors who are not officers of the Association shall be elected in alternative years for terms of two years until their successors are elected or appointed.
C. Elections. The interim board shall conduct an election for a board of directors by the membership after December 31, 2008, and no later than one year after the appointment of the interim boardThe Chair of the board shall appoint a nominating committeesubject to approval of the boardof directorsat least 90 days before the annualmeeting to nominate members to fill the expiring terms of Directors. Therecommendations of the nominating committee shall be announced at least 60days before the annual meeting and members shall be given 10 days after suchannouncement to make additional nominations of members who have signifiedtheir willingness to stand for election. Ballots shall be mailed to the members atleast 30 days before the annual meeting indicating the nominations by thenominating committee and any additional nominations. The ballots shall becounted by tellers appointed by the Chair and the results of the election shallbe announced at the annual meeting.
D. Vacancies. Vacancies on the board shall be filled for the remaining period of thevacating Director’s term by the board of directors.
E. Actions. A majority of the board of directors shall constitute a quorum for the
transaction of business and the acts of a majority of the directorspresent or by proxy at ameeting at which a quorum is present shall be the acts of the board, except that anaffirmative vote of a majority of the directorsis required to:
1. Approve contracts with an annual obligation of $5,000 or more.
2. Adopt a schedule for countersignature and other fees.
3. Borrow money.
4. Amend this Plan.
5. Authorize bank signatures.
6. Remove any officer
7. Hire or dismiss executive director
When such issues are presented to the directorsat any annual, regular or specialmeeting, those directorsabsent from such meeting may be polled by the Chairon such issues and any vote cast by such absentee Director on such issues shallbe as valid as though such absentee Director was in fact present at the meeting forpurposes of determining whether a quorum is present and voting. Votes cast in thismanner shall be subsequently confirmed in writing by letter from such absenteeDirector to the Chair.
F. Directors’ Annual Meeting.An annual meeting of the board of directors shall beheld at the Association’s office or such other place designated by the board of directors as soon as possible after the annual meeting ofmembers in order to elect officers.
G. Regular and Special Meetings. Regular meetings of the board of directors shallbe held in order to review, considerand act on any matters deemed necessary to the administration and purposes ofthe Association and the Minnesota surplus line law. The Chair shall designate thedate, time and place, of such regularmeetings and may cancel or postpone any regular meeting when in his judgmentsuch cancellation or postponement will not interfere with the business of theAssociation. Special meetings of the board of directors may be called by theChair and shall be called at the request of any three directors upon not lessthan 5 days written notice to each director of the time and place, which shall be inthe State of Minnesota, and purpose or purposes of any special meeting. Such noticefor any special meeting may be waived by written waiver signed by all the directorsbefore or after such meeting. At any regular or special meeting, the directorsmayconsider and decide any matter deemed to be necessary for the administration ofthe Association. Meetings of the board of directors may be conducted via tele-conference.
I. Consent. Any action which may be taken at an annual, regular or special meetingof the board may be taken without a meeting if consent in writing, setting forththe action so taken, shall be signed by all the directorsentitled to vote at ameeting. Any such consent signed by all the directorsshall have the same effectas a unanimous vote.
J. Compensation, Reimbursement. Directorsshall serve without compensation butthey may be reimbursed for necessary expenses incurred by them as members ofthe board of directors.
K. Proxy.A director may designate in writing an individual employed by the same or affiliated employer as a proxy for a specific meeting to represent the director in the Association’s affairs.
L. Removal for Cause. A director may be removed for cause, stated in writing, after an opportunity has been given to the director to be heard.
ARTICLE IV Officers
A. Officers. The officers of the Association to be elected by the boardof directorsshall be a Chair, a Vice-Chair, a Treasurer and a Secretary. They shall beelected at the board of directors’ annual meeting and shall hold office until the nextDirectors’ annual meeting or until their successors are elected and installed. TheChair shall not be elected to more than two consecutive one year terms.
B. Chair. It shall be the duty of the Chair to preside at all meetings and to
perform all duties usually pertaining to his office. The Chairshall be an ex-officio memberof all committees.
C. Vice-Chair. It shall be the duty of the Vice-Chairduring the absence of the Chair to perform all the duties of the Chair.
D. Secretary. It shall be the duty of the Secretary to keep full minutes of the
Proceedings of all meetings of the Association and of the boardof directorsand toperform all duties usually pertaining to his office or as may be assigned by the
board of directors.
E. Treasurer. It shall be the duty of the Treasurer to report at the annual meeting ofmembers the account of the funds of the Association and of all receipts and
disbursements and to perform all duties usually pertaining to his office or as
be assigned by the board of directors.
ARTICLE V Operations
A. Address. The official address of the Association shall be the permanent office ofthe Association.
B. Employees, Agents. The Association may employ such persons, firms or
corporations, attorneys or accountants, as are necessary for the performance ofthe duties imposed on the Association. Employees of the Associationshall bewholly independent of any on-going connection with any Member of the Association.
C. Bank Accounts; Borrowing. The Association may open one or more bank
accounts. Reasonable delegation of deposit and withdrawal authority to such
accounts for Association business may be made consistent with prudent fiscal
policy. The Association may borrow money as the board of directors in its
judgment deems advantageous for the Association.
D. Budget and Fee Schedule. Prior to November 1 of each year, the board of
directorsshall adopt a budget for the Association’s operating and capital expensesand contingent expenses for the period January 1 to December 31 following. Thebudget shall take into account unknown and unanticipated expenses as mayreasonably occur and make provision for such expenses in accordance withprudent business practice. Based upon the anticipated volume of surplus linepremium during the period, the boardof directorsshall adopt a countersignaturefee to be charged members on all surplus line business submitted to theAssociation and may adopt a schedule for an annual fee, minimum fees, fees forlate or erroneous filings or payments, or other fees approved by the board of directors. The countersignature fee and fee schedule shall be submitted to theCommissioner of Commerce for approval on or about August 1.
E. Fee Schedule.Based upon the anticipated volume of surplus line premium during the period, the board of directors shall adopt a countersignature fee to be charged members on all surplus line business submitted to the Association and may adopt a schedule for an annual fee, minimum fees, fees for late or erroneous filings or payments, or other fees approved by the board of directors. The countersignature fee and fee schedule shall be submitted to the Commissioner of Commerce for approval on or about August 1.
F. Stamping Fee. The services performed by the Association shall be
funded by a stamping fee assessed for each premium-bearing document submitted to the Association. The stamping fee shall be established by theboard of directors of the Association from time to time. The stamping fee shall be paid by the insured to the surplus lines licensee and remitted electronically to the Association by the surplus lines licensee. It shall be unlawful for an insurance agent, broker, or surplus lines licensee to deliver in this state any surplus lines insurance policy or contract unless the insurance document is stamped by the Association.
MINN. LAW 2008, Chp. 366, Art. 17, Sec. 2, Subd.7.
G. Countersignature Reports. The Association shall record and countersign all
surplus line insurance documents submitted to it pursuant to the Minnesota Insurancestatutes and shall prepare reports to the Commissioner of Commerce and to members asrequired therein and for such other purposes as approved by the board of directors.
H. Procedures Manual. The Association shall prepare and distribute a proceduresmanual to each member setting forth the procedure for submitting surplus lineinsurance documents to the Association and other matters germane to theoperation of the Association.
I.Insurance. The Association shall procure such bonds and insurance covering
Directors, officers, employees and agents of the Association and the Association
and its properties as it determines to be appropriate for the Association and the
members.
J. Data. All data collected by the Association shall be stored and utilized solely for the operations of the Association. Unless otherwise classified by statute, a temporary classification under Minn. Statute 13.06, or federal law, information obtained by the commissioner from the Association is public, except that any data identifying insureds is private data on individuals or nonpublic data as defined in Minn. Statute 13.02, Subd.ivisions 9 and 12.