P.R. Laws tit. 26, § 1007a
(1) No surplus line insurance producer shall transact an insurance contract in an unauthorized insurer that is not an eligible surplus line insurer as provided in this section. No unauthorized insurer shall be or shall be considered an eligible surplus line insurer unless the Commissioner shall determine its eligibility according to the following conditions:
(a) The status of eligibility of the insurer shall be applied for in writing to the Commissioner by a surplus line producer licensed as such.
(b) The unauthorized insurer shall present to the Commissioner satisfactory evidence to the effect that it is at the time an authorized insurer in the state or country where it resides for the kind or kinds of insurance it seeks thus to transact, and shall have been such an insurer for not less than the five (5) years immediately preceding; or shall be a subsidiary wholly owned by an authorized insurer in Puerto Rico, or an eligible surplus line insurer that has been so eligible for not less than the five (5) years immediately preceding.
(c) Before granting eligibility, the surplus line insurance producer or the unauthorized insurer shall present to the Commissioner a duly authenticated copy of its most recent annual financial statement, in English or Spanish, with all monetary values expressed in legal tender of the United States and containing such other additional information concerning the insurer as the Commissioner may require.
(d) The unauthorized insurer shall have a surplus for policyholders of not less than the amount required by this title for an authorized insurer of the same kind, and, in the case of a foreign insurer not organized according to the laws of a state of the United States, it shall also deposit with the Secretary of the Treasury of the Commonwealth of Puerto Rico, or in a bank duly authorized to operate in Puerto Rico, a sum not less than fifty thousand dollars ($50,000), or, in the case of a group of insurers, then said deposits shall be for a sum not less than three hundred thousand dollars ($300,000). Such amounts would be for the protection of all policyholders and creditors of such foreign insurer in Puerto Rico. Any fund so established shall consist of public obligations of the Commonwealth of Puerto Rico, the United States, or any state, county, or municipality thereof, or of the Dominion of Canada, or of other investments of the same nature, kind, and quality as those considered eligible for similar funds by domestic insurers according to former §§ 601–632 of this title.
(e) The unauthorized insurer shall enjoy good reputation and shall render services with reasonable promptness to its policyholders concerning compensation for losses and just claims.
(f) No unauthorized insurer shall be eligible if its administration is incompetent or unreliable, or if it lacks experience in the management of insurance companies to the extent that the operations it may undertake to transact may be risky to the insured public, or if the Commissioner has good grounds to believe that it is directly or indirectly affiliated, through possession, control, reinsurance transactions, or insurance or business relations, with any person or persons whose commercial operations are or have been detrimental to the policyholders, stockholders, investors, creditors, or the general public.
(g) No unauthorized insurer shall be eligible if it is the property of, or is financially controlled, in whole or in part, by any government or government agency, or if administered by or for the benefit of such government or agency.
(2) The Commissioner shall from time to time publish a list of all eligible surplus line insurers and shall send by mail to each surplus line insurance producer a copy thereof to its latest address registered at the Commissioner’s Office.
(3) This section shall not be construed to impose upon the Commissioner the duty or responsibility of determining the present financial condition or the practices concerning the handling of claims of an unauthorized insurer; and the status of eligibility, should the Commissioner grant same, shall only indicate that the insurer apparently operates on a sound financial basis and that it follows satisfactory practices in the handling of claims and the Commissioner has no trustworthy evidence to the contrary.
(4) When a particular risk of surplus line insurance cannot be insured in whole or in part in the eligible surplus line insurers, the surplus line insurance producer may present to the Commissioner a supplementary affidavit stating the facts and informing that such part of the risk as cannot be insured as stated is being insured in an unauthorized insurer or insurers, whose name it shall give, in the amounts and percentages indicated in the affidavit. The said ineligible unauthorized insurer or insurers shall, however, before accepting the risk, deposit with the Secretary of the Treasury of the Commonwealth of Puerto Rico, through the Commissioner, the sum of twenty thousand dollars ($20,000) in cash or eligible securities as provided in subsection (1)(d) of this section, of equal market value, which shall be retained by the Secretary of the Treasury solely for the benefit of the insurer’s creditors and policyholders, and the surplus line insurance producer shall obtain from such unauthorized insurer, and present to the Commissioner, a certified copy of its most recent annual financial statement. If the deposit is made, and the financial statement discloses admitted net assets including capital and surplus, of at least five hundred thousand dollars ($500,000), of which at least three hundred thousand dollars ($300,000) are admitted liquid assets, the surplus line insurance producer may proceed to transact the insurance contract. When an insurance risk or part thereof is transacted in an ineligible unauthorized insurer, as herein provided, the policy, or provisional guarantee, if any, shall contain conspicuously on its face the following recital in red letters: “All or a number of the insurers participating in this insurance have not been authorized to transact business in Puerto Rico nor approved as surplus line insurers by the Commissioner of Insurance of this Commonwealth. The transaction of this insurance by a licensed surplus line insurance producer shall not be construed to mean that the Commissioner of Insurance of Puerto Rico approves of such insurer.”
All other provisions of this title shall be applicable to such insurance contract as if such risks were placed in an eligible surplus line insurer.
(5) No eligible surplus line insurer can issue this type of insurance on any person, property or any other material object of the insured, resident, located, or to be carried out in Puerto Rico unless it is done through a surplus line producer authorized according to the provisions of § 1011 of this title.
History —Ins. Code, added as § 10.071 on Aug. 30, 1961, No. 7, p. 341, § 3; Feb. 16, 1979, No. 15, p. 28, § 7.