(a) Prior to placing business with an unauthorized insurer, an excess line broker shall make inquiry sufficient to ascertain the insurer's financial stability and capacity adequate to its business and, in order to support such inquiry, shall except as provided by subdivision (g) of this section obtain, review and retain at least the following:

1. (1) if a foreign insurer, then a copy of the insurer's most recent annual financial statement as of a date in no event earlier than 18 months prior to placement, in the form filed with its home jurisdiction;
2. (2) if an alien insurer, then evidence that such insurer appears in the most recent NAIC IID list of alien insurers;
3. (3) if accessible to the excess line broker, a copy of the insurer’s latest report on examination, if any, in English (or true translation) and stated in United States dollars, as conducted by its home jurisdiction; and
4. (4) a certification, in English (or true translation), from the insurer's home jurisdiction, or any other documentation sufficient to ascertain and verify the fact that the insurer is authorized in its domiciliary jurisdiction to write the insurance policy proposed to be procured from it by the excess line broker.

(b) An excess line broker shall not place coverage with an unauthorized insurer, unless the insurer's financial statements or other evidence demonstrate that the insurer:

1. (1) is solvent and otherwise substantially complies with solvency requirements for authorized insurers;

2. (2) has surplus to policyholders sufficient to support its writings, reasonable in relation to its outstanding liabilities, adequate to its financial needs and:

   1. (i) for an individual incorporated foreign unauthorized insurer, the insurer maintains surplus to policyholders of not less than US $45,000,000;
   2. (ii) for a partnership of foreign unauthorized insurers, each licensed in its domicile and which parternship is duly authorized by its domiciliary jurisdiction to insure risks on a joint and several basis, each insurer maintains surplus to policyholders of not less than US $45,000,000; and
3. (3) as of January 1, 2016 and every three years thereafter, the minimum surplus to policyholders requirements in subparagraphs (2)(i) and (ii) of this subdivision shall be increased by US $1,000,000.

(c) For purposes of subdivision (b) of this section, in the case of an insurance exchange created by the laws of a state other than this State, no excess line broker shall procure coverage from that exchange or any of its syndicates, unless:

1. (1) the insurance exchange maintains funds in trust or custodial accounts, under terms acceptable to the superintendent, in an amount not less than US $75,000,000 in the aggregate provided that an amount at least equal to the greater of US $30,000,000 or one-third of the aggregate, is maintained on a joint and several basis for the protection of all insurance exchange policyholders;
2. (2) the syndicates of such insurance exchange maintain total capital and surplus, or their substantial equivalent, not less than US $100,000,000 in the aggregate; and
3. (3) each syndicate with which excess line insurance is placed has surplus to policyholders sufficient to support its writings, reasonable in relation to its outstanding liabilities, adequate to its financial needs; and if the syndicate maintains minimum capital and surplus, or their substantial equivalent, of not less than US $45,000,000; and
4. (4) as of January 1, 2016 and every three years thereafter, the minimum capital and surplus requirements in paragraph (3) of this subdivision shall be increased by US $1,000,000.

(e) Before placing business with an unauthorized insurer, an excess line broker shall make inquiry sufficient to demonstrate that such insurer’s:

1. (1) claims practices have been, and continue to be, satisfactory; and
2. (2) management is trustworthy and competent.

(f) Whenever an excess line broker knew or should have known that an unauthorized insurer is not in compliance with any requirement of this section, the excess line broker shall:

1. (1) cease procuring coverage from such insurer; and
2. (2) notify, in writing and within 10 days, the superintendent, excess line association, any producing broker and each insured having a policy placed by the excess line broker with such insurer that, in the excess line broker's judgment, replacement of coverage is warranted, stating reasons supporting that judgment. Proof of mailing of the excess line broker's notice to replace coverage, to the first named insured at the address shown in the policy, shall be sufficient proof of notice required by this paragraph.

(g) An excess line broker's need to obtain and retain any information or materials specified in this section may be waived to the extent that the excess line association:

1. (1) maintains such information or materials; and

2. (2) makes the information and materials available, during normal business hours and at reasonable cost, to excess line brokers, producing brokers, insureds or prospective insureds, provided, however, that nothing in this paragraph shall be interpreted in any way to relieve or diminish the obligation of the excess line licensee to inquire about unauthorized insurers and review all the relevant material required by this section.

   (h)

3. (1) The requirements of paragraph (b)(2) or (c)(3) of this section may be satisfied by an unauthorized insurer possessing less than the surplus to policyholders required, and the requirements of paragraph (c)(1) of this section regarding the maintenance of funds on a joint and several basis may be satisfied by an insurance exchange possessing less than the amount of funds in trust or custodial accounts required to be maintained on a joint and several basis for the protection of all insurance exchange policyholders, upon an affirmative finding of acceptability by the superintendent. The finding shall be based upon such factors as quality of management, capital and surplus of any parent company, the unauthorized insurer's or insurance exchange's underwriting profit and investment income trends, unauthorized insurer or insurance exchange record and reputation within the industry, whether the unauthorized insurer or insurance exchange will provide capacity for risks for which coverage is not readily available in the admitted market or from unauthorized insurers which satisfy the requirements of paragraph (b)(2) or (c)(3) of this section, and insurance exchanges which satisfy the requirements of paragraph (c)(1) of this section, and the degree to which a finding of acceptability would benefit insurance consumers in this State.
4. (2) An unauthorized insurer or insurance exchange seeking an affirmative finding of acceptability from the superintendent shall file a business plan with the superintendent detailing the unauthorized insurer's or insurance exchange's proposed underwriting activity on New York risks. Any affirmative finding of acceptability pursuant to this subdivision shall be conditioned upon the unauthorized insurer's or insurance exchange's adherence to the business plan as filed with the superintendent. Any unauthorized insurer's or insurance exchange's granted an affirmative finding of acceptability pursuant to this subdivision may file a revised business plan with the superintendent seeking to alter its underwriting activity on New York risks.
5. (3) In no event shall the superintendent make an affirmative finding of acceptability when the unauthorized insurer’s surplus to policyholders is less than US $25,000,000; provided, that as of January 1, 2016, and every three years thereafter, the minimum surplus to policyholders requirement amount shall be increased by US $1,000,000.