As Passed by the House

129th General Assembly Regular Session 2011-2012

Sub. H. B. No. 122

Representative Hottinger 

Cosponsors: Representatives Antonio, Baker, Beck, Brenner, Bubp, Carey, Carney, Coley, Combs, Derickson, Fende, Garland, Goyal, Hackett, Hagan, C., Hall, Heard, Letson, Luckie, Mallory, McClain, Mecklenborg, Milkovich, Newbold, Rosenberger, Sears, Stinziano, Young Speaker Batchelder 

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A BILL

To amend sections 3901.17, 3905.30, 3905.31, 3905.33,

1

3905.34, 3905.36, 3905.37, and 3905.38 and to

2

enact section 3905.331 of the Revised Code to

3

exempt state surplus lines insurance from

4

regulation in Ohio when Ohio is not the home state

5

of the insured and to make other changes to the

6

law regulating surplus lines insurance.

7

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1.  That sections 3901.17, 3905.30, 3905.31, 3905.33,	8
3905.34, 3905.36, 3905.37, and 3905.38 be amended and section	9
3905.331 of the Revised Code be enacted to read as follows:	10

Sec. 3901.17.  (A) As used in this section:

11

(1) "Captive insurer" has the meaning defined in section	12
3905.36 of the Revised Code.	13

(2) "Insurer" includes, but is not limited to, any person	14
that is an affiliate of or affiliated with the insurer, as defined	15
in division (A) of section 3901.32 of the Revised Code, and any	16
person that is a subsidiary of the insurer as defined in division	17
(F) of section 3901.32 of the Revised Code.	18

(3) "Laws of this state relating to insurance" has the	19
meaning defined in division (A)(1) of section 3901.04 of the	20
Revised Code.	21

(4) "Person" has the meaning defined in division (A) of	22
section 3901.19 of the Revised Code.	23

(5) "Home state" has the same meaning as in section 3905.30	24
of the Revised Code.	25

(B) Any of the following acts in this state, effected by mail	26
or otherwise, by any foreign or alien insurer not authorized to	27
transact business within this state, any nonresident person acting	28
on behalf of an insurer, or any nonresident insurance agent	29
subjects the insurer, person, or agent to the exercise of personal	30
jurisdiction over the insurer, person, or agent to the extent	31
permitted by the constitutions of this state and of the United	32
States:	33

(1) Issuing or delivering contracts of insurance to residents	34
of this state or to corporations authorized to do business	35
therein;	36

(2) Making or proposing to make any insurance contracts;

37

(3) Soliciting, taking, or receiving any application for	38
insurance;	39

(4) Receiving or collecting any premium, commission,	40
membership fee, assessment, dues, or other consideration for any	41
insurance contract or any part thereof;	42

(5) Disseminating information as to coverage or rates,	43
forwarding applications, inspecting risks, fixing rates,	44
investigating or adjusting claims or losses, or transacting any	45
matters subsequent to effecting a contract of insurance and	46
arising out of it;	47

(6) Doing any kind of business recognized as constituting the	48
doing of an insurance business under Title XXXIX of the Revised	49
Code or subject to regulation by the superintendent of insurance	50
under the laws of this state relating to insurance.	51

Any such act shall be considered to be the doing of an	52
insurance business in this state by such insurer, person, or agent	53
and shall be its agreement that service of any lawful subpoena,	54
notice, order, or process is of the same legal force and validity	55
as personal service of the subpoena, notice, order, or process in	56
this state upon the insurer, person, or agent.	57

(C) Service of process in judicial proceedings shall be as	58
provided by the Rules of Civil Procedure. Service in or out of	59
this state of notice, orders, or subpoenas in administrative	60
proceedings before the superintendent shall be as provided in	61
section 3901.04 of the Revised Code.	62

(D) Service of any notice, order, subpoena, or process in any	63
such action, suit, or proceeding shall, in addition to the manner	64
provided in division (C) of this section, be valid if served upon	65
any person within this state who, in this state on behalf of such	66
insurer, person, or agent is or has been:	67

(1) Soliciting, procuring, effecting, or negotiating for	68
insurance;	69

(2) Making, issuing, or delivering any contract of insurance;

70

(3) Collecting or receiving any premium, membership fees,	71
assessment, dues, or other consideration for insurance;	72

(4) Disseminating information as to coverage or rates,	73
forwarding applications, inspecting risks, fixing rates,	74
investigating or adjusting claims or losses, or transacting any	75
matters subsequent to effecting a contract of insurance and	76
arising out of it.	77

(E) Nothing in this section shall limit or abridge the right	78
to serve any subpoena, order, process, notice, or demand upon any	79
insurer, person, or agent in any other manner permitted by law.	80

(F) Every person investigating or adjusting any loss or claim	81
under a policy of insurance not excepted under division (I) of	82
this section and issued by any such insurer and covering a subject	83
of insurance that was resident, located, or to be performed in	84
this state at the time of issuance shall immediately report the	85
policy to the superintendent.	86

(G) EachIf this state is the home state of the insured, each	87
such insurer that does any of the acts set forth in division (B)	88
of this section in this state by mail or otherwise shall be	89
subject to a tax of five per cent on the gross premiums,	90
membership fees, assessments, dues, and other considerations	91
received on all contracts of insurance covering subjects of	92
insurance resident, located, or to be performed within this state.	93
Such insurer shall annually, on or before the first day of July,	94
pay such tax to the treasurer of state, as calculated on a form	95
prescribed by the treasurer of state. If the tax is not paid when	96
due, the tax shall be increased by a penalty of twenty-five per	97
cent. An interest charge computed as set forth in section 5725.221	98
of the Revised Code shall be made on the entire sum of the tax	99
plus penalty, which interest shall be computed from the date the	100
tax is due until it is paid. The treasurer of state shall	101
determine and report all claims for penalties and interest	102
accruing under this section to the attorney general for collection	103
the requirements of section 3905.36 of the Revised Code.	104

For purposes of this division, payment is considered made	105
when it is received by the treasurer of state, irrespective of any	106
United States postal service marking or other stamp or mark	107
indicating the date on which the payment may have been mailed.	108

(H) No contract of insurance effected in this state by mail	109
or otherwise by any such insurer is enforceable by the insurer.	110

(I) This section does not apply to:

111

(1) Insurance obtained pursuant to sections 3905.30 to	112
3905.36 of the Revised Code;	113

(2) The transaction of reinsurance by insurers;

114

(3) Transactions in this state involving a policy solicited,	115
written, and delivered outside this state covering only subjects	116
of insurance not resident, located, or to be performed in this	117
state at the time of issuance, provided such transactions are	118
subsequent to the issuance of the policy;	119

(4) Transactions in this state involving a policy of group	120
life or group accident and sickness insurance solicited, written,	121
and delivered outside this state;	122

(5)(4) Transactions involving contracts of insurance	123
independently procured through negotiations occurring entirely	124
outside this state which are reported to the superintendent and	125
with respect to which the tax provided byis paid in accordance	126
with section 3905.36 of the Revised Code is paid;	127

(6)(5) An attorney at law acting on behalf of the attorney's	128
clients in the adjustment of claims or losses;	129

(7) Except as provided in division (G) of this section, any	130
insurance company underwriter issuing contracts of insurance to	131
employer insureds or contracts of insurance issued to an employer	132
insured. For purposes of this section, an "employer insured" is an	133
insured to whom all of the following apply:	134

(a) The insured procures the insurance of any risk or risks	135
by use of the services of a full-time employee acting as an	136
insurance manager or buyer or the services of a regularly and	137
continuously qualified insurance consultant. As used in division	138
(I)(7)(a) of this section, a "regularly and continuously qualified	139
insurance consultant" does not include any person licensed under	140
Chapter 3905. of the Revised Code.	141

(b) The insured's aggregate annual premiums for insurance on	142
all risks total at least twenty-five thousand dollars; and	143

(c) The insured has at least twenty-five full-time employees.

144

(8)(6) Ocean marine insurance;

145

(9)(7) Transactions involving policies issued by a captive	146
insurer.	147

Sec. 3905.30. (A) As used in sections 3905.30 to 3905.38 of	148
the Revised Code:	149

(1) Notwithstanding section 3905.01 of the Revised Code,	150
"home state" means the state in which an insured maintains its	151
principal place of business or, in the case of an individual, the	152
individual's principal residence except in the case of either of	153
the following:	154

(a) If one hundred per cent of the insured risk is located	155
out of the state in which an insured maintains its principal place	156
of business or principal residence as described in division	157
(A)(1)(a) of this section, "home state" means the state to which	158
the greatest percentage of the insured's taxable premium for that	159
insurance contract is allocated.	160

(b) If more than one insured from an affiliated group are	161
named insureds on a single unauthorized insurance contract, "home	162
state" means the state in which the member of the affiliated group	163
that has the largest percentage of premium attributed to it under	164
such insurance contract.	165

(2) "Principal place of business" means the state where the	166
insured maintains the insured's headquarters and where the	167
insured's high-level officers direct, control, and coordinate the	168
business activities of the insured.	169

(B) The superintendent of insurance may issue a surplus line	170
lines broker's license to any natural person who is a resident of	171
this or any other state or to a business entity that is organized	172
under the laws of this or any other state. To be eligible for a	173
resident surplus linelines broker's license, a person must have	174
both a property license and a casualty license. To be eligible for	175
a nonresident surplus linelines broker's license, a person must	176
hold an active surplus linelines broker license in the person's	177
home state. A nonresident surplus linelines broker shall obtain a	178
nonresident license with a property and casualty line of authority	179
in this state if the broker is or will be personally performing	180
the due diligence requirements under section 3905.33 of the	181
Revised Code.	182

(C) A surplus linelines broker's license permits the person	183
named in the license to negotiate for and obtain insurance, other	184
than life insurance, on property or persons in this state from	185
insurers not authorized to transact business in this state. Each	186
such license expires on the thirty-first day of January next after	187
the year in which it is issued, and may be then renewed.	188

Sec. 3905.31. (A) No person not licensed under section	189
3905.30 of the Revised Code shall take or receive any application	190
for such insurance upon property or persons in this state, or	191
receive or collect a premium or any part thereof for any	192
unauthorized insurance company, or attempt or assist in any such	193
act, or perform any act in this state concerning any policy or	194
contract of insurance of any unauthorized insurance company	195
provided that any duly licensed property and casualty agent may	196
place business with an agent licensed under section 3905.30 of the	197
Revised Code and may accept compensation therefor, if such	198
insurance is written in conformity with the insurance laws of this	199
state. This	200

(B) This section does not apply to any selling, soliciting,	201
or negotiating of unauthorized insurance by a surplus lines broker	202
that takes place in an insured's home state if the home state of	203
the insured is a state other than this state.	204

(C) This section does not apply to those engaged in the act	205
of adjusting claims or losses in connection with any policy of	206
insurance written under the provisions of sections 3905.30 to	207
3905.35 of the Revised Code.	208

Sec. 3905.33.  (A) No person licensed under section 3905.30	209
of the Revised Code shall solicit, procure an application for,	210
bind, issue, renew, or deliver a policy with any insurer that is	211
not eligible to write insurance on a surplus linean unauthorized	212
basis in this state.	213

To establish the eligibility of an unauthorized insurer, the	214
superintendent of insurance may request copies of the insurer's	215
most recent financial statements; instruments such as domestic	216
trust agreements, powers of attorney, and investment management	217
contracts; biographies of the owners and managers of the insurer;	218
and any other information the superintendent believes may be	219
helpful in determining an insurer's suitability. The suitability	220
of each unauthorized insurer is subject to the continuous scrutiny	221
and discretion of the superintendentPursuant to the "Nonadmitted	222
and Reinsurance Reform Act of 2010," 15 U.S.C. 8201 et seq., 124	223
Stat. 1589, or any successor or replacement law, where this state	224
is the home state of the insured, an insurer shall be considered	225
eligible to write insurance on an unauthorized basis in this state	226
if either of the following are true:	227

(1) The insurer meets the requirements and criteria in	228
sections 5A(2) and 5C(2)(a) of the non-admitted insurance model	229
act adopted by the national association of insurance	230
commissioners, or alternative nationwide uniform eligibility	231
requirements adopted by this state through participation in a	232
compact or other nationwide system pursuant to 15 U.S.C. 8201 et	233
seq., 124 Stat. 1589.	234

(2) For unauthorized insurance placed with, or procured from	235
an unauthorized insurer domiciled outside the United States, the	236
insurer is listed on the quarterly listing of alien insurers	237
maintained by the international insurers department of the	238
national association of insurance commissioners.	239

(B)(1) No insurance agent or surplus linelines broker shall	240
solicit, procure, place, or renew any insurance with an	241
unauthorized insurer unless thean agent or the surplus linelines	242
broker has complied with the due diligence requirements of this	243
section and is unable to procure the requested insurance from an	244
authorized insurer.	245

Due diligence requires thean agent or surplus line broker to	246
contact at least five of the authorized insurers the agent or	247
surplus line broker represents, or as many insurers as the agent	248
or surplus line broker represents, that customarily write the kind	249
of insurance required by the insured. Due diligence is presumed if	250
declinations are received from each authorized insurer contacted.	251
If any authorized insurer fails to respond within ten days after	252
the initial contact, the agent or surplus line broker may assume	253
the insurer has declined to accept the risk.	254

(2) Due diligence shall only be performed by an agent	255
licensed in this state that holds an active property and casualty	256
insurance agent license.	257

(3) An insurance agent or surplus linelines broker is exempt	258
from the due diligence requirements of this section if the agent	259
or surplus linelines broker is procuring insurance from a risk	260
purchasing group or risk retention group as provided in Chapter	261
3960. of the Revised Code.	262

(4) An insurance agent or surplus lines broker is exempt from	263
the due diligence requirements of this section if the agent or	264
surplus lines broker is seeking to procure or place unauthorized	265
insurance for a person that qualifies as an exempt commercial	266
purchaser under section 3905.331 of the Revised Code and both of	267
the following are true:	268

(a) The surplus lines broker procuring or placing the surplus	269
lines insurance has disclosed to the exempt commercial purchaser	270
that the insurance may or may not be available from the authorized	271
market that may provide greater protection with more regulatory	272
oversight.	273

(b) After receipt of the disclosure required under division	274
(B)(4)(a) of this section, the exempt commercial purchaser has	275
requested in writing that the insurance agent or broker procure or	276
place the insurance from an unauthorized insurer.	277

(C) AnExcept when exempt from due diligence requirements	278
under division (B) of this section, an insurance agent who	279
procures or places insurance through a surplus linelines broker	280
shall obtain an affidavit from the insured acknowledging that the	281
insurance policy is to be placed with a company or insurer not	282
authorized to do business in this state and acknowledging that, in	283
the event of the insolvency of the insurer, the insured is not	284
entitled to any benefits or proceeds from the Ohio insurance	285
guaranty association. The affidavit must be on a form prescribed	286
by the superintendent. The agent shall submit the original	287
originally executed affidavit to the surplus linelines broker	288
within thirty days after the effective date of the policy. If no	289
other agent is involved, the surplus linelines broker shall	290
obtain the affidavit from the insured.	291

The surplus linelines broker shall keepmaintain the	292
originaloriginally executed affidavit or a copy of the affidavit,	293
and the originating agent shall keep a copy of the affidavit, for	294
at least five years after the effective date of the policy to	295
which the affidavit pertains. A copy of the affidavit shall be	296
given to the insured at the time the insurance is bound or a	297
policy is delivered.	298

(D) For the purpose of carrying out the "Nonadmitted and	299
Reinsurance Reform Act of 2010," 124 Stat. 1589, 15 U.S.C. 8201 et	300
seq., or any successor or replacement law, the superintendent may	301
enter into a multi-state agreement or compact for determining	302
eligibility for placement of unauthorized insurance and for	303
payment, reporting, collection, and allocation of the tax on	304
unauthorized insurance. The multi-state agreement or compact also	305
may include eligibility for placement of unauthorized insurance	306
and payment, reporting, collection, and allocation of the tax on	307
unauthorized insurance for risks that are not multi-state, and for	308
independently procured insurance in the unauthorized market.	309

(E) The superintendent may adopt rules in accordance with	310
Chapter 119. of the Revised Code to carry out the purposes of	311
sections 3905.30 to 3905.38 of the Revised Code.	312

Sec. 3905.331.  (A) A person purchasing commercial insurance	313
qualifies as an exempt commercial purchaser if, at the time of	314
placement, the exempt commercial purchaser satisfies all of the	315
following requirements:	316

(1) The person employs or retains a qualified risk manager to	317
negotiate insurance coverage.	318

(2) The person has paid aggregate nationwide commercial	319
property and casualty insurance premiums in excess of one hundred	320
thousand dollars in the immediately preceding twelve months.	321

(3) The person satisfies at least one of the following	322
criteria:	323

(a) The person possesses a net worth in excess of twenty	324
million dollars, as adjusted pursuant to division (B) of this	325
section.	326

(b) The person generates annual revenues in excess of fifty	327
million dollars, as adjusted pursuant to division (B) of this	328
section.	329

(c) The person employs more than five hundred full-time or	330
full-time equivalent employees per individual insured or is a	331
member of an affiliated group employing more than one thousand	332
employees in the aggregate.	333

(d) The person is a not-for-profit organization or public	334
entity generating annual budgeted expenditures of at least thirty	335
million dollars, as adjusted pursuant to division (B) of this	336
section.	337

(e) The person is a municipal corporation with a population	338
in excess of fifty thousand persons.	339

(B) Effective on January 1, 2015, and every five years	340
thereafter, the superintendent of insurance shall adjust the	341
dollar amounts in division (A) of this section to reflect the	342
percentage change for that five-year period in the consumer price	343
index for all urban consumers published by the bureau of labor	344
statistics of the United States department of labor.	345

(C) A qualified risk manager employed or retained to	346
negotiate insurance by an exempt commercial purchaser under this	347
section shall satisfy all of the following requirements:	348

(1) The person is an employee of, or third-party consultant	349
retained by, the commercial policyholder.	350

(2) The person provides skilled services in loss prevention,	351
loss reduction, or risk and insurance coverage analysis and the	352
purchase of insurance.	353

(3) The person satisfies one of the following:

354

(a) The person has obtained a bachelor's degree or a higher	355
degree from an accredited college or university in risk	356
management, business administration, finance, economics, or any	357
other field determined by a state insurance commissioner or other	358
state regulatory official or entity to demonstrate minimum	359
competence in risk management, and either has three years of	360
experience in risk financing, claims administration, loss	361
prevention and insurance analysis, or purchasing commercial lines	362
of insurance or has one of the following designations:	363

(i) A designation as a chartered property and casualty	364
underwriter issued by the American institute for CPCU and the	365
insurance institute of America;	366

(ii) A designation as an associate in risk management issued	367
by the American institute for CPCU and the insurance institute of	368
America;	369

(iii) A designation as certified risk manager issued by the	370
national alliance for insurance education and research;	371

(iv) A designation as a RIMS fellow issued by the global risk	372
management institute;	373

(v) Any other designation, certification, or license	374
determined by the superintendent to demonstrate minimum competency	375
in risk management.	376

(b) The person has at least seven years of experience in risk	377
financing, claims administration, loss prevention, risk and	378
insurance coverage analysis, or purchasing commercial lines of	379
insurance; and has any one of the designations specified in	380
division (B)(3)(a) of this section.	381

(c) The person has at least ten years of experience in risk	382
financing, claims administration, loss prevention, risk and	383
insurance coverage analysis, or purchasing commercial lines of	384
insurance.	385

(d) The person has a graduate degree from an accredited	386
college or university in risk management, business administration,	387
finance, economics, or any other field determined by the	388
superintendent to demonstrate minimum competence in risk	389
management.	390

Sec. 3905.34.  Each person licensed under section 3905.30 of	391
the Revised Code shall keep a separate account of the business	392
done under the person's license. On or before the thirty-first day	393
of JanuaryMarch or when required under a multi-state agreement or	394
compact entered into by the superintendent of insurance as	395
authorized by division (D) of section 3905.33 of the Revised Code,	396
each surplus linelines broker shall file with the superintendent	397
of insurance the portion of that account that details of the	398
business done during the preceding calendar year in the format	399
prescribed by the superintendent. The account must show the amount	400
of such insurance, the name of the insured, a brief description of	401
the type of insurance, the location of the property, the gross	402
premium charged, the name of the insurer, the date of the policy	403
and term thereof, and a report in the same detail of all such	404
policies canceled and the gross return premiums thereon.	405

Sec. 3905.36.  (A) Except as provided in divisions (B) and	406
(C) of this section, everyEvery insured association, company,	407
corporation, or other person that enters, directly or indirectly,	408
into any agreementsindependent procurement or direct placement	409
agreement with any insurance company, association, individual,	410
firm, underwriter, or Lloyd's, not authorized to do business in	411
this state, whereby the insured shall procure, continue, or renew	412
contracts of insurance covering subjects of insurance resident,	413
located, or to be performed within this state, with such	414
unauthorized insurance company, association, individual, firm,	415
underwriter, or Lloyd's, for which insurance there is a gross	416
premium, membership fee, assessment, dues, or other consideration	417
charged or collected, shall file the details of the transaction	418
annually, on or before the thirty-first day of March, return to	419
the superintendent of insurance a statement under oath showing the	420
name and address of the insured, name and address of the insurer,	421
subject of the insurance, general description of the coverage, and	422
amount of gross premium, fee, assessment, dues, or other	423
consideration for such insurance for the preceding calendar year	424
and shall at the same time pay to the treasurer of state a tax of	425
five per cent of such gross premium, fee, assessment, dues, or	426
other consideration, after a deduction for return premium, if any,	427
as calculated on a formin the prescribed by the treasurer of	428
state. Allformat or in compliance with any requirements of a	429
multi-state agreement or compact entered into by the	430
superintendent pursuant to division (D) of section 3905.33 of the	431
Revised Code. An insurer may submit the required details of the	432
transaction and remit the tax payment on behalf of an insured.	433

All taxes collected under this section by the treasurer of	434
state shall be paid into the general revenue fund. If the tax is	435
not paid when due, the tax shall be increased by a penalty of	436
twenty-five per cent. An interest charge computed as set forth in	437
section 5725.221 of the Revised Code shall be made on the entire	438
sum of the tax plus penalty, which interest shall be computed from	439
the date the tax is due until it is paid. For purposes of this	440
section, payment is considered made when it is received by the	441
treasurer of state, irrespective of any United States postal	442
service marking or other stamp or mark indicating the date on	443
which the payment may have been mailed.	444

The superintendent of insurance, in the superintendent's sole	445
discretion, may waive the twenty-five per cent penalty and	446
interest charge thereon for a first-time, inadvertent nonpayment	447
of the tax when due if the nonpayment is reported immediately upon	448
discovery and the outstanding tax is thereafter immediately paid	449
to the superintendent.	450

(B) Each person licensed under section 3905.30 of the Revised	451
Code shall pay to the treasurer of state, on or before the	452
thirty-first day of March of each year, five per cent of the	453
balance of the gross premiums charged for insurance placed or	454
procured under the license after a deduction for return premiums	455
in the prescribed format or in compliance with any requirements of	456
a multi-state agreement or compact entered into by the	457
superintendent pursuant to division (D) of section 3905.33 of the	458
Revised Code. The tax shall be collected from the insured by the	459
surplus lines broker who placed or procured the policy of	460
insurance at the time the policy is delivered to the insured. No	461
license issued under section 3905.30 of the Revised Code shall be	462
renewed until payment is made. If the tax is not paid when due,	463
the tax shall be increased by a penalty of twenty-five per cent.	464
An interest charge computed as set forth in section 5725.221 of	465
the Revised Code shall be made on the entire sum of the tax plus	466
penalty, which interest shall be computed from the date the tax is	467
due until it is paid. For purposes of this section, payment is	468
considered made when it is received, irrespective of any United	469
States postal service marking or other stamp or mark indicating	470
the date on which the payment may have been mailed.	471

The superintendent, in the superintendent's sole discretion,	472
may waive the twenty-five per cent penalty and interest charge	473
thereon for a first-time, inadvertent nonpayment of the tax when	474
due if the nonpayment is reported immediately upon discovery and	475
the outstanding tax is thereafter immediately paid to the	476
superintendent.	477

(C) This section does not apply to:

478

(1) Transactions in this state involving a policy solicited,	479
written, and delivered outside this state covering only subjects	480
of insurance not resident, located, or to be performed in this	481
state at the time of issuance, provided such transactions are	482
subsequent to the issuance of the policyAn insured otherwise	483
exempt from the payment of premium or franchise taxes under state	484
or federal law;	485

(2) Attorneys-at-law acting on behalf of their clients in the	486
adjustment of claims or losses;	487

(3) Transactions involving policies issued by a captive	488
insurer. For this purpose, a "captive insurer" means any of the	489
following:	490

(a) An insurer owned by one or more individuals or	491
organizations, whose exclusive purpose is to insure risks of one	492
or more of the parent organizations or individual owners and risks	493
of one or more affiliates of the parent organizations or	494
individual owners;	495

(b) In the case of groups and associations, insurers owned by	496
the group or association whose exclusive purpose is to insure	497
risks of members of the group or association and affiliates of the	498
members;	499

(c) Other types of insurers, licensed and operated in	500
accordance with the captive insurance laws of their jurisdictions	501
of domicile and operated in a manner so as to self-insure risks of	502
their owners and insureds.	503

(4) Professional or medical liability insurance procured by a	504
hospital organized under Chapter 3701. of the Revised Code;	505

(5) Insurance with an initial policy period of more than	506
three years and that is procured to cover known events related to	507
environmental remediation that occurred prior to the effective	508
date of that insurance;	509

(6) Insurance procured on behalf of an entity that	510
manufactures, packages, and sells, as more than fifty per cent of	511
the entity's business, pharmaceutical products for human use where	512
the production, packaging, and sale of such products are subject	513
to regulation by an agency of the United States;	514

(7) A political subdivision or any combination or consortium	515
of two or more political subdivisions.	516

(C) In transactions that are subject to sections 3905.30 to	517
3905.35 of the Revised Code, each person licensed under section	518
3905.30 of the Revised Code shall pay to the treasurer of state,	519
on or before the thirty-first day of March of each year, five per	520
cent of the balance of the gross premiums charged for insurance	521
placed or procured under the license after a deduction for return	522
premiums, as reported on a form prescribed by the treasurer of	523
state. The tax shall be collected from the insured by the surplus	524
line broker who placed or procured the policy of insurance at the	525
time the policy is delivered to the insured. No license issued	526
under section 3905.30 of the Revised Code shall be renewed until	527
payment is made. If the tax is not paid when due, the tax shall be	528
increased by a penalty of twenty-five per cent. An interest charge	529
computed as set forth in section 5725.221 of the Revised Code	530
shall be made on the entire sum of the tax plus penalty, which	531
interest shall be computed from the date the tax is due until it	532
is paid. For purposes of this section, payment is considered made	533
when it is received by the treasurer of state, irrespective of any	534
United States postal service marking or other stamp or mark	535
indicating the date on which the payment may have been mailed.	536

(D) As used in this section:

537

(1) "Political subdivision" means any county; municipal	538
corporation; township; township police district; township fire	539
district; joint fire district; joint ambulance district; joint	540
emergency medical services district; fire and ambulance district;	541
joint recreation district; township waste disposal district;	542
township road district; community college district; technical	543
college district; detention facility district; a district	544
organized under section 2151.65 of the Revised Code; a combined	545
district organized under sections 2151.65 and 2152.41 of the	546
Revised Code; a joint-county alcohol, drug addiction, and mental	547
health service district; a drainage improvement district created	548
under section 6131.52 of the Revised Code; a union cemetery	549
district; a county school financing district; a city, local,	550
exempted village, cooperative education, or joint vocational	551
school district; or a regional student education district created	552
under section 3313.83 of the Revised Code, any public division,	553
district, commission, authority, department, board, officer, or	554
institution of any one or more of those political subdivisions,	555
that is entirely or substantially supported by public tax moneys.	556

(2) "Municipal corporation" means all municipal corporations,	557
including those that have adopted a charter under Article XVIII,	558
Ohio Constitution.	559

Sec. 3905.37.  No person, company, association, or	560
corporation shall fail to make the report required in section	561
3905.36 of the Revised Code and to furnish all the information	562
that is required by the treasurer of state to determine the amount	563
due under that section.	564

Sec. 3905.38. (A) Sections 3905.30 to 3905.37 of the Revised	565
Code do not apply where this state is not the home state of the	566
insured.	567

(B) Sections 3905.36 to 3905.38, inclusive, of the Revised	568
Code do not extend to private citizens, firms, or corporations,	569
residents of this state, who seek to provide indemnity among	570
themselves, from fire loss or other casualty, by exchange of	571
private contracts for protection only and not for profit, nor	572
apply to life or accident and sickness insurance. Sections 3905.30	573
through 3905.37, inclusive, of the Revised Code do not apply to	574
ocean marine insurance when placed by licensed agents of this	575
state.	576

Section 2.  That existing sections 3901.17, 3905.30, 3905.31,	577
3905.33, 3905.34, 3905.36, 3905.37, and 3905.38 of the Revised	578
Code are hereby repealed.	579