As Passed by the Senate

129th General Assembly Regular Session 2011-2012

Am. 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 

Senators Bacon, Daniels, Faber, Hite, Hughes, Jones, Lehner, Obhof, Sawyer, Schaffer, Tavares, Wagoner, Wilson 

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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	301
shall conduct a fiscal analysis of the impact of entering into a	302
multi-state agreement or compact for determining eligibility for	303
placement of unauthorized insurance and for payment, reporting,	304
collection, and allocation of the tax on unauthorized insurance.	305
If the fiscal analysis indicates that entering into a multi-state	306
agreement or compact is advantageous to this state, the	307
superintendent may enter into the surplus lines insurance	308
multi-state compliance compact adopted by the national conference	309
of insurance legislators and known as "SLIMPACT," as amended on	310
December 21, 2010, and including any subsequent amendment; or, if	311
it is in this state's financial best interest, the superintendent	312
shall request that the general assembly authorize the	313
superintendent to enter into a different multi-state agreement or	314
compact.	315

(E) The superintendent may adopt rules in accordance with	316
Chapter 119. of the Revised Code to carry out the purposes of	317
sections 3905.30 to 3905.38 of the Revised Code.	318

Sec. 3905.331.  (A) A person purchasing commercial insurance	319
qualifies as an exempt commercial purchaser if, at the time of	320
placement, the exempt commercial purchaser satisfies all of the	321
following requirements:	322

(1) The person employs or retains a qualified risk manager to	323
negotiate insurance coverage.	324

(2) The person has paid aggregate nationwide commercial	325
property and casualty insurance premiums in excess of one hundred	326
thousand dollars in the immediately preceding twelve months.	327

(3) The person satisfies at least one of the following	328
criteria:	329

(a) The person possesses a net worth in excess of twenty	330
million dollars, as adjusted pursuant to division (B) of this	331
section.	332

(b) The person generates annual revenues in excess of fifty	333
million dollars, as adjusted pursuant to division (B) of this	334
section.	335

(c) The person employs more than five hundred full-time or	336
full-time equivalent employees per individual insured or is a	337
member of an affiliated group employing more than one thousand	338
employees in the aggregate.	339

(d) The person is a not-for-profit organization or public	340
entity generating annual budgeted expenditures of at least thirty	341
million dollars, as adjusted pursuant to division (B) of this	342
section.	343

(e) The person is a municipal corporation with a population	344
in excess of fifty thousand persons.	345

(B) Effective on January 1, 2015, and every five years	346
thereafter, the superintendent of insurance shall adjust the	347
dollar amounts in division (A) of this section to reflect the	348
percentage change for that five-year period in the consumer price	349
index for all urban consumers published by the bureau of labor	350
statistics of the United States department of labor.	351

(C) A qualified risk manager employed or retained to	352
negotiate insurance by an exempt commercial purchaser under this	353
section shall satisfy all of the following requirements:	354

(1) The person is an employee of, or third-party consultant	355
retained by, the commercial policyholder.	356

(2) The person provides skilled services in loss prevention,	357
loss reduction, or risk and insurance coverage analysis and the	358
purchase of insurance.	359

(3) The person satisfies one of the following:

360

(a) The person has obtained a bachelor's degree or a higher	361
degree from an accredited college or university in risk	362
management, business administration, finance, economics, or any	363
other field determined by a state insurance commissioner or other	364
state regulatory official or entity to demonstrate minimum	365
competence in risk management, and either has three years of	366
experience in risk financing, claims administration, loss	367
prevention and insurance analysis, or purchasing commercial lines	368
of insurance or has one of the following designations:	369

(i) A designation as a chartered property and casualty	370
underwriter issued by the American institute for CPCU and the	371
insurance institute of America;	372

(ii) A designation as an associate in risk management issued	373
by the American institute for CPCU and the insurance institute of	374
America;	375

(iii) A designation as certified risk manager issued by the	376
national alliance for insurance education and research;	377

(iv) A designation as a RIMS fellow issued by the global risk	378
management institute;	379

(v) Any other designation, certification, or license	380
determined by the superintendent to demonstrate minimum competency	381
in risk management.	382

(b) The person has at least seven years of experience in risk	383
financing, claims administration, loss prevention, risk and	384
insurance coverage analysis, or purchasing commercial lines of	385
insurance; and has any one of the designations specified in	386
division (B)(3)(a) of this section.	387

(c) The person has at least ten years of experience in risk	388
financing, claims administration, loss prevention, risk and	389
insurance coverage analysis, or purchasing commercial lines of	390
insurance.	391

(d) The person has a graduate degree from an accredited	392
college or university in risk management, business administration,	393
finance, economics, or any other field determined by the	394
superintendent to demonstrate minimum competence in risk	395
management.	396

Sec. 3905.34.  Each person licensed under section 3905.30 of	397
the Revised Code shall keep a separate account of the business	398
done under the person's license. On or before the thirty-first day	399
of JanuaryMarch or when required under the compact entered into	400
by the superintendent of insurance as authorized by division (D)	401
of section 3905.33 of the Revised Code, each surplus linelines	402
broker shall file with the superintendent of insurance the portion	403
of that account that details of the business done during the	404
preceding calendar year in the format prescribed by the	405
superintendent. The account must show the amount of such	406
insurance, the name of the insured, a brief description of the	407
type of insurance, the location of the property, the gross premium	408
charged, the name of the insurer, the date of the policy and term	409
thereof, and a report in the same detail of all such policies	410
canceled and the gross return premiums thereon.	411

Sec. 3905.36.  (A) Except as provided in divisions (B) and	412
(C) of this section, everyEvery insured association, company,	413
corporation, or other person that enters, directly or indirectly,	414
into any agreementsindependent procurement or direct placement	415
agreement with any insurance company, association, individual,	416
firm, underwriter, or Lloyd's, not authorized to do business in	417
this state, whereby the insured shall procure, continue, or renew	418
contracts of insurance covering subjects of insurance resident,	419
located, or to be performed within this state, with such	420
unauthorized insurance company, association, individual, firm,	421
underwriter, or Lloyd's, for which insurance there is a gross	422
premium, membership fee, assessment, dues, or other consideration	423
charged or collected, shall file the details of the transaction	424
annually, on or before the thirty-first day of March, return to	425
the superintendent of insurance a statement under oath showing the	426
name and address of the insured, name and address of the insurer,	427
subject of the insurance, general description of the coverage, and	428
amount of gross premium, fee, assessment, dues, or other	429
consideration for such insurance for the preceding calendar year	430
and shall at the same time pay to the treasurer of state a tax of	431
five per cent of such gross premium, fee, assessment, dues, or	432
other consideration, after a deduction for return premium, if any,	433
as calculated on a formin the prescribed by the treasurer of	434
state. Allformat or in compliance with any requirements of the	435
compact entered into by the superintendent pursuant to division	436
(D) of section 3905.33 of the Revised Code. An insurer may submit	437
the required details of the transaction and remit the tax payment	438
on behalf of an insured.	439

All taxes collected under this section by the treasurer of	440
state shall be paid into the general revenue fund. If the tax is	441
not paid when due, the tax shall be increased by a penalty of	442
twenty-five per cent. An interest charge computed as set forth in	443
section 5725.221 of the Revised Code shall be made on the entire	444
sum of the tax plus penalty, which interest shall be computed from	445
the date the tax is due until it is paid. For purposes of this	446
section, payment is considered made when it is received by the	447
treasurer of state, irrespective of any United States postal	448
service marking or other stamp or mark indicating the date on	449
which the payment may have been mailed.	450

The superintendent of insurance, in the superintendent's sole	451
discretion, may waive the twenty-five per cent penalty and	452
interest charge thereon for a first-time, inadvertent nonpayment	453
of the tax when due if the nonpayment is reported immediately upon	454
discovery and the outstanding tax is thereafter immediately paid	455
to the superintendent.	456

(B) Each person licensed under section 3905.30 of the Revised	457
Code shall pay to the treasurer of state, on or before the	458
thirty-first day of March of each year, five per cent of the	459
balance of the gross premiums charged for insurance placed or	460
procured under the license after a deduction for return premiums	461
in the prescribed format or in compliance with any requirements of	462
the compact entered into by the superintendent pursuant to	463
division (D) of section 3905.33 of the Revised Code. The tax shall	464
be collected from the insured by the surplus lines broker who	465
placed or procured the policy of insurance at the time the policy	466
is delivered to the insured. No license issued under section	467
3905.30 of the Revised Code shall be renewed until payment is	468
made. If the tax is not paid when due, the tax shall be increased	469
by a penalty of twenty-five per cent. An interest charge computed	470
as set forth in section 5725.221 of the Revised Code shall be made	471
on the entire sum of the tax plus penalty, which interest shall be	472
computed from the date the tax is due until it is paid. For	473
purposes of this section, payment is considered made when it is	474
received, irrespective of any United States postal service marking	475
or other stamp or mark indicating the date on which the payment	476
may have been mailed.	477

The superintendent, in the superintendent's sole discretion,	478
may waive the twenty-five per cent penalty and interest charge	479
thereon for a first-time, inadvertent nonpayment of the tax when	480
due if the nonpayment is reported immediately upon discovery and	481
the outstanding tax is thereafter immediately paid to the	482
superintendent.	483

(C) This section does not apply to:

484

(1) Transactions in this state involving a policy solicited,	485
written, and delivered outside this state covering only subjects	486
of insurance not resident, located, or to be performed in this	487
state at the time of issuance, provided such transactions are	488
subsequent to the issuance of the policyAn insured otherwise	489
exempt from the payment of premium or franchise taxes under state	490
or federal law;	491

(2) Attorneys-at-law acting on behalf of their clients in the	492
adjustment of claims or losses;	493

(3) Transactions involving policies issued by a captive	494
insurer. For this purpose, a "captive insurer" means any of the	495
following:	496

(a) An insurer owned by one or more individuals or	497
organizations, whose exclusive purpose is to insure risks of one	498
or more of the parent organizations or individual owners and risks	499
of one or more affiliates of the parent organizations or	500
individual owners;	501

(b) In the case of groups and associations, insurers owned by	502
the group or association whose exclusive purpose is to insure	503
risks of members of the group or association and affiliates of the	504
members;	505

(c) Other types of insurers, licensed and operated in	506
accordance with the captive insurance laws of their jurisdictions	507
of domicile and operated in a manner so as to self-insure risks of	508
their owners and insureds.	509

(4) Professional or medical liability insurance procured by a	510
hospital organized under Chapter 3701. of the Revised Code;	511

(5) Insurance with an initial policy period of more than	512
three years and that is procured to cover known events related to	513
environmental remediation that occurred prior to the effective	514
date of that insurance;	515

(6) Insurance procured on behalf of an entity that	516
manufactures, packages, and sells, as more than fifty per cent of	517
the entity's business, pharmaceutical products for human use where	518
the production, packaging, and sale of such products are subject	519
to regulation by an agency of the United States;	520

(7) A political subdivision or any combination or consortium	521
of two or more political subdivisions.	522

(C) In transactions that are subject to sections 3905.30 to	523
3905.35 of the Revised Code, each person licensed under section	524
3905.30 of the Revised Code shall pay to the treasurer of state,	525
on or before the thirty-first day of March of each year, five per	526
cent of the balance of the gross premiums charged for insurance	527
placed or procured under the license after a deduction for return	528
premiums, as reported on a form prescribed by the treasurer of	529
state. The tax shall be collected from the insured by the surplus	530
line broker who placed or procured the policy of insurance at the	531
time the policy is delivered to the insured. No license issued	532
under section 3905.30 of the Revised Code shall be renewed until	533
payment is made. If the tax is not paid when due, the tax shall be	534
increased by a penalty of twenty-five per cent. An interest charge	535
computed as set forth in section 5725.221 of the Revised Code	536
shall be made on the entire sum of the tax plus penalty, which	537
interest shall be computed from the date the tax is due until it	538
is paid. For purposes of this section, payment is considered made	539
when it is received by the treasurer of state, irrespective of any	540
United States postal service marking or other stamp or mark	541
indicating the date on which the payment may have been mailed.	542

(D) As used in this section:

543

(1) "Political subdivision" means any county; municipal	544
corporation; township; township police district; township fire	545
district; joint fire district; joint ambulance district; joint	546
emergency medical services district; fire and ambulance district;	547
joint recreation district; township waste disposal district;	548
township road district; community college district; technical	549
college district; detention facility district; a district	550
organized under section 2151.65 of the Revised Code; a combined	551
district organized under sections 2151.65 and 2152.41 of the	552
Revised Code; a joint-county alcohol, drug addiction, and mental	553
health service district; a drainage improvement district created	554
under section 6131.52 of the Revised Code; a union cemetery	555
district; a county school financing district; a city, local,	556
exempted village, cooperative education, or joint vocational	557
school district; or a regional student education district created	558
under section 3313.83 of the Revised Code, any public division,	559
district, commission, authority, department, board, officer, or	560
institution of any one or more of those political subdivisions,	561
that is entirely or substantially supported by public tax moneys.	562

(2) "Municipal corporation" means all municipal corporations,	563
including those that have adopted a charter under Article XVIII,	564
Ohio Constitution.	565

Sec. 3905.37.  No person, company, association, or	566
corporation shall fail to make the report required in section	567
3905.36 of the Revised Code and to furnish all the information	568
that is required by the treasurer of state to determine the amount	569
due under that section.	570

Sec. 3905.38. (A) Sections 3905.30 to 3905.37 of the Revised	571
Code do not apply where this state is not the home state of the	572
insured.	573

(B) Sections 3905.36 to 3905.38, inclusive, of the Revised	574
Code do not extend to private citizens, firms, or corporations,	575
residents of this state, who seek to provide indemnity among	576
themselves, from fire loss or other casualty, by exchange of	577
private contracts for protection only and not for profit, nor	578
apply to life or accident and sickness insurance. Sections 3905.30	579
through 3905.37, inclusive, of the Revised Code do not apply to	580
ocean marine insurance when placed by licensed agents of this	581
state.	582

Section 2.  That existing sections 3901.17, 3905.30, 3905.31,	583
3905.33, 3905.34, 3905.36, 3905.37, and 3905.38 of the Revised	584
Code are hereby repealed.	585