but does not include ships nor vessels nor boats nor any railroad rolling stock.

14. Miscellaneous insurance, including cyclone, tornado, windstorm and lightning insurance and any and all casualty insurance not included under any of the foregoing thirteen kinds, and which is a proper subject of in

surance.

No company having a capital stock shall do in California any of said first kind of insurance without having a capital stock of at least two hundred thousand dollars nor shall any such company do in California any other said kinds of insurance except the sixth and eighth; provided, that any such insurance company desiring to do the kind of insurance embraced within either the sixth or eighth kind must have in addition to such two hundred thousand dollars of capital stock, at least fifty thousand dollars of capital stock and do the kind of insurance embraced within both the sixth and eighth kinds at least the sum of one hundred thousand dollars capital stock in addition to the said two hundred thousand dollars of capital stock required to do the first kind of insurance. No company having a capital stock shall do in California any of said second kind of insurance without having a capital stock of at least two hundred thousand dollars nor shall such company do in California any other of such kinds of insurance except the third, twelfth, thirteenth and fourteenth, nor do the third without having in addition to such two hundred thousand dollars capital stock at least two hundred thousand dollars capital stock for such third kind of insurance, nor do any of the twelfth, thirteenth or fourteenth kinds of insurance without having in addition to such two hundred thousand dollars capital stock for the second, nor do any of the twelfth, thirteenth or fourteenth other than automobile insurance without having in addition to such four hundred thousand dollars capital stock for the second and third at least fifty thousand dollars capital stock for each of such twelfth, thirteenth and fourteenth kinds of insurance, but no company shall do any of said kinds of insurance, unless authorized so to do by their charter. No company having a capital stock shall do in California any of said third kind of insurance without having a capital stock of at least two hundred thousand dollars, nor shall any such company do in California any other of said kinds of insurance except the second and thirteenth nor do the second without having in addition to such two hundred thousand dollars capital stock at least two hundred thousand dollars capital stock for such second kind of insurance, nor do any of the thirteenth other than automobile insurance without having in addition to such two hundred thousand dollars capital stock for the third or in addition to such four hundred thousand dollars capital stock for the second and third at least fifty thousand dollars capital stock for such thirteenth kind of insurance. No company having a capital stock shall do in California any of the fourth or fifth or sixth or seventh or eighth or ninth or tenth or eleventh or twelfth or thirteenth or fourteenth of said kinds of insurance without having a capital stock of at least one hundred thousand dollars, nor shall any such

company do in California any other of said fourth or fifth or sixth or seventh or eighth or ninth or tenth or eleventh or twelfth or thirteenth or fourteenth kinds of insurance without having in addition to such one hundred thousand dollars capital stock at least fifty thousand dollars capital stock for each additional kind of insurance. No company having a capital stock of at least two hundred thousand dollars and organized to do in California the thirteenth kind of insurance shall therein do the first or second or third kind of insurance, and must in addition to such capital stock of at least two hundred thousand dollars, have fifty thousand dollars of capital stock for each kind of insurance it may do therein other than the said thirteenth kind. Such capital stock required must be fully paid up before the doing of any such business in the state of California except that companies incorporated under the laws of California must have at least twenty-five per cent of their capital stock paid in previous to the issuance of any policies and the residue within twelve months of the filing of the certificate of incorporation. The capital stock required must be exclusive of all liabilities for losses reported, expenses, taxes and reinsurance of all outstanding risks, as provided in sections 602 and 602a of the Political Code. Every company organized or formed under the laws of any other state or country as a mutual or as a joint stock and mutual company having a capital stock of not more than one hundred thousand dollars must have in lieu of such capital stock, available cash assets of at least two hundred thousand dollars above all liabilities for losses reported, expenses, taxes, and reinsurance of all outstanding risks as provided in sections 602 and 602a of the Political Code. [Amendment approved May 1, 1911; Stats. 1911, p. 1347.]

§ 595.

Citations. App. 8/415, 416, 417.

Transaction of insurance business in state.

§ 596. No company shall transact any insurance business in this state without first complying with all the provisions of the laws of this state, and thereafter procuring from the insurance commissioner a certificate of authority, and continuing to comply with the laws of this state, provided, that insurance may be procured from or placed with Companies not authorized to transact business in this state upon the terms and conditions hereinafter stated.

Every such certificate of authority shall expire on the first day of the July after its issuance unless sooner revoked. No certificate of authority shall be granted or renewed to any company in arrears to the state or to any county, city and county, city or town in the state for fees, licenses, taxes, assessments, fines or penalties accrued on business previously transacted in the state, nor while said company is otherwise in default for failure to comply with any of the laws of this state regarding the governmental control of such company by the state. Νο person shall act as agent in any transaction of any insurance business

for any insurance company not authorized to transact such business in this state. A surplus line broker is one licensed by the insurance commissioner to act as broker in soliciting, negotiating, and effecting insurance under conditions hereinafter stated, to be procured from or placed with companies not authorized to transact such business in this state. Within the meaning of this law "authorized companies" are those authorized by the insurance commissioner to transact in the state of California the kinds of insurance business that they are transacting. All others are "unauthorized companies." The insurance commissioner may issue a license authorizing any individual to act as surplus line broker from its date until the first of July following, on the following conditions:

(a) Payment to the insurance commissioner of a fee of twenty-five ($25) dollars in advance.

(b) Delivery to the insurance commissioner of a bond to the state of California in the sum of five thousand ($5,000) dollars with sureties having the qualifications mentioned in sections 1056 and 1057 of the Code of Civil Procedure, conditioned that said licensee will fully and faithfully comply with the requirements of section 596 of the Political Code.

A surplus line broker, after having procured from and placed with authorized companies the total amount of insurance obtainable on any property from a majority of all authorized companies, may place the excess of insurance desired over such amount with unauthorized companies. No insurance is to be procured from or placed with unauthorized companies by any one except by a surplus line broker and under such conditions. The following are the duties of a surplus line broker with which he is required to comply:

1. To maintain in good faith an office in this state.

2. To keep in said office books of account correctly showing in separate accounts all business transacted with unauthorized companies. Said books are to specify the dates of such insurance going into effect, the name of the insurers and of the insured, the gross premiums payable therefor, the terms, character of insurance and locations of the insured property. They shall also contain statements in the same detail of all such insurance canceled, or on which premiums have been increased or reduced and the amounts of additional or of return premiums thereon. Such books are to be open at all times for the inspec tion of, and examination by, the insurance commissioner, or any one appointed by him for said purpose.

3. Within one week after the surplus line broker shall have obtained knowledge of the completion of the procurement of insurance on any property from an unauthorized company, he shall file with the insurance commissioner a true report showing the name of the insured and of the insurers, the character of the insurance, location of the property, gross premium payable therefor, and the date of such insurance taking effect

and the term thereof; also a list of authorized companies comprising a majority thereof from whom the insurance so effected was not obtainable. As soon as practicable after any such insurance has been canceled or any premium thereon has been increased or reduced, such surplus line broker shall file with the insurance commissioner a report thereof in the same detail as above required in the case of the report above referred to.

4. On or before the first day of March of each year he shall file with the insurance commissioner a sworn statement of all business transacted under his license during the last preceding calendar year ending December 31st. Such statements shall contain true accounts of the gross amount of insurance procured from and placed with unauthorized companies during said calendar year, the gross premiums charged therefor, including additional insurance premiums, and the gross amount of all insurance canceled during said year, and the gross return premiums thereon. Such statements shall also include additional premiums charged during said calendar year on insurance previously effected and the gross return premiums during said calendar year on insurance previously effected.

5. All such reports and statements shall be made on blanks to be furnished surplus line brokers by the insurance commissioner on application therefor.

6. On or before the first day of June of each year said surplus line broker shall pay to the insurance commissioner for use of the state of California three (3%) per cent of the gross premiums charged, less three (3%) per cent of all return premiums on policies canceled, or upon which the premiums have been reduced during the year ending December 31st last preceding.

The insurance commissioner shall revoke the license of any surplus line broker who willfully fails or refuses to perform any of his duties herein above specified.

If in the opinion of the insurance commissioner the solvency of any surety on a bond hereby required has become impaired or doubtful, he shall notify the surplus line broker in writing, and unless within ten (10) days after receipt of such notice the solvency of such surety is proved to the satisfaction of the insurance commissioner, or a new bond is substituted therefor, said insurance commissioner shall revoke the license of the surplus line broker.

The removal of the office of the surplus line broker from this state, or the removal therefrom of his accounts of his business as such, or the closing of his said office for a period of more than twenty (20) consecutive days, shall constitute a termination of the authority of said surplus line broker, and shall be tantamount to an express revocation of his license, whether or not the insurance commissioner thereafter revokes the same. No new license shall be issued to any surplus line

broker whose license has been revoked for any reason other than the insufficiency of his sureties, within the period of one year after such revocation, and until all indebtedness of said surplus line broker on former business has been paid to said insurance commissioner. Every insured for whom insurance has been effected with unauthorized companies shall produce for examination by the insurance commissioner, whenever requested by him, in writing, so to do, all policies, contracts, and other documents evidencing such insurance and disclose to him the true amount of the gross premiums paid or agreed to be paid therefor, or, upon refusal so to do, he shall forfeit to the state of California the sum of two hundred ($200) dollars for each refusal. All policies and other contracts of insurance, issued without full compliance by all parties concerned with the laws of this state, shall be null and void. [Amendment approved May 1, 1911; Stats. 1911, p. 1269.]

Citations. App. 8/417.

Examination of insurance companies.

§ 597. The commissioner, whenever he deems necessary, or whenever he is requested by verified petition, signed by twenty-five persons interested, either as stockholders, policy holders, or creditors of any company engaged in insurance business in this state, showing that such company is insolvent under the laws of this state, must make an examination of the business and affairs relating to the insurance business of such company, and must make such an examination whenever any company is organized to do insurance business in this state, and before issuing a certificate of authority other than renewals to such company. Provided, the insurance commissioner shall have no authority to issue and no certificate of authority shall be issued to any insurance company or corporation hereafter organized or incorporated in this state, whether the same be organized and promoted directly or by means of a holding company or corporation, one of the purposes of which is the organization and promotion of such insurance company or corporation, where such examination shows the expense of organization and promotion to be in excess of fifteen per cent of the total amount actually paid on its capital stock exclusive of surplus.

Whenever any company not organized under the laws of this state, applies for a certificate of authority to do business in this state, the insurance commissioner may make or cause to be made by the insurance department of the state where such company is organized, an examination of the business and affairs relating to the insurance business of such company. The company organized or existing under the laws of any country outside of the United States, shall be deemed to be organized within the meaning of this act in any state wherein such company maintains the deposits required by the laws of this state.

For the purpose of making such examination the insurance commissioner shall have free access to all the books and papers of such company, and must thoroughly inspect and examine all its affairs, and as