What is a key responsibility of agents dealing with surplus lines?

Agents dealing with surplus lines have a crucial responsibility to ensure compliance with regulations. The surplus lines market exists to provide coverage for risks that standard insurance companies are unwilling or unable to insure. This market is heavily regulated to ensure that the underwriting practices, as well as the financial stability of surplus lines carriers, are sound and in line with legal standards. Agents must navigate both state and federal regulations to ensure that all transactions comply with the law. This includes ensuring that the surplus lines insurer is eligible to do business in the state and that the policies sold meet the necessary requirements.

In addition to compliance, agents also need to maintain proper documentation and inform clients about their rights and the characteristics of surplus lines insurance, enhancing transparency in the process. This focus on compliance protects both the agents and their clients, ensuring that coverage is reliable and lawful.