What is a requirement for agents when placing risks in surplus lines?

When placing risks in surplus lines, it is essential for agents to attempt placement in the admitted market first. This requirement is established to ensure that insurers operate within regulatory frameworks and that all possible options are explored before turning to surplus lines, which often involve greater risks and fewer consumer protections. The purpose of this regulation is to prioritize consumer welfare by leveraging the stability and security offered by licensed and admitted insurers.

Attempting placement in the admitted market serves as a safeguard that reinforces the need for thorough risk assessment and fosters a responsible approach to underwriting. It indicates that surplus lines should be a solution of last resort, utilized only when coverage is unavailable through standard channels. This practice discourages the routine bypassing of the admitted market, ensuring that agents remain diligent in their duties and uphold ethical standards in insurance placements.