What actions should a surplus lines broker take if they wish to sell a non-admitted product?

When dealing with non-admitted products, it is crucial for a surplus lines broker to provide notice to policyholders about the coverage limitations. Non-admitted insurance is typically issued by insurers that are not licensed or regulated by the state where the policyholder resides. Therefore, it is essential to inform potential clients about the specific risks and limitations associated with the coverage, as these policies may not offer some of the protections or guarantees that admitted products do.

Informing policyholders allows them to make informed decisions about their insurance needs and understand that they might not have the same recourse through state guaranty funds should the insurer become insolvent. Transparency regarding coverage limitations is a key aspect of maintaining ethical standards in the insurance industry and ensuring that clients are fully aware of what they are purchasing, especially with non-admitted policies, which often serve niche markets or unique risks not covered by traditional insurance.

Involving other procedures, such as registering the product or obtaining permissions from admitted insurers, does not directly address the immediate need for client awareness regarding the characteristics of the non-admitted product. Similarly, while having experience in the specific product type is beneficial for effective service, the priority must be on adequately communicating coverage information to policyholders.