What is not required from Surplus Lines Insurance?

Surplus Lines insurance operates under a unique regulatory framework that distinguishes it from more traditional insurance products. A Certificate of Authority is a formal credential issued to insurers that allows them to operate in a specific state, indicating that they meet the necessary regulatory standards to conduct business there. However, surplus lines insurers often do not hold a Certificate of Authority in the states where they are providing coverage because surplus lines policies are typically utilized in situations where standard markets cannot provide adequate coverage.

Surplus lines brokers can place coverage with non-admitted carriers, which are those that haven’t received a Certificate of Authority in a given state. These brokers are responsible for ensuring that the policies comply with the relevant state surplus lines laws, including disclosing to policyholders that the insurer is non-admitted. This lack of a requirement for a Certificate of Authority is what makes surplus lines insurance a flexible option for unique risks that might not be effectively served in the standard insurance market.

The other options mentioned represent important components of the surplus lines insurance framework. A license is indeed needed to operate as a surplus lines broker, compliance with state regulations (including filing requirements and taxes) is essential, and policyholder disclosures are critical to ensure consumers are informed about the nature of the coverage and the status of the insurer