Elaine is a Senior Specialist at ReSource Pro Compliance
Typically, in order to place a risk with a surplus lines carrier, the retail/producing agent involved must complete a diligent effort search. This involves attempting to place a risk with several (usually 3) admitted carriers writing that kind and class of insurance. There are a few exceptions to this requirement. These include the Commercial Purchaser Exemption and the independent procurement of insurance coverage process. The most common “bypass” for the diligent search requirement, however, is the use of a state’s export list.
What Is an Export List?
An export list is a roster of insurance types or coverages which are automatically exempt from diligent search requirements. State regulators are very familiar with the insurance companies doing business in their jurisdictions. They know when certain types of coverage simply aren’t available from an admitted carrier. By listing these instances, they save all parties concerned a great deal of time and effort, while still protecting the interests of consumers.
Using the Export List
Surplus lines regulators generally provide a copy of the state’s export list (if it has one) on its website. Depending on the state, this might be the surplus lines stamping office, the surplus lines association, or the department of insurance.
An export list entry typically includes a coverage code as well as a description of the class and line coverage. This information needs to appear exactly as given in the policy and the policy filing. The breakdown of coverages is often very specific, so be sure you’re using the code that most accurately describes the coverage being placed.
If you’re not sure whether a specific policy fits into one of the list’s categories, contact the surplus lines regulator. Remember, they want you to get your filings right; and they’re very willing to answer any questions you might have to help make that happen.
Another important thing to keep in mind: if a policy combines multiple types of coverages—only some of which appear on the export list—you’ll still need to complete the diligent effort process for those non-exempt coverages. Also, appearing on the export list exempts the surplus lines producer/broker only from the diligent search requirement, not from any other steps that the state may require to place business in the non-admitted market.
Updating the Export List
The insurance market evolves quickly, especially with so many insurtechs and other start-ups entering the industry to serve niche sectors. That means export lists change frequently. Yesterday’s surplus lines-only coverage may be tomorrow’s standard policy. An emerging risk type may need to be added to the list. For example, Nevada added pandemic protection insurance to its export list in May 2022. Finally, admitted carriers might adjust their appetite for certain risks, changing the availability of coverage in the standard market. That’s why it’s essential for brokers to refer to the most current list when processing a risk placement.
Most regulators review their export lists on a set schedule. Many hold public hearings so that insurance professionals can share their insights into the availability of and need for certain types of coverage. If you find that you routinely can’t place certain risks in the admitted market, you can request that the regulator add that coverage to the state’s export list. There’s no guarantee they will, but it never hurts to ask!
Find out how ReSource Pro helps insurance agencies and producers meet their licensing and compliance needs by visiting our compliance page.
