The Connecticut Insurance Department has issued a notice to surplus lines brokers concerning the placement of business, particularly along the Connecticut coastline, in the surplus lines market.
The Department said it had been apprised of situations where a surplus lines broker is placing a coastal risk in the surplus lines market despite the fact that the insured received a renewal offer from their existing Connecticut authorized insurer.
The Department notice was a reminder that all Connecticut licensed producers as well as Connecticut surplus lines brokers, that when an insured has been offered a renewal from their existing admitted insurers; any other Connecticut admitted insurer; or any residual market mechanism, it would be a violation of Connecticut statutes for the risk to be placed in the surplus lines market.
The department said that surplus lines brokers and producers should review Bulletin SL-1 dated November 17, 2009 at the following link: http://www.ct.gov/cid/lib/cid/BullSL1.pdf for Connecticut requirements for the placement of surplus lines business.
If the Department determines that a producer/broker is employing this practice it said it would undertake appropriate action against the Connecticut licensed producer or surplus lines broker as authorized under the provisions of Title 38a of the Connecticut General Statutes.
Additionally, the Department said that once a risk has been placed in the excess and surplus lines market, that the surplus lines broker is required to seek placement in the admitted market at each renewal and must fully complete a new affidavit verifying their attempt to place the account in the admitted market.
A copy of the form of Affidavit can be found at: http://www.ct.gov/cid/lib/cid/surlnsaff.pdf. Surplus lines brokers are also reminded that surplus lines brokers are required to keep a complete and separate record of all policies procured from unauthorized insurers that all such records shall be subject to examination by the Insurance Commissioner.
Questions concerning this Notice should be made to the Connecticut Insurance Department’s Property and Casualty division at: (860) 297-3941 or at: firstname.lastname@example.org.