Thursday, August 25, 2011

More States Adopt NAPSLO’s View on Requiring Surplus Lines Brokers to Have P&C License

A recent survey by the NARAB Working Group has shown that a number of states have adopted NAPSLO’s position that under Gramm-Leach-Bliley Act of 1999 states can not require surplus lines brokers to have underlying P&C license if they are not handling the diligent search for a policy.

One of the goals of Gramm-Leach-Bliley was to allow easier access to surplus lines licenses to out of state residents. A number of states required that before a broker could acquire a surplus lines license they would need to acquire an underlying property and casualty license. NAPSLO argued that if the broker was not performing the diligent search of the state’s admitted market, under GLB they did not need an underlying P&C license.

The NARAB survey showed that Idaho, Illinois, Kansas, Kentucky, Maine, Maryland, Mississippi, Montana, Nebraska, North Dakota, Oregon, Rhode Island, and Wyoming eliminated the underlying license requirement for those brokers that do not conduct diligent searches. In addition, a number of other states had previously passed legislation that adopted this view.

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