Surplus Lines Insurance Flashcards

What distinguishes a 'managing general agent' (MGA) from a standard surplus lines broker in DC?

Answer: MGAs have binding authority delegated by an insurer and can underwrite, bind, and issue policies; standard brokers only place coverage

An MGA has delegated underwriting authority from an insurer, allowing them to bind and issue policies on the insurer's behalf, unlike a standard broker who merely places coverage.

If a DC surplus lines insurer becomes insolvent, where can a DC policyholder turn for claim payment?

Answer: There is no guaranty protection—the policyholder is an unsecured creditor in insolvency proceedings

Because non-admitted insurers are not members of the DC guaranty association, policyholders are unsecured creditors in the insolvency with no guaranty fund backup.

Under DC surplus lines law, what is the 'independently procured' insurance rule?

Answer: A sophisticated commercial insured may independently place coverage with a non-admitted insurer without using a surplus lines broker, but must pay the applicable tax

DC allows certain large commercial insureds to independently (directly) procure coverage with non-admitted insurers without going through a surplus lines broker, provided they pay the applicable premium tax.

A DC surplus lines broker receives a quote from a non-admitted insurer for a hard-to-place risk. Before binding, the broker must verify which of the following?

Answer: That the non-admitted insurer appears on DISB's eligible surplus lines insurer list

DC surplus lines brokers may only place business with non-admitted insurers that appear on DISB's list of eligible surplus lines insurers.

Which federal law preempts state laws that impose requirements on surplus lines insurance policies as a condition of coverage for non-admitted insurers?

Answer: Nonadmitted and Reinsurance Reform Act (NRRA) of 2010

NRRA preempts state laws that condition surplus lines coverage on filing or approval of policy forms or rates by non-admitted insurers.

In DC, surplus lines brokers must maintain records of all surplus lines transactions for a minimum of how many years?

Answer: 5 years

DC requires surplus lines brokers to maintain records of all surplus lines transactions for a minimum of 5 years.