DC Surplus Lines Insurance 2

Question 1

Under the Nonadmitted and Reinsurance Reform Act (NRRA), which state's surplus lines law and taxes govern a multi-state risk?

Accepted Answer

The home state of the insured (the state where the greatest percentage of the insured's risk is located)

Answer

Under NRRA, the home state of the insured (where the greatest portion of the risk is located) has sole regulatory and taxing authority over surplus lines placements.

Question 2

What is a 'white list' (eligible insurer list) in DC surplus lines regulation?

Accepted Answer

A list of non-admitted insurers approved by DISB as eligible to receive surplus lines placements from DC brokers

Answer

DC's eligible insurer list (white list) contains non-admitted insurers that DISB has approved as financially sound enough to receive surplus lines placements.

Question 3

How must a DC surplus lines broker inform the insured that the policy is being placed with a non-admitted insurer?

Accepted Answer

A written disclosure stating the insurer is non-admitted and not covered by the DC guaranty association must be provided before or at policy delivery

Answer

DC law requires written disclosure to the insured that the surplus lines insurer is non-admitted and that guaranty association protection does not apply.

Question 4

What is the primary advantage to a DC insured of using a non-admitted surplus lines insurer over an admitted insurer?

Accepted Answer

Non-admitted insurers can negotiate custom policy forms and pricing for unusual risks

Answer

Non-admitted insurers are not restricted to filed rates and forms, giving them flexibility to craft custom coverage and pricing for unique or difficult risks.

Question 5

A DC surplus lines broker files a quarterly affidavit with DISB. What does this affidavit confirm?

Accepted Answer

That all surplus lines transactions complied with DC law, including diligent search and tax remittance

Answer

DC surplus lines brokers must file affidavits with DISB confirming that placements complied with the diligent search requirement and that surplus lines taxes were properly remitted.

DC - District of Columbia Insurance Practice Test

DC - District of Columbia Insurance Practice Test

DC Surplus Lines Insurance 2