Dearie (excess)

Question 1

Difference b/w surplus lines (non-admitted) vs admitted market

Answer 1

1. No rate & form regulation → can charge any rate
2. No guaranty funds
3. No govt mandated programs

Question 2

Licensing requirement of surplus lines broker

Answer 2

1. Only need 1 license (home state license)

Question 3

Methods to access non-admitted market (surplus lines) (2)

Answer 3

1Surplus Lines method: IF diligent search for coverage on admitted market fails THEN buy from licensed surplus broker

Direct Placement method: go out of state + buy from unauthorized carrier OR unlicensed broker

Question 4

State Board of Insurance vs Todd Shipyards Corp

issue

ruling 1

ruling 2

Answer 4

Issue: Can person leave state X to buy insurance from unlicensed insurer?

Ruling: Yes (legalized direct placement method)

Ruling: McCarran Ferguson Act says state X can NOT tax NOR regulate the transaction

Question 5

Commercial Purchaser Exemption

define

who enacted it

Answer 5

waive diligent search IF broker discloses admitted coverage might be available (& buyer requests broker place him w/ surplus lines insurer)

Non-Admitted & Reinsurance Reform Act (NRRA) established as uniform federal standard

Question 6

Non-Admitted & Reinsurance Reform Act (NRRA) – Purpose (2)

Answer 6

Limit regulatory authority to home state: just 1 state…

has requirements that matter

can collect premium taxes

can regulate surplus line transactions

can impose license requirements

Establish uniform federal standards

commercial purchase exemption

premium tax collection

non-admitted insurer eligibility

Question 7

Non-Admitted & Reinsurance Reform Act (NRRA) – enacted by?

Answer 7

Dodd-Frank

Question 8

Define surplus line insurer‘home state’ (2)

Answer 8

Where principle business is located

OR

IF all risk outside (1) THEN where most premium taxes are collected

Question 9

‘NAIC Non-Admitted Insurance Model Act’ says foreign surplus lines insurer must

Answer 9

1. be authorized in its domiciliary state
2. adhere to minimum capital requirement of home state

Question 10

Natl Association of Registered Agents & Brokers (3)

Answer 10

licensing system for those operating outside home state

licensing standards across states

preserve laws of each state