What is a primary goal of surplus lines regulation?

The primary goal of surplus lines regulation is to protect consumers by ensuring a regulated insurance market. Surplus lines insurance exists primarily to provide coverage for risks that are difficult to place in the standard market due to their unique or high-risk nature. Therefore, regulation helps to ensure that consumers have access to necessary coverage while also implementing oversight that guarantees ethical practices and financial stability among surplus lines insurers.

By regulating surplus lines, authorities aim to establish a framework that protects consumers from potential exploitation or inadequate coverage options. This oversight can include ensuring that surplus lines carriers are financially solvent, that adequate disclosures are made to consumers regarding the nature of their policies, and that the insurance products offered are appropriate for the risks being purposed. Ultimately, this builds consumer confidence in the market, offering a safeguard against potential pitfalls when purchasing insurance.