What must surplus lines brokers do before placing insurance with a non-admitted insurer?

Surplus lines brokers are required to conduct a diligent search for available coverage from admitted insurers before placing insurance with a non-admitted insurer. This requirement exists to ensure that the broker has made every reasonable effort to find coverage through licensed and financially stable insurers that are admitted to do business in the state.

The rationale is grounded in the regulatory framework intended to protect consumers. By first searching for admitted options, brokers demonstrate that they are prioritizing the insured's needs by seeking the most reliable and appropriate coverage. Non-admitted insurers typically operate in situations where admitted carriers cannot provide the necessary coverage, often due to unique risks or other reasons. Thus, ensuring a diligent search is integral to the broker's responsibilities and helps maintain market integrity while safeguarding policyholders.

The other potential options do not reflect the legal obligations and best practices for surplus lines brokers, which further emphasizes the importance of the diligent search requirement.