When must a producer possess a license to transact surplus lines insurance?

A producer must possess a license to transact surplus lines insurance prior to engaging in any transactions. This requirement is set to ensure that producers are adequately trained and knowledgeable about the specifics of surplus lines insurance, which often involves unique risks and market dynamics compared to standard insurance products. Without the proper licensing, producers cannot legally offer, negotiate, or implement surplus lines insurance policies. The licensing process typically ensures that producers meet certain educational and professional qualifications so that they can effectively serve clients and adhere to regulatory standards. This requirement is essential in maintaining the integrity of the insurance market and protecting consumers from unlicensed practices.

Possessing a license at any time or only during the renewal period does not align with the regulations, as producers must have an active license before conducting any transactions in surplus lines. The notion of avoiding fines also does not capture the primary purpose of the licensing requirement, which is to ensure professionalism and compliance in insurance practices.