Diligent search is a specific step in the insurance process. In this article, we discuss what diligent search is and why it is important for insurance carriers and policyholders.
What is a Diligent Search?
A diligent search is surplus lines regulatory requirement. It establishes that coverage for a risk is unavailable from admitted insurers. The policy seeker must submit an affidavit confirming that an admitted carrier declined the risk. Diligent search is also known as diligent effort.
Understanding Diligent Search
Surplus lines brokers are generally required to verify that a diligent effort was made to place the policy in the admitted market before a risk is placed in the surplus lines market. This standard exists to incentivize using the admitted market. In the admitted market, taxes are lower. Policy form is more competitive. Consumers have the right to appeal to the state if policies have been handled improperly.
However, the general trend over the history of surplus lines regulation has been to lessen the regulatory burden caused by diligent search. There are currently many exemptions from the diligent search. However, they are not consistent from state to state, with the exception of the federal exemption in the NRRA. There are several states who have dropped the standard altogether and no longer require diligent search.
The diligent effort is confirmation that coverage has been requested and declined from authorized insurers within the admitted market. But what is the point of the diligent effort? Continue Reading.
Oregon nixes the diligent search form requirement in a first-quarter announcement. Find out what changes you need to make to stay compliant. Continue Reading.
The lack of modernization has not kept up with the rapid advancements envisioned by Insurtech companies. We must innovate to secure the future of the surplus lines industry. Continue Reading.
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