How must surplus lines brokers document their transactions?

Surplus lines brokers are required to document their transactions by maintaining written records of risk placements and associated notices. This requirement is crucial for ensuring compliance with regulatory standards and for maintaining a transparent transaction history. Written documentation provides a clear and verifiable record of the insurance risks placed in the surplus lines market, which can be critical for both regulatory oversight and dispute resolution.

Written records include details about the insured risk, the terms of the placement, and any communications and notices relevant to the transaction. This thorough documentation helps protect both the broker and the insured, as it provides a basis for accountability and clarity in the case of claims or inquiries.

While oral records or personal notebooks might capture certain details, they lack the reliability and formal recognition necessary for a regulated environment like that of surplus lines insurance. Furthermore, filing monthly reports with state regulators is part of broader compliance requirements but does not replace the necessity for brokers to keep detailed written records of individual transactions. Maintaining written documentation is thus the most effective and compliant method for surplus lines brokers to document their transactions.