What constitutes a "diligent search" requirement in the surplus lines market?

In the surplus lines market, the "diligent search" requirement is fundamentally about ensuring that an insurance broker has made a genuine and thorough effort to locate coverage through available options before seeking to place coverage in the surplus lines market. Specifically, the requirement stipulates that brokers must seek coverage from at least three admitted insurers. This practice is rooted in the understanding that admitted insurers are those licensed and regulated in the state, offering more consumer protections than surplus lines insurers.

By requiring efforts to contact multiple admitted insurers, this approach ensures that the broker has thoroughly explored all possible avenues to find suitable coverage options. It demonstrates due diligence and protects consumers by making sure that they are aware of and have access to traditional insurance options before resorting to surplus lines, which can often be more expensive or less regulated.

This requirement helps maintain market integrity while providing consumers with greater choice and availability of insurance coverage. Through these efforts, brokers can justify their recommendation of surplus lines coverage, ensuring that it is a necessary path rather than simply a convenience. The other options do not align with this comprehensive standard mandated for a diligent search.