What does the "diligent search" requirement refer to?

The "diligent search" requirement refers specifically to the necessity for brokers to thoroughly document their search for standard market alternatives before turning to surplus lines. This means that brokers must demonstrate that they have actively sought out available coverage from admitted insurers and have obtained rejections or quotes from those insurers, establishing that the coverage needed is not available in the standard market.

This requirement is in place to ensure that surplus lines insurance is utilized only when no other options are viable. It provides a framework for compliance with regulations governing the surplus lines market, promoting a responsible underwriting process. By adhering to this diligent search process, brokers fulfill their duty to their clients without defaulting to surplus lines coverage prematurely.

While the other options touch on important concepts in the insurance market, they do not accurately capture the essence of the diligent search requirement as it specifically relates to the search for standard market alternatives before considering surplus lines.