What is a key responsibility of surplus lines brokers?

Surplus lines brokers have a critical responsibility to properly disclose non-admitted insurance to clients. This involves ensuring that clients understand the nature of the coverage they are purchasing, including the fact that it is provided by insurers that are not licensed in their state but are allowed to operate under specific regulations. The transparency in this disclosure is crucial because non-admitted insurers typically do not have the same level of state protection for consumers as admitted insurers. By informing clients about the potential risks and limitations associated with non-admitted policies, brokers help clients make well-informed decisions about their insurance needs.

Other options may misrepresent the role of surplus lines brokers. For example, lowering premiums across the board is not a primary function of these brokers, as their main role revolves around providing access to insurance markets rather than price manipulation. Ensuring compliance only in deregulated environments is also not accurate, as surplus lines brokers must adhere to regulatory requirements in all environments where they operate, not just those that are deregulated. Lastly, marketing only the cheapest insurance options overlooks the need for brokers to consider the appropriateness and suitability of coverage rather than just focusing on price.