What is the purpose of having a written confirmation in surplus lines placements?

The purpose of having a written confirmation in surplus lines placements is primarily to document agreements and terms of coverage clearly for both parties involved in the transaction. This written confirmation serves as a formal record that outlines the specific details of the insurance placement, including coverage limits, exclusions, premiums, and any other pertinent conditions.

Having a detailed written confirmation helps to prevent misunderstandings and disputes later on by ensuring that both the broker and the insurer are on the same page regarding the terms of the coverage provided. This is particularly important in the surplus lines market, where coverage may deviate from standard market practices and may involve more complex terms. A clear and detailed record protects the interests of both parties and reinforces the transparency of the transaction.

As a result, this written confirmation acts as a safeguard for both the broker and the insurer, reinforcing the integrity of the placement process and ensuring compliance with regulatory requirements.