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Montana
Surplus Lines Agents' Association |
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What is Surplus Lines Insurance
The
surplus lines insurance market is the segment of the insurance industry where
the more difficult or unusual risks are written. Because surplus lines insured’s risk tend to be more
unusual or higher risk, much of the surplus lines market is characterized by
a high degree of specialization.
Insurers participating in this market have specialized expertise and
experience in underwriting and rating insurance for a wide range of
risks. Only licensed surplus lines
producers can place insurance with surplus lines insurers (unauthorized
insurer) for Montana insureds. A producer must meet legal requirements to
place a surplus lines policy with a
surplus lines company. A surplus lines
producer can be either a resident or nonresident. The surplus lines insurance market focuses on two types of
products: unusual or difficult insurance and higher risk accounts. An example of an unusual or difficult
product is professional liability, and an example of a higher risk account would
be a manufacturer of explosives. Certain types of professional liability
risks are included in the specialty lines market because the
underwriting, rating and claims functions require a high degree of expertise
and experience. The explosives
manufacturer would be included because of the unique products liability
exposures presented. Surplus lines insurance, because of its specialty nature, is not required to file its rates and forms to allow it to
develop coverage and rates for each unique and special risk. Surplus Lines Insurers are not licensed to
do business in Montana; they are approved by the Insurance Department to
conduct business in Montana. One of
the reasons they are not licensed to do business in Montana is because they
do not participate in the Property and Casualty Insurance Guaranty Association. Because consumers do not have the
protection of this Guaranty
Association if the Surplus Lines Company becomes insolvent, access is
restricted through regulation in the insurance codes. Surplus lines insurance is regulated
specifically in Montana Title 33, Chapter 2, Part 3. Approved by the Department of
Insurance 3/17/2005 |
