|
|
Montana
Surplus Lines Agents' Association |
|
|
|
|
|
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 |
