2019 Fall #2b

In the section that discusses the question and answers from 2019 Fall #2b there is the following note:

"Only Specialty Licensed Producers are Permitted to Sell Surplus Lines Insurance ← Alice thinks this is wrong...see below...

This is incorrect because the Dearie source text explicitly states that independent procurement / direct placement can be a valid method of accessing the nonadmitted market. In other words, the start-up surplus lines carrier described in the question can offer their product on a direct-to-consumer basis."

I think the answer in the examiners report is perfectly valid if you assume that by "entering" a state, the start-up company will be located in the same state they are planning to offer insurance for. Thus, they could only offer direct to consumer insurance through independent procurement for insureds in other states.


  • edited November 2020

    I will take a look at this and get back to you. Thanks.

    Next day: Ok, I went back and looked at this:

    • If "entering a state" means physically entering the state, then you're correct (and the examiner's report is correct.)

    • If "entering a state" only means starting to write policies with insureds who are located in the state while remaining domiciled out of state then the situation is different.

    If this comes up on the exam, it might be worth making a note on how you decided to interpret "entering". I will link to your post from the wiki. Thanks.

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