How many admitted carriers are required to decline a risk during the diligent search process?

In the surplus lines insurance process, a diligent search is a necessary step before a policy can be placed with a non-admitted carrier. This process is intended to ensure that the coverage cannot be acquired from licensed, admitted insurers within the relevant market.

To complete a diligent search, it is stipulated that an insurance agent or broker must approach at least three admitted carriers. Only if all three of these admitted insurers decline the risk can the agent proceed to place the coverage with a non-admitted carrier. This requirement exists to protect consumers and ensure that they are offered the best possible options available within the regulated insurance market before turning to surplus lines solutions, which may offer coverage that is not available through standard admitted policies.

Therefore, the requirement of three admitted carriers declining the risk is central to the surplus lines process, aligning with the aims of market oversight and consumer protection.