In what situation do diligent search and reporting requirements not apply?

Diligent search and reporting requirements typically do not apply in the context of surplus lines insurance when the risk falls under a group policy. This is because group policies are often established to provide coverage to a large number of individuals or entities under a single contract, making the need for extensive search and reporting less critical. The nature of group policies typically allows for streamlined underwriting processes, which can reduce the complexity and the need for rigorous evaluation associated with obtaining surplus lines coverage.

In contrast, other scenarios such as those involving admitted markets, high-value commercial policies, or risks with constantly adjusting coverage would necessitate a more detailed analysis. In these cases, insurers are often required to conduct diligent searches to ensure that the risk could not be placed with an admitted carrier, and thorough reporting is essential for regulatory compliance and risk assessment. Thus, the exemption regarding group policies specifically reflects the understanding that these policies operate under different principles than individual surplus lines placements.