What does the regulation system established for surplus lines insurance aim to encourage?

The regulation system established for surplus lines insurance aims to encourage innovation in insurance products available to consumers. Surplus lines insurance is designed to cover unique or high-risk situations that standard admitted insurers may not be willing to insure. By allowing non-admitted insurers to operate under regulatory oversight, the system promotes the development of specialized products to meet specific needs that are not being addressed by traditional insurance markets. This fosters an environment where insurers can create tailored solutions and innovate, ultimately benefiting consumers who require coverage options that go beyond standard offerings.

The structure of surplus lines regulation is intended to balance the need for creative insurance solutions while maintaining consumer protection measures, ensuring that innovations can safely enter the marketplace. This approach helps ensure that a diverse range of coverage options is available to meet varying consumer needs without unnecessarily restricting choices.