What is one criterion that must be satisfied for the placement of surplus lines insurance?

To successfully place surplus lines insurance, one essential criterion that must be met is that the full amount or kind of insurance coverage cannot be obtained from admitted insurers. This requirement ensures that surplus lines insurance serves its primary purpose: to provide options for coverage that are not available through traditional insurance markets. Admitted insurers are those licensed and authorized to operate in a given state, and they are subject to state regulations, including rates and forms. If a particular type of coverage or the amount needed is not available through these traditional avenues, then surplus lines become a viable option for policyholders seeking coverage.

The rationale behind this criterion is to ensure that surplus lines are considered a last resort. Insurers that operate in the surplus lines market are not subject to the same regulations as admitted carriers, which allows them to offer more flexible or specialized policies that may not otherwise be available. This can include unique risks or new types of coverage that admitted markets might not yet offer.

For the purpose of maintaining regulatory compliance and protecting consumers, this criterion is pivotal in distinguishing surplus lines from standard insurance offerings, ensuring that surplus lines are utilized only when no other options exist.