What is the purpose of the written notice to insured by a surplus lines licensee?

The purpose of the written notice to the insured by a surplus lines licensee is primarily to inform them about the involvement of nonadmitted insurers. In the surplus lines insurance market, policies are placed with insurers that are not licensed in the state where the insured is located. This means that these insurers may not be subject to the same regulations as admitted insurers, which can affect the protections available to the insured.

This written notice serves to ensure that the insured is aware of this crucial detail, allowing them to understand the risks and considerations related to their coverage. It helps in promoting transparency, as insured individuals need to be cognizant of the fact that their policy is sourced from a nonadmitted carrier, which can imply limited recourse in the event of a dispute or insolvency.

In contrast, other options focus on specifics that do not represent the primary function of the written notice. For instance, explaining policy renewals, emphasizing low premiums, or notifying about premium raises are not as critical as making the insured aware of the involvement of nonadmitted insurers in their policy purchase. Understanding the implications of this involvement is vital for the insured's decision-making regarding their coverage.