What must a broker do to ensure compliance with surplus lines regulations?

Maintaining thorough documentation of transactions is essential for a broker to ensure compliance with surplus lines regulations. This documentation serves multiple purposes: it provides a clear record of the insurance placement process, helps substantiate the surplus lines broker's actions, and demonstrates adherence to regulatory requirements. By maintaining such records, brokers can show compliance with state laws and regulations regarding surplus insurance, which often require specific disclosures to clients and the management of placed risks. Additionally, documentation is crucial in case of audits by regulatory bodies, as it provides evidence of the broker's procedures and transactions.

The other choices do not align with the key compliance requirements set forth by surplus lines regulations. For example, limiting the number of clients does not address regulatory compliance directly, as brokers must serve their client base effectively. Using standardized forms for policies may not be required by all jurisdictions, and providing coverage to all applicants contradicts the nature of surplus lines, which cater to unique or high-risk situations that may not be covered by standard insurers.