Bulletin 1981-4

# State of North Dakota J. O. WIGEN Commissioner IRV SMITH - Deputy [LOGO] State Capitol Building Bismarck, North Dakota 58505 Phone (701)224-2440 # Office of the Insurance Commissioner TO : All Surplus Lines Agents FROM: J. O. Wigen, Commissioner of Insurance RE : Bulletin 81-4 DATE: May 20, 1981 The purpose of this bulletin is to advise you of the surplus lines meeting of May 15, 1981 held in the State Capitol Building, Bismarck, North Dakota, and to provide you with some general guidelines concerning the surplus lines area of business. One of the most important outcomes of the meeting was the establishment of an advisory committee made up of licensed agents in the State of North Dakota to assist the Commissioner of Insurance to establish rules and regulations concerning the surplus lines law and to provide reasonable guidelines. Furthermore, the advisory committee may well make recommendations concerning legislation in this area. In the interim, the following guidelines have been established: 1. Risks that have been historically written in surplus lines may continue to be written in this area. 2. If business is currently written in an admitted carrier, it may not be replaced with a surplus lines carrier. 3. In packaging an entire account, where all but one line of insurance is to be written in an admitted carrier, the broker may place the one problem line of insurance in a surplus lines carrier. We would not expect the producer to send the account to another agent. 4. A customer must be informed that the business is being placed in a surplus lines carrier. Furthermore, he must be advised that a surplus lines company does not participate in the Insurance Guaranty Association. Surplus Lines Agents May 20, 1981 Page 2 5. The language "diligent search" shall be interpreted to permit the insured to designate the surplus lines broker as his agent for the purposes of conducting the search. 6. In all cases, we require that the policies carry an endorsement which shall read: "...issued in an unauthorized company under agent license number ____." 7. All affidavits filed with the department shall be signed by the licensed surplus lines broker personally. 8. The term "filed" shall be interpreted to mean that the affidavit will be deemed filed prior to procuring the coverage if it is mailed on or before the effective date of the coverage (policy). 9. In the interim, before the rules and regulations are established, we call upon all agents to use good judgment. If you have any questions about matters which are in a "grey area," we would expect that you would contact the department for guidance concerning enforcement policy. JOW:pak P.S. If you have any questions, please contact: Gregory D. Morris Assistant Attorney General N. D. Insurance Department Capitol Bldg., Fifth Floor Bismarck, ND 58505