IIABNY members often call the Research Department with this question. Here are the rules:
In general, an excess line broker may not place a risk with a non-admitted carrier unless she has obtained three declinations from admitted carriers. These carriers must be licensed to write the kind of insurance in question. In addition, she must have reason to believe those carriers might consider writing the type of coverage or class of insurance involved. New York Insurance Regulation 41 lists five criteria on which the broker can base her reason to believe that these carriers were markets. For example, recently writing that type of coverage or class of insurance; advertising; articles in the media; and conversations with other insurance producers are all valid reasons.
New York law allows the Department of Financial Services to waive the declination requirement for certain coverages and classes. The list of these coverages and classes is called the “export list.” A broker is not required to get any declinations prior to placing a risk involving these coverages and classes with a non-admitted carrier. Examples include:
- Vacant commercial property
- Liability coverage for construction contractors
- Liability coverage for horseback riding establishments
It is important to keep in mind an advisory legal opinion the DFS issued in 2003. In the department’s opinion, where an admitted carrier and a non-admitted carrier offer the same coverage but the admitted carrier’s premium is higher, the excess line broker must obtain coverage from the admitted carrier.
More information, including links to relevant New York laws and regulations and the current export list, is available on the Excess & Surplus Lines page in the Member Answer Center of the IIABNY Web site.