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Rule of Exportability
The term exportability refers to what business a surplus line broker can "export" to the nonadmitted market versus what business should be placed in the admitted market. There are essentially two criteria that determine what business is eligible to be exported: availability and price.
- Availability: Insurance that can be procured from admitted insurers may not be exported to the surplus line market. Admitted insurers generally accept the more straightforward risks that lend themselves to using standard form policies and standardized rating manuals
The law requires a surplus line broker to ensure that a diligent
search for the coverage is made among admitted insurers. Recognizing
that it would place an unreasonable burden on consumers if insurance
producers were required to submit risks to every admitted insurer to
determine unavailability, the law considers declinations from three admitted
insurers that actually write the particular type of insurance to be "prima facie evidence" of
unavailability.
Additionally, the Insurance Commissioner publishes a list, called
the "Export List," of risks and coverages for which the Commissioner
has found no reasonable or adequate market among admitted insurers. Risks
and coverages on the export list are deemed to be unavailable and may
be exported without any declinations.
- Price: Exportation to obtain a lower rate or premium is prohibited. If the insurance product is available in the admitted market, it must be purchased in the admitted market even if the same product could be procured at a lower rate in the nonadmitted market. For exceptions, refer to Insurance Code Section 1763(c).
Statutory References: Statutory References: California Insurance Code §§ 1763 and 1763.1.
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