General Insurance PrinciplesQuestion 192 of 474
The surplus lines market exists so that a risk can be:
a.split among several admitted insurers that each take a share
b.placed with the state guaranty association instead of an insurer
c.written by a non-admitted insurer when the admitted market declines
d.written at a lower rate than any admitted insurer would charge
Explanation
Surplus lines handles hard-to-place or unusual exposures that licensed insurers will not write, and the placement is made through a specially licensed surplus lines producer after a search of the admitted market. It is not a discount channel, and surplus lines pricing is often higher. A guaranty association pays certain claims of insolvent licensed insurers; it does not write coverage.
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