P&CNew Yorkmedium
Under NY Insurance Law § 2118, before an Excess Line Broker may place coverage with an unauthorized insurer, what diligent-effort requirement must generally be satisfied?
AThe broker must obtain written consent from the NAIC
The broker must show that a diligent effort was made to procure the coverage from authorized insurers, generally by declinations from a specified number of authorized insurers (declinations from three authorized insurers are typically required)
CThe broker must collect a surplus lines premium tax bond equal to 100% of the premium
DThe broker must first place the risk through the NYPIUA FAIR Plan
Why this is the answer
NY Insurance Law § 2118 governs excess (surplus) line placements. Before an Excess Line Broker may bind coverage with an unauthorized insurer, the broker must document a diligent effort to place the risk in the authorized market — generally evidenced by declinations from three authorized insurers writing the line in NY (the 'three declinations' rule). Affidavits are filed with the Excess Line Association of New York (ELANY), the DFS-supervised stamping office.
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