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Excess & Surplus (E&S) Lines Insurance
any type of coverage that cannot be placed with an admitted insurer in a certain jurisdiction.
Effects of the Excess & Surplus Market
- The E&S market is characterized by limited regulation, which has two effects
- Insurers can set premiums for coverage as they see fit.
- They can offer policy forms on a nonstandardized and often case-by-case basis.
Surplus Lines Broker
a broker who is licensed to place coverage with nonadmitted insurers.
Managing General Agents (MGA)
a wholesale insurance intermediary with the authority to accept placements from retail agents on behalf of an insurer. MGAs generally provide underwriting and administrative services.
For a risk to be placed with a nonadmitted insurer, it must be rejected by at least threeadmitted insurers. Wholesale brokers must maintain the documentation showing that a diligent search was performed in trying to place the business in the admitted market.
An exportable list is a list of risks that are inherently so hard to place that the state regulator has waived the diligent search requirement for those risks.
Earthquake deductibles for direct property damage are usually expressed as a percentage of the structural value. The deductible usually ranges from 5 to 10 percent of the insured value. Especially important is whether the deductible applies per structure or per location, because a location can have multiple structures. An earthquake may include aftershocks occurring within a certain time period, such as 72 hours.
protects against loss of crops arising from natural disasters, such as drought and hail.
Private Crop-Hail vs. Government Crop-Hail
- Private: first dollar coverage; no subsidy; flexible deadline; coverage based on acre.
- Government: built-in deductible; subsidy; stricter deadline; based on yield.
- 8 States: Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and Texas.
- Insurers in all eight states are required to have plan.
- Mobile homes are ineligible.
- Usually large deductibles.