Arizona Surplus Lines study guide
Arizona Surplus Lines · Work through your exam, one topic at a time.
The Arizona surplus lines license is a producer credential for insurance professionals who place coverage with non-admitted insurers when admitted carriers decline a risk. It is aimed at licensed property and casualty producers, agency principals, and wholesale or brokerage staff who already understand standard markets and want to work in the excess and surplus space. The Arizona Department of Insurance and Financial Institutions (DIFI) is the state regulator that licenses insurance professionals, maintains a license search tool, and publishes the laws, rules, bulletins, and forms that govern the industry. Candidates should treat DIFI's site as the authoritative starting point for licensing steps, application channels through Thentia or NIPR, and any rule changes. Topics on this exam: Arizona Insurance Law and Regulations, General Insurance Concepts, and Surplus Lines Principles and Practices. The Arizona Surplus Lines study guide has 3 sections and about 1,166 words.
01Arizona Insurance Law and Regulations for Surplus Lines
Arizona regulates surplus lines through statute and through rules administered by the Department of Insurance and Financial Institutions (DIFI). The Director of DIFI holds the appointing, licensing, and disciplinary authority described in Title 20 of the Arizona Revised Statutes. Candidates should be able to name the core actors and instruments: the Director, the surplus lines broker license, the diligent search, the export list, and the surplus lines premium tax. Arizona requires a surplus lines broker to hold a property and casualty or equivalent authority and to be separately licensed as a surplus lines broker before placing eligible business.
415 words, about 2 min02General Insurance Concepts Tested on the Arizona Surplus Lines Exam
Candidates must separate risk (uncertainty of loss), peril (the cause of loss), and hazard (a condition increasing the chance or severity of loss). Hazards are physical, moral, or morale. A classic trap is confusing moral hazard (dishonesty, such as arson for profit) with morale hazard (carelessness or indifference because insurance exists). Insurable interest must exist at the time of loss for property insurance and at inception for life insurance.
344 words, about 2 min03Surplus Lines Principles and Practices
Surplus lines insurance is coverage written by nonadmitted insurers for risks that authorized insurers will not accept, or will not accept on the same terms. Nonadmitted insurers are not licensed in Arizona but may write eligible business through a licensed surplus lines broker. They are not subject to the same rate and form filing requirements, which is the reason surplus lines can respond quickly to unusual or hard-to-place risks, and also the reason the insured has less regulatory protection. Before placing with a nonadmitted insurer, the broker must confirm the risk is eligible surplus lines business and complete the required diligent search of authorized insurers.
407 words, about 2 min