Iowa Surplus Lines flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

McCarran-Ferguson Act

The 1945 federal law that leaves insurance regulation primarily to the states, allowing state licensing and market conduct rules to govern unless Congress expressly provides otherwise.

Iowa Insurance Division

The state agency headed by the Insurance Commissioner that licenses producers, examines insurer solvency, reviews market conduct, and enforces Iowa's unfair trade practices law.

Nonresident producer reciprocity

A licensing arrangement allowing an out-of-state producer with an active home state license to obtain Iowa authority without retaking the Iowa licensing examination.

Surplus lines license

A separate Iowa qualification layered on a property and casualty producer license that authorizes placement of coverage with eligible nonadmitted insurers after a diligent search.

Producer continuing education

Iowa resident producers complete 36 credit hours per three-year license term, including 3 hours of ethics, to maintain an active license.

Insurable interest

A lawful economic relationship in which the insured benefits from continuation of the subject and suffers loss from its destruction; required at inception for property and at loss for life.

Principle of indemnity

The rule that insurance restores the insured to approximately the pre-loss financial position, no better and no worse, subject to defined exceptions such as valued policies.

Contract of adhesion

An insurance contract drafted by the insurer and offered on a take-it-or-leave-it basis, so ambiguities are generally construed against the drafter.

Representation versus warranty

A representation is a statement believed true at application; a warranty is a promised condition whose breach may void coverage under traditional common law.

Apparent authority

Authority a producer appears to have based on the insurer's conduct, which can bind the insurer even without express or implied authority.

Diligent search requirement

The surplus lines producer's duty to attempt placement with admitted insurers and document their declinations before placing coverage with a nonadmitted insurer.

Export list

A list of coverage classes exempt from individual admitted-market declinations, though the producer must still verify the nonadmitted insurer's eligibility.

Eligible nonadmitted insurer

A surplus lines insurer authorized in its domicile that meets capital and surplus thresholds and appears on Iowa's approved list or the NAIC IID listing.

Surplus lines disclosure

A written notice stating the insurer is not licensed in Iowa, is not subject to Iowa regulation, and is not covered by the Iowa guaranty association.

Surplus lines producer bond

A surety bond, commonly $50,000, that Iowa requires as a condition of surplus lines licensure to protect insureds and the state.

Fiduciary premium account

A trust account in which a surplus lines producer holds collected premiums for the insurer or insured, separate from general operating funds.

Surplus lines register

A required record showing each placement's insured, insurer, coverage, premium, tax, declinations, and disclosure acknowledgment, retained at least five years.

Fee disclosure requirement

A surplus lines producer may charge a policy or inspection fee only when the insurer permits it and the fee is disclosed to the insured.

Nonadmitted insurer

An insurer without an Iowa certificate of authority that may lawfully write Iowa surplus lines only through a licensed surplus lines producer.

Prohibited placement

Placing coverage with a nonadmitted insurer not on the approved or IID list, exposing the producer to fines, license discipline, and personal tax liability.

Trusteed insurer

An alien insurer that qualifies to write U.S. surplus lines by maintaining a U.S. trust fund in an amount set by the Commissioner.

Guaranty fund exclusion

Surplus lines policyholders are not protected by the Iowa guaranty association if the nonadmitted insurer becomes insolvent.

Claims-made coverage

Coverage responding to claims first made during the policy period, with an extended reporting period available if purchased before expiration.

Self-insured retention

A specified amount the insured pays before surplus lines coverage responds, often used in casualty and specialty policies and documented at placement.

Surplus lines property exclusions

Common exclusions include flood, earthquake, wear and tear, faulty workmanship, and ordinance or law, some of which may be bought back by endorsement.

Additional insured endorsement

An endorsement extending coverage to another party, which in surplus lines must be confirmed in writing by the nonadmitted insurer.

Surplus lines premium tax

An Iowa tax, commonly 1% of gross premium, collected by the producer and remitted in lieu of other premium taxes on the nonadmitted insurer.

Stamping office

An entity that reviews surplus lines filings, verifies tax calculations, and maintains the state's surplus lines policy database.

Premium tax liability

The surplus lines producer is personally liable for collected premium tax that is not remitted, regardless of whether the insured paid the producer.

Residual market treatment

Coverage placed through assigned risk plans, FAIR plans, or workers' compensation pools is generally not surplus lines and is not subject to the surplus lines tax.

Unfair trade practices

Acts prohibited by Iowa Code chapter 507B, including misrepresentation, false advertising, coercion, intimidation, and unfair claim settlement practices.

Suitability duty

The producer's obligation to assess the insured's needs, recommend appropriate coverage, and avoid placing coverage with an ineligible insurer or without a diligent search.