Diligent Search and Placement with Non-Admitted Insurers
The core duty
Before placing coverage with a non-admitted insurer, the producer must show that the coverage could not be obtained from authorized insurers. A diligent search is not a phone call; it is a documented market check covering the full scope of coverage requested with authorized insurers that actually write that class of business in Indiana.
What the file must show
For each authorized insurer approached, record the insurer's name, the date, the coverage and limits requested, and the specific reason for declining. Acceptable reasons include underwriting appetite, capacity, limits, exclusions, or loss history. "The surplus lines quote was cheaper" is not an acceptable basis - price alone does not justify going non-admitted. Verbal declinations must be reduced to writing. The search must precede binding, and a renewal should be re-documented rather than copied forward indefinitely.
Export list shortcut
Where the class of business appears on the commissioner's export list, the individual declination requirement is generally waived and the producer may place directly with an eligible surplus lines insurer, still observing disclosure, tax, and filing duties.
Common traps
- Counting declinations from insurers that do not write the class; those do not support the search.
- Splitting a risk into pieces to avoid documenting a full-market search.
- Backdating or reconstructing declinations after the policy is issued.
- Treating a single blanket "no markets available" note as sufficient evidence.
Worked example
A manufacturer needs $8 million of property coverage including flood. The producer documents three declinations - one for capacity, one for flood exclusion, one for loss history - each dated and named, then exports nothing (flood is not listed) and places with an eligible insurer, with disclosure and tax filing. If one declination had come from an insurer that never writes flood, the file would be two declinations short and the placement challengeable.