Disclosures to the Insured
Required notices
Before placing surplus lines insurance, the producer must give the insured a written notice that the insurer is not admitted in Oregon, is not protected by the Oregon Insurance Guaranty Association, and is not subject to Oregon rate and form approval. The notice should identify the insurer and be signed or acknowledged by the insured.
Consumer protection
Do not describe a nonadmitted insurer as admitted. Do not imply guaranty fund protection. Explain that the insured may have to rely on the insurer’s home-state remedies. Keep the acknowledgment with the transaction file.
Worked example
An insured signs a disclosure, then asks whether the policy is backed by the Oregon guaranty fund. The producer must say no and explain the notice. Reasoning: the written disclosure is not boilerplate; it must be explained accurately. A verbal assurance of guaranty fund coverage would be a misrepresentation.
Traps that cost marks
Do not deliver the notice after a loss. Do not substitute a general agency disclosure for the surplus lines notice. Do not let an unlicensed assistant give the explanation without supervision. Do not omit the insurer’s name from the notice.