Affidavit Filing Procedures for Surplus Lines Brokers

In the surplus lines insurance market, the affidavit—often referred to as the Diligent Effort Form or Evidence of Search—is a critical document. Its primary purpose is to provide sworn evidence that a broker has attempted to place a risk within the admitted market but was unsuccessful. Because surplus lines insurers are non-admitted and do not participate in state guaranty funds, regulators require this extra layer of verification to protect consumers from unnecessary exposure to risk.

For candidates preparing for the exam, understanding the affidavit process is essential. It serves as the legal bridge between the standard market and the specialty market. You can explore more about these foundational concepts in our complete Surplus Lines exam guide. Properly filing these documents ensures that the broker remains in compliance with state laws and that premium taxes are accurately recorded and collected.

Before an affidavit can be filed, a surplus lines broker must conduct a diligent search. This is not merely a suggestion; it is a statutory requirement in nearly every jurisdiction. The standard rule of thumb is that a broker must receive declinations from at least three admitted insurers that are actively writing the type of coverage requested.

Key aspects of the diligent search include:

• Authorized Markets: The insurers contacted must be licensed (admitted) in the state where the risk is located.
• Reasonable Effort: The search must be performed in good faith. Contacting companies that clearly do not write the specific class of business does not constitute a diligent search.
• Documentation: Every declination must be documented with the name of the insurer, the individual contacted, and the specific reason for the refusal.

Certain risks may be exempt from this search if they appear on a state's Export List. These are types of coverage that the insurance commissioner has already determined have no viable market among admitted insurers.

While the specific format of an affidavit varies by state, the core data points remain consistent. A broker must be prepared to provide precise information to the Surplus Lines Stamping Office or the State Department of Insurance. Failure to provide accurate data can lead to fines, license suspension, or the invalidation of the coverage.

The following elements are typically required:

• Producer Information: The name and license number of the surplus lines broker.
• Insured Information: The legal name and address of the party being insured.
• Description of Risk: A summary of the exposure, including the type of insurance (e.g., professional liability, coastal property).
• Detailed Search Results: A list of the admitted companies that declined the risk, along with the date of declination and the specific reason (e.g., "Exceeds capacity," "Class of business not written").
• Broker Certification: A signed statement (often notarized) affirming that the information provided is true and that the coverage was not placed in the surplus market solely to obtain a lower premium.

Once the policy is bound, the clock starts ticking for the broker to file the affidavit. Most states require the filing within a specific window, typically ranging from 30 to 60 days after the effective date of the policy. Late filings often result in automatic administrative penalties.

Modern insurance regulation has shifted toward electronic filing systems. Many states utilize SLIP (Surplus Lines Information Portal) or similar clearinghouse platforms. These systems allow brokers to upload affidavit data digitally, which facilitates faster processing and more accurate calculation of surplus lines taxes. If you are practicing for the exam, ensure you are comfortable with these procedural workflows by reviewing our practice Surplus Lines questions.