Under the Dodd-Frank law, when can a broker place insurance with a nonadmitted insurer?

The Dodd-Frank Wall Street Reform and Consumer Protection Act established key regulations surrounding financial and insurance practices in the U.S., including guidelines for surplus lines insurance. A broker can place insurance with a nonadmitted insurer specifically if that insurer is listed in the National Association of Insurance Commissioners (NAIC) Quarterly Listing of Insurers. This listing serves as a database of insurers authorized to engage in insurance business in various states, providing brokers a reliable reference point to ensure they are working with recognized and compliant entities.

This requirement safeguards consumers by ensuring that nonadmitted insurers meet certain standards, preventing brokers from arbitrarily choosing any nonadmitted insurer without oversight. Brokers are expected to conduct their due diligence and only work with nonadmitted insurers that have passed the necessary evaluations and are therefore listed in this quarterly publication.

Other options present scenarios that either lack regulatory backing or do not align with the structured guidance provided by the Dodd-Frank law regarding nonadmitted insurers.