Which authority do most surplus lines brokers lack?

Surplus lines brokers typically lack binding authority, meaning they do not have the power to finalize or bind insurance coverage on behalf of the insurance company. Instead, these brokers play an intermediary role, facilitating the connection between the insured and the insurer but unable to commit the insurer to providing coverage without prior approval.

In the context of surplus lines, which involves placing risks that are not readily available in the admitted market, brokers must communicate with insurers to obtain quotes and terms. Any binding coverage must be explicitly confirmed by the insurer through the appropriate channels, which is why surplus lines brokers do not have this authority. This distinction emphasizes the regulatory frameworks that surround surplus lines insurance, where the brokers are tasked with navigating the complexities of non-standard risks without the ability to guarantee coverage independently.