View this article online: https://www.claimsjournal.com/news/southeast/2003/03/06/26836.htm
Remarks made recently by Georgia Insurance Commissioner John Oxendine about the role of surplus lines insurers in the marketplace should not diminish the importance of these companies and the vital role they play for consumers encountering difficulties in obtaining coverage, according to the National Association of Independent Insurers (NAII).
“We are extremely disappointed and puzzled by Oxendine’s statements when he addressed the function of surplus lines in Georgia,” Michael Koziol, senior director and counsel at the NAII, remarked. “Surplus lines companies are critically needed as a relief valve during the hard market we are currently experiencing.
“These companies have proved to be a mechanism that works, providing coverage and capacity to consumers who are unable to obtain coverage through the licensed market to get the insurance they need. In 2001 alone, companies wrote nearly $500 million in surplus lines business in Georgia, pumping $19 million in taxes that year to the state.”
In a recent presentation to the Georgia Chamber of Commerce, Oxendine spoke out on several insurance issues, including the need for tort reform and the role of surplus lines in the market. When asked if surplus lines insurers should be price controlled, Oxendine responded that “though surplus lines is a necessary evil, standardized regulation between the states could improve operations.”
“While Commissioner Oxendine said he recognizes that further government regulation of rates and forms in general would not increase competition and entice business in the marketplace, it is imperative for the economic health of businesses that the traditional freedom for surplus lines carriers to operate in Georgia not be impinged,” Koziol said. “Otherwise, consumers may be faced with fewer insurers to choose from, and could be unavailable or too costly.
“It is important to note that the surplus line transaction is not free of
regulation,” Koziol continued. “The commissioner has full regulatory control over licensed surplus lines brokers in Georgia by regulating their transactions. The broker is subject to review by the insurance department, and, should a particular situation warrant, subject to the full panoply of regulatory sanctions.”
Generally, customers who have tried unsuccessfully to obtain insurance from at least three licensed companies in their state (referred to as “due diligence”) can then seek coverage from an out-of-state surplus lines insurers who are not subject to that state’s rate and form restrictions.