UNDERSTANDING EXCESS & SURPLUS LINES IN NORTH CAROLINA

Written by:Todd Wood, CPCU, CIC, ASLIAdjunct Professor, Appalachian State UniversityVP of P&C Underwriting – JSAandDavid D. Wood, Ph.D., CPCU, CRM

Joseph F. Freeman Distinguished Professor of Insurance

Appalachian State UniversityMay 1, 2010

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UNDERSTANDING EXCESS UNDERSTANDING EXCESS AND SURPLUS LINES IN AND SURPLUS LINES IN NORTH CAROLINANORTH CAROLINA

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Written by: Todd Wood, CPCU, CIC, ASLI AdjunctProfessor, Appalachian State UniversityVP of P&C Underwriting -JSAAndDr. David D. Wood, CPCU Joseph F. FreemanDistinguished Professor of InsuranceAppalachian State University

SURPLUS LINES INSURANCE

•NORTH CAROLINA SURPLUS LINES ACTdefines as :any insurance in this state of risksresident, located, or to be performed in thisState, permitted to be placed through a surplusto accept such insurance, other thanreinsurance, commercial aircraft insurance, wetmarine and transportation insurance, insuranceindependently procured pursuant to GS 58-28-5,life and accident or health insurance, andannuities.”

•INSURANCE INSTITUTE OFAMERICA/AMERICAN INSTITUTE FORCPCU defines surplus lines as “abuy property-liability insurance fromnonadmitted insurers when consumers areunable to purchase the coverage theyneed from admitted insurers.”

•AM BEST defines surplus lines insuranceas “The surplus lines market is known foraiding insurance agents and brokers byproviding coverage solutions for thesepolicyholders in addition to developing.Without the Surplus Lines market,businesses would have to forgo traditionalinsurance, self-insure their exposures orseek coverage outside of the US market.”•NAPSLO –(National Association ofProfessional Surplus Lines Offices, LTD)Places surplus lines risks into 3 categories(1) Non-Standard riskswhich haveunusual underwriting characteristics(2) Unique Riskswhich admitted carriersdo not offer a filed policy form or rate(3) Capacity Riskswhen a client seeks ahigher level of coverage

FIRE!!!IRE!!!