What is the purpose of an ‘affidavit of diligent effort’?

The purpose of an ‘affidavit of diligent effort’ is to demonstrate compliance in seeking coverage from admitted carriers. In the context of surplus lines insurance, this affidavit serves as a formal statement indicating that the broker has made a genuine effort to secure insurance coverage from licensed or admitted insurers before turning to surplus lines providers.

This process ensures that brokers are fulfilling their due diligence requirement, which is crucial in maintaining transparency and accountability in the insurance transaction process. When a broker submits an affidavit, it confirms that alternative options were explored and that surplus lines coverage is justified, typically because the insurance needed is not readily available through admitted insurers. This documentation is important for both regulatory compliance and providing evidence of the broker's commitment to acting in the best interests of their clients.