What must brokers do if a surplus lines insurer becomes insolvent?

When a surplus lines insurer becomes insolvent, brokers have a critical responsibility to notify their clients about the financial status of the insurer. This communication is essential because clients may not be aware of the potential risks posed by an insurer's insolvency. Moreover, informing clients allows them to make informed decisions regarding their insurance coverage.

In addition to notification, brokers are expected to assist clients in finding alternative coverage. This proactive approach helps clients avoid potential gaps in their insurance protection and ensures that they maintain adequate coverage during a transitional period. It demonstrates the broker's duty of care and commitment to their clients' financial security, reinforcing the trust placed in them as insurance professionals.

These responsibilities are aligned with the broader goals of maintaining consumer protection and transparency within the insurance market, particularly in the context of surplus lines coverage, which is typically utilized for risks not adequately covered by standard insurers.