What responsibility do surplus lines brokers have regarding consumer disclosures?

Surplus lines brokers have a specific responsibility to disclose risks associated with using unadmitted insurers. Unadmitted insurers are those that are not licensed in the state where the policyholder resides, which means there are certain risks involved that differ from traditional licensed insurers. These risks include a lack of state regulation, meaning that the policyholder may not have access to some consumer protections that are typically available with licensed insurers. By informing consumers of these risks, brokers ensure that clients are fully aware of the potential implications of purchasing insurance through unadmitted carriers, thereby allowing them to make informed decisions about their coverage options. Providing this disclosure is a critical part of maintaining transparency and upholding ethical practices within the insurance industry.