When a risk goes to a surplus lines insurer, most US states expect the broker to show that the admitted market was tried first — commonly a number of declinations from admitted carriers, recorded with their reasons, and an affidavit filed. The work is not hard. It is easy to do late, from memory, with a reason or a date missing.
InsightPlacement keeps the diligent-effort log as the placement happens, checks it against a threshold before the bind order, and prepares the affidavit for a person to file. This post follows the illustrative hotel group’s Florida property line. The three-declination threshold is the product’s starter rule, not a statement of any state’s requirement — each practice sets its own with its compliance team.
Not legal or regulatory advice
Surplus lines rules differ by state and change. The control described here is configurable and ships with an illustrative default of three admitted declinations per line. Confirm your own requirements with your compliance function.
| Actors | Compliance (files the affidavit), placement broker, practice leader |
|---|---|
| Trigger | A line is selected (or recommended) with a surplus lines carrier |
| Line | Commercial property, home state Florida |
| Agents involved | Placement compliance agent, market selector, supervisor agent |
| Decisions | File the diligent-effort affidavit; bind only when the log is sufficient |
| Outcome | Three admitted declinations, each with a reason and a date, and an affidavit prepared from them |
| What is measured | Surplus lines placements with a complete log at bind (should be all), days from selection to filing |
How the log is built
The log is not a separate form. Every market row already carries its status, its type (admitted or surplus), and — when it declines — the reason and the date. The diligent-effort engine reads those rows: for each line placed (selected, or else recommended) with a surplus carrier, it counts the declinations from admitted carriers on that line and lists them.
admitted declinations,
reason and date"] --> E["Diligent effort engine"] B["The line's pick:
selected, else recommended"] --> E E --> Q{"Surplus pick with
fewer than 3 admitted
declinations?"} Q -- yes --> X["SL_DILIGENT_EFFORT
blocks the bind"] Q -- no --> P["Compliance agent:
prepare the affidavit
for the home state"] P --> H{"Compliance files it"} style X fill:#fdecec,stroke:#e57373 style H fill:#e8f8f4,stroke:#10b981,stroke-width:2px
For the hotel group: commercial property is placed with a surplus carrier, and the log has three admitted declinations — capacity committed in the region (October 25), coastal wind exposure outside appetite (October 21), and doesn’t write in Florida (October 22). The security floor is met by every quoting carrier.
The prepared affidavit, and the facts behind it
The compliance agent prepares File the surplus lines diligent-effort affidavit (FL) for Commercial property, with the five numbered facts it rests on: the surplus carrier, the count, and each declination with its reason. In this demo record the model’s reading is cautious: it says binding cannot be confirmed from these facts alone. That is the right instinct — the affidavit is a person’s act — and it is exactly what “what the agent couldn’t settle” is for.
Step by step
Three admitted carriers decline the property line, each with its reason and date on the market row.
The property quote selected is from a surplus lines carrier rated A.
Property: surplus, 3 admitted declinations, sufficient against the rule of 3.
For the home state, for the surplus line(s), with the declinations listed.
Accept carries it out as the compliance person; the record keeps who filed, when, and on which facts.
If the count had been two, SL_DILIGENT_EFFORT would block the bind until a third admitted declination is logged.
What the proposal tells the client
When a line is placed with a surplus lines insurer, the client proposal says so in its own section and notes that such insurers are not covered by the state guaranty arrangements that protect admitted business — information the client should have before signing off.
What the agents prepared, and what each rests on
| Agent | What it prepared | What it cites | Who decides |
|---|---|---|---|
| Compliance | File the surplus lines diligent-effort affidavit (FL) | The surplus pick; three admitted declinations with reasons | Compliance |
| Market selector | Surplus markets cautioned unless the placement allows them | Market type; the placement’s clearance | Placement broker |
| Supervisor | Bind order only when no control blocks | SL_DILIGENT_EFFORT, SECURITY_FLOOR | Practice leader |
Edge cases
| What happens | What InsightPlacement does |
|---|---|
| A surplus declination | Doesn’t count: only admitted carriers’ declinations do. |
| A declination logged without a reason | It counts, but appears on the log with no reason, which compliance will see before filing. |
| The placement isn’t cleared for surplus lines | A surplus quote is a hard flag in the comparison and cannot be recommended while an admitted one exists. |
| Two surplus lines on one placement | Each line needs its own declinations; the control reads the fewest. |
The decision record for this step
| Section | Hit | Outcome |
|---|---|---|
| Engine | Diligent effort: property, surplus, 3 admitted declinations | pass |
| Engine | Security floor: every quoting carrier A- or better | pass |
| Agent | Compliance: file the FL affidavit for commercial property | refer |
For the account team
The log builds itself from what you already record on each market. Nothing to reconstruct at bind.
For broker IT
The threshold is a parameter of a published rule; changing it is a versioned edit in the Studio, tested against open placements first.
For practice leaders
Every surplus placement has its declinations, reasons and filer on record. That is an audit answer, not a search through e-mail.
Questions we get asked
Does InsightPlacement file with the state?
No. It prepares the affidavit and records the filing decision. Filing happens through your normal process.
Is three declinations the law?
No — it is the product’s illustrative default. Requirements vary; set the rule to yours.
Keep reading
From the proposal to the bind order
The client signs off on the record, then binding follows — as a dry run.
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Claims advocacy, company intelligence and policy checking in the renewal
The loss story from InsightAdvocate, the company from InsightPulse, the bound policy for InsightProofing.
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