Statutory FAQs

North Carolina General Statute G.S. 58-21-15 governs diligent search requirements for the placement of surplus lines insurance in North Carolina. The statute is broad in scope and does not require a specific number of declinations from the admitted insurers before insurance is placed with an authorized surplus lines insurer.

The NCDOI has maintained the position that the producing agent is responsible for conducting a diligent search for the placement of insurance with admitted insurers in North Carolina. In the event that insurance cannot be placed with an admitted insurer in North Carolina, it is the responsibility of the surplus lines licensee to confirm that the diligent search was conducted by the producing agent.

North Carolina insurance laws, including the Surplus Lines Act, are silent as to the type of documentation that the surplus lines licensee may use as confirmation of the diligent search by the producing agent. This decision regarding acceptable documentation confirming the diligent search can be determined by the surplus lines licensee. A copy of the licensee’s diligent search confirmation, shall be maintained in the insured’s policy file.

The North Carolina Form F has been replaced by an online “Compliance Acknowledgement” which confirms that the surplus lines licensee has verified the producing agent has complied with North Carolina General Statute §58-21 for the placement of surplus lines business in North Carolina.

A copy of the compliance acknowledgment should be maintained in each insured’s file. (Either a hard copy or electronically stored).

North Carolina General Statute §58-21-45(f) requires that every surplus lines policy placed by a surplus lines licensee bear the name of the licensee and the following legend in 12-point type and in contrasting color or in 12-point type and underlined and in bold print.

(1) For nonadmitted insurer: “The insurer with which this coverage has been placed is not licensed by the State of North Carolina and is not subject to its supervision. In the event of the insolvency of the insurance company, losses under this policy will not be paid by any State insurance guaranty or solvency fund.”

(2) For nonadmitted domestic surplus lines insurers: “The insurer with which this coverage has been placed is domiciled and authorized by the State of North Carolina and is subject to its supervision. However, in the event of the insolvency of the insurance company, losses under this policy will not be paid by any State insurance guaranty or solvency fund.”

Please refer to North Carolina General Statute §58-21-75, Records of surplus lines licensee.

Records can be kept either electronically or a hard copy and must be maintained for five years.