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If a private flood insurance policy is a surplus line of coverage effective with a non-US insurer like Lloyds London, is the policy still acceptable under the discretionary acceptance requirements if the insurer is not licensed in the state but is admitted or otherwise found to be eligible by the state department of insurance verified through the state stamping office for surplus lines but, the insurer is not listed on the most recent NAIC’s quarterly listing of alien insurers report?
If the surplus lines insurer is “otherwise approved to engage in the business of insurance by the insurance regulator of the State or jurisdiction in which the property to be insured is located” and the policy meets the other requirements it should be fine. I’d suggest becoming familiar with the applicable state’s department of insurance and how they mark insurers, including surplus lines insurers, so you can recognize if they are licensed, admitted or otherwise approved.”
From the preamble to the final rule:
The Agencies received specific comments on the section of the proposed definition of “private flood insurance” relating to the State licensing of insurers. These commenters expressed concern that this definition could be interpreted to exclude policies issued by surplus lines insurers for noncommercial properties. In response to these commenters, the Agencies confirm that policies issued by surplus lines insurers for noncommercial properties already are covered in the definition of “private flood insurance” as policies that are issued by insurance companies that are “otherwise approved to engage in the business of insurance by the insurance regulator of the State or jurisdiction in which the property to be insured is located.”If they are approved by the applicable state DOI, that would meet the “licensed, admitted, or otherwise approved” criteria.
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