Surplus Lines ‘Diligent Effort’ Requirement Repealed Oct. 1 

Thanks to the hard work of Big I Connecticut members, Connecticut insurance producers and surplus lines brokers are no longer subject to a surplus lines “diligent effort” requirement as of October 1, 2026. The change was enacted in last spring’s legislative session and signed into law in June. This reform was a major legislative priority for Big I Connecticut.

Under prior law, producers and surplus lines brokers could not obtain coverage from an insurer not licensed in Connecticut without first obtaining and documenting declinations from at least three licensed insurers. The new law repeals that requirement and permits the state’s insurance commissioner to require surplus lines brokers to annually report aggregate policy information and the locations of real property insured under these policies.  

The Connecticut Insurance Department issued a bulletin about the change on October 2, announcing that the department will require the annual reports from surplus lines brokers. Annual notices to them will explain the form and manner of the reports. The bulletin reminded them of their surplus lines tax filing and payment obligations and gave this reminder in bold font to producing and surplus lines brokers alike: 

“Please be advised that despite the elimination of the diligent effort requirement, it is critical that producers, including surplus lines brokers, continue to exercise caution when placing business in the surplus lines market. Specifically, the Commissioner recommends that retail agents (producers) and surplus lines brokers (i) fully disclose to insureds the benefits and risks associated with surplus lines and admitted policies including differences in cost, coverage, cancellation and non-renewal notice requirements, and guaranty association coverage, and (ii) maintain evidence of such disclosure. Intentionally misrepresenting the terms of an actual or proposed insurance contract is grounds for the termination of a producer license.” 

Big I Connecticut members’ consistent advocacy and direct engagement with policymakers played a central role in getting this law changed. During the Big I Connecticut Morning at the Capitol on March 31, members held a well-attended roundtable with Insurance & Real Estate Committee Co-Chair, Rep. Kerry Wood, and Insurance Commissioner Josh Hershman. Members shared real-world examples from their agencies and emphasized how the requirement affects customers, helping to keep the issue front and center at a key point in the session.