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Feb 16
Big I CT Calls for Improvements to Excess Lines Due Diligence Process

Scott Hobson BW Blog Headshot_80x103.jpgBy Scott Hobson, AVP of Government Relations

SHobson@BigICT.org

This week, Big I CT called on the CT Insurance Department (CID) to make much-needed improvements to the "diligent effort" process​ required when placing coverage in the excess market. Excess Lines insurance is a vital part of Connecticut’s market and is essential for ensuring customers can obtain the best coverage to fit their needs. The importance of the excess market has only grown in recent years as the market has hardened significantly. It is in the best interest of consumers that Connecticut take steps to streamline the process for securing coverage in the excess market. 

We urged the CID to exempt cyber liability insurance from the diligent effort requirement by adding it to the export list. The landscape of cyber risks is dynamic, with new threats emerging regularly, and the severity of incidents escalating rapidly. In such a scenario, a rigid process of obtaining multiple declinations from admitted carriers could significantly delay a company's ability to secure essential cyber liability coverage. Excluding cyber liability insurance from the diligent effort requirement acknowledges the need for timely responses and allows insurance brokers to navigate the evolving cyber landscape efficiently.

Moreover, cyber insurance is a relatively specialized field, and many admitted carriers may not have the expertise or capacity to underwrite these risks comprehensively. Allowing brokers to access the excess market without the diligent effort prerequisite ensures that businesses can access the most suitable and responsive coverage tailored to the unique nature of cyber threats. The addition of this coverage to the export list reflects the distinctive characteristics of cyber liability insurance and supports a more agile and effective approach to risk management in the digital age.

We also called on the department to reduce administrative burdens on retail agents by eliminating the requirement to obtain the name and title of the representative for each admitted carrier that declined a risk. In practice, this information can be challenging or impossible to obtain. For example, many submissions to insurers are now made through web portals which generate either a quote or a declination of the risk. A web portal declination does not contain the name of an individual or their affiliation (company employee, agent, other). This information is not vital and often impossible to obtain, and can be eliminated with no impact on consumer protection. Notably, this exact change was made in New York in 2022. It is a reasonable approach to simplifying the due diligence process in CT.

We thank the CID for its support of the 2023 law eliminating the quarterly filing requirement of excess lines due diligence documentation, and look forward to working with them to further streamline the excess lines placement process. ​






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