insurer authorization NRRA v DSLI
I'm a bit confused as to why these 2 requirements wouldn't result in some sort of circular reference issue?
Under key provision of NRRA: uniform eligibility standards (BattleCard 7), it states that the insurer must be authorized to write in its domiciliary jurisdiction. Meanwhile under DSLI, it states that the insurer needs to be an eligible surplus lines insurer in a jurisdiction other than its state of domicile. So if I'm understanding this correctly, under NRRA you need authorization by domiciliary jurisdiction to become a surplus lines insurer but under DSLI you can only be a surplus lines insurer in your domiciliary jurisdiction if you are authorized in another state?
Comments
This is definitely confusing. First note that the following terms have different meanings:
All insurers must be authorized/licensed in their domiciliary state, meaning they could write only admitted insurance. So prior to DSLIs, they were not eligible to write surplus lines insurance in their domiciliary state even though they could be eligible to write surplus lines insurance in other states. Here is a link to an example from "Surplus Lines Association of Illinois" that explains this:
If for some reason the above link doesn't work, I've copied the text below:
A Domestic Surplus Line Insurer is an insurer that is specially licensed under the Domestic Surplus Line Insurer Law (Section 445a) of the Illinois Insurance Code. It is domiciled in Illinois but, unlike all other Illinois-domiciled insurers, can write surplus line policies in Illinois.
U.S. based insurers are always licensed by their state of domicile. Prior to the inception of this law, a U.S. based surplus line insurer had to operate on a licensed, admitted basis in its state of domicile. Therefore, if an insurer wanted to write surplus line contracts in all fifty states, two companies had to be created and capitalized. For example, a primary insurance company would be domiciled in Illinois to write policies in 49 states (all states except Illinois), and a secondary insurance company had to be created and capitalized (domiciled in a different state) just to write surplus line policies in Illinois. This is a waste of capital and an inefficiency of the surplus line insurance system in the U.S. Illinois recognized this with the creation of the Domestic Surplus Line Insurer Law.