Excess line brokers that cannot provide evidence of insurance to insureds prior to receiving an ELANY-stamped declarations page or cover note can issue a "confirmation of placement of coverage."
Insurance law §2118(b)(6) states, "It shall be unlawful for a licensee ... pursuant to §2105 ... to deliver in this state any declarations page ... or cover note evidencing insurance unless such insurance document is stamped by the excess line association."
11 CRR-NY 27.15(b) states in pertinent part that “An excess line broker shall not deliver, or cause to be delivered by the producing broker to a person or entity requesting coverage from an unauthorized insurer any memorandum, certificate or other document evidencing insurance coverage …” However, it goes on to state, “except that the excess line broker or producing broker may deliver written confirmation of placement of coverage (emphasis added) with the unauthorized insurer if the confirmation identifies the insurer by name and address, accurately describes the coverage, premium and terms, and bears across its face conspicuously, in not less than 10-point bold type, the following legend:
THE INSURER(S) NAMED HEREIN IS (ARE) NOT LICENSED BY THE STATE OF NEW YORK, NOT SUBJECT TO ITS SUPERVISION, AND IN THE EVENT OF THE INSOLVENCY OF THE INSURER(S), NOT PROTECTED BY THE NEW YORK STATE SECURITY FUNDS. THE POLICY MAY NOT BE SUBJECT TO ALL OF THE REGULATIONS OF THE DEPARTMENT OF FINANCIAL SERVICES PERTAINING TO POLICY FORMS.”
A confirmation of placement of coverage is legally not the same as a binder.
A binder sets forth the same or substantially similar information as the confirmation, but the binder is issued by an insurer, its agent or an excess line broker with a binding authority filed with ELANY.
No broker in New York can act as an agent for an unauthorized insurer according to Insurance Law §2117.
An excess line broker that does not have a binding authority with the excess line insurer cannot legally bind on behalf of that unauthorized insurer or ISSUE binders. The confirmation of placement of coverage is a vehicle to document coverage to the insured as confirmed by the insurer to the excess line broker.
Neither Insurance Law §2118 nor 11 CRR-NY 27.15(b) mandate that a confirmation of placement of coverage be stamped by ELANY. Nevertheless, as a matter of best business practice, if you deliver a confirmation to the insured, submit a duplicate to ELANY in lieu of a binder for stamping. If the confirmation has a deficiency, ELANY’s review may help a broker correct a mistake before it becomes a major problem.
Keep in mind that ALL DECLARATIONS PAGES, COVER NOTES AND PREMIUM-BEARING ENDORSEMENTS MUST BE SENT TO ELANY FOR STAMPING, EVEN WHEN A PRIOR BINDER OR CONFIRMATION WAS STAMPED.
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ELANY DISCLAIMER:
This is not intended to be nor should it be construed as legal advice. Consult with your own legal counsel.
Last Reviewed: 01/10/2025