1. (a) In accordance with Arkansas Code § 23-65-306, Form SL-2, the surplus line broker's affidavit, must be completed in full and forwarded to the Insurance Commissioner by the surplus line broker within sixty (60) days of the end of the month in which the coverage was procured.

2. (b)

   1. (1) The originating producer or broker, pursuant to Arkansas Code § 23-65-305, must make a diligent effort to place the business in admitted insurers.
   2. (2) To this end, the originating producer or broker must attempt to place the business with those admitted insurers that he or she has reason to believe are actually marketing in this state the kind or class of insurance sought to be placed, before the business may be placed in surplus line insurers.

3. (c)

   1. (1) In regard to the affidavit of the surplus line broker, he or she may rely on the diligent effort made by the originating producer or broker.
   2. (2) If the surplus line broker also serves as the originating producer or broker, the surplus line broker must make the diligent effort to secure coverage through the admitted market.
4. (d) If the originating producer or broker is made aware of an offer of renewal in the admitted market from any source, the property, casualty, surety, or marine policy cannot be written on a surplus line basis unless it qualifies under subsection (e) of this section.
5. (e) Any offer of similar coverage by an admitted insurer requiring a gross premium of twenty percent (20%) or more higher than the total gross premium and charges, including taxes and expense of underwriting, applicable to the procurable surplus line coverage may be considered a declination by the originating producer or broker and the surplus line broker.

6. (f)

   1. (1) In accordance with Arkansas Code § 23-65-305, if a portion of the property or risk can be written in an admitted insurer, it must be written in that insurer.
   2. (2) The amount of insurance placed in an approved surplus line insurer can only be the balance remaining from the amount procurable from admitted insurers.
7. (g) It is permissible for the surplus line broker to file a monthly affidavit, Form SL-2, with the insurers' names, total premiums, total expense of underwriting, and total tax for each insurer with which he or she placed business during that month, and a completed Form SL-2A for each insurer.

8. (h)

   1. (1) Return premiums, additional premiums, and premiums paid on a monthly payment method are to be so identified on Form SL-2A.
   2. (2) In the column designated as "Premium", the amount of the premium and the amount of return premium (in parenthesis) are to be inserted.

9. (i)

   1. (1) If the surplus line broker desires to retain evidence of having filed Forms SL-2 with the State Insurance Department, the surplus line broker must forward one (1) additional copy thereof so that the department can stamp the copy "FILED" and return it to the surplus line broker.
   2. (2) The broker must request a file-marked copy and include a postage paid, self-addressed envelope for use in returning the copy.
10. (j) Due to the similarity of the names of many insurers, the full and complete names as they appear on the Arkansas Approved Surplus Lines Insurers List and the NAIC Non­Admitted Insurers Quarterly Listing must be given on all forms.
11. (k) The guidelines and procedures outlined in this part and the Surplus Lines Insurance Law, Arkansas Code § 23-65-301 et seq., shall apply anew each time it is proposed that a particular coverage, which has been placed in the surplus line market, be rewritten or renewed on a surplus line basis.

12. (l)

    1. (1) Computer-generated Forms SL-2, SL-3, and SL-4 are permissible for use if they follow the format outlined in the forms located on the department’s website.
    2. (2) Specimen forms must be submitted to the commissioner for approval prior to use in this state.

Codification Notes: “NAIC” means National Association of Insurance Commissioners.