The term exportability refers to what business a surplus line broker can "export" to the surplus line market versus what business should be placed in the admitted market. There are essentially two criteria that determine what business is eligible to be exported: availability and price.
1. Availability: Insurance that can be procured from admitted insurers may not be exported to the surplus line market. Admitted insurers generally accept the more straightforward risks that lend themselves to using standard form policies and standardized rating manuals.
The law requires a surplus line broker to ensure that a diligent search for the coverage is made among admitted insurers. Recognizing that it would place an unreasonable burden on consumers if insurance producers were required to submit risks to every admitted insurer to determine unavailability, the law considers declinations from three admitted insurers that actually write the particular type of insurance to be "prima facie evidence" of unavailability.
Additionally, the Insurance Commissioner publishes a list, called the "Export List," of risks and coverages for which the Commissioner has found no reasonable or adequate market among admitted insurers. Risks and coverages on the export list are deemed to be unavailable and may be exported without any declinations.
2. Price: Exportation to obtain a lower rate or premium is prohibited. If the insurance product is available in the admitted market, it must be purchased in the admitted market even if the same product could be procured at a lower rate in the surplus line market. For exceptions, refer to Insurance Code Section 1763(c).
Statutory References: California Insurance Code §§ 1763 and 1763.1.