What is the required bond percentage for a resident producer when placing policies with a non-appointed insurer?

The correct answer is that a resident producer is required to post a bond of 5% of the premiums when placing policies with a non-appointed insurer. This bond acts as a financial assurance mechanism that protects both the insurer and the policyholders. It ensures compliance with state regulations and also provides a safeguard against potential financial liabilities that may arise from transactions conducted with non-appointed insurers.

This requirement aligns with the regulatory framework that governs surplus lines brokers and producers, emphasizing the importance of financial responsibility and ethical practices in the insurance industry. By maintaining a bond, producers demonstrate their commitment to adhering to state laws while engaging in surplus lines business, which often involves unique risks not covered by standard insurers.

Understanding this bond requirement is crucial for producers, as it ensures they are prepared to operate within the legal confines of the insurance market, particularly when navigating non-appointed carrier relationships.