KRS 304.10-040: Conditions for export -- Exceptions relating to diligent effort.

(1) Surplus Lines may be procured from a nonadmitted insurer subject to the following

conditions:

(a) The insurance shall be procured through a licensed surplus lines broker;

(b) After a diligent effort, a licensed agent with property and casualty lines of

authority, or with health and life lines of authority if procuring disability

insurance, has been unable to procure the full amount of insurance required

from an insurer that is authorized to transact, and that actually writes, that

kind and class of insurance in this state. If the licensed agent is able to procure

an amount of insurance less than the full amount, only the excess amount

needed to procure the full amount shall be exported;

(c) The insurance shall not be exported for the sole purpose of securing either:

1. A lower premium rate than would be accepted by an authorized insurer;

or

2. More advantageous terms of the insurance contract.

(2) The requirements of subsection (1) of this section related to a diligent effort shall

not be required for coverag e procured or placed for an exempt commercial

purchaser if:

(a) The broker procuring or placing the surplus lines insurance has disclosed to

the exempt commercial purchaser that insurance may or may not be available

from the admitted market that may provid e greater protection with more

regulatory oversight; and

(b) The exempt commercial purchaser has subsequently requested in writing that

the broker procure or place insurance from a nonadmitted insurer.