Diligent Search Report (SL-2) (California)
WSS and other wholesalers annually file thousands of policies with the Surplus Line Association of California, including the required Diligent Search Report (SL-2). 99.9% of the time those filings are processed routinely and smoothly. Occasionally, however, a question arises about a particular risk and the correct way to complete the SL-2 form.
The SL-2 form itself is fairly simple. The main section for general Property and Casualty accounts are covered in Q.7 & 8. By checking the "YES" box on Q.7 and filling in the 3 names completes the process with your signature and date. And keep in mind that there are many classes that do NOT require the SL-2 form. Those classes and risk categories are listed annually on the CDI Export List. Some of the more typical examples are:
- Commercial DIC/Stand alone Earthquake
- Vacant Buildings
- Employment Practices Liability (EPL)
- Products - written on a stand-alone basis
- Security Guard Services
- Prize Indemnification (Excluding hole-in-one)
For more information and a complete list of categories, please see CIC Section 1763.1 and SLA Bulletin #1160. Or, simply call us and we'll let you know if your risk is on the List.
As the Surplus Line Broker, the CDI makes it our responsibility to verify the accuracy of the Diligent Search. However, all licensees are subject to the code, so it's important for all of us to get this done correctly. Potential problems arise when Q.7 is answered "NO" by the person completing the form and Q.8 answered instead. When that happens, we must ask that you provide additional information about your search efforts in order to satisfy the requirements. If we can't verify the search, we can't write the risk. As the Executive Director of the SLA has pointed out:"If the Diligent Search is found to be erroneous or incomplete by a CDI investigation, the broker is subject to penalties". Whenever possible, we'll provide the name of an admitted carrier for you to list in Q.7.
We hope that this clears up some of the confusion surrounding the Diligent Search requirements and we're happy to help with the process. A quick phone call to your local WSS Broker can often save a lot of time and trouble.