Sec. 27.15. Advice to insureds and evidence of coverage

(a) If coverage cannot be placed with an authorized insurer, then within 10 days after receipt by the excess line broker of a request for coverage to be placed with an unauthorized insurer, the excess line broker shall give, or cause to be given by the producing broker, written notice to the person or entity requesting the coverage setting forth the status in regard to the request.

(b) An excess line broker shall not deliver, or cause to be delivered by the producing broker to a person or entity requesting coverage from an unauthorized insurer any memorandum, certificate or other document evidencing insurance coverage, unless the document constitutes an insurance policy or contract of insurance actually issued by the insurer, except that the excess line broker or producing broker may deliver written confirmation of placement of coverage with the unauthorized insurer if the confirmation identifies the insurer by name and address, accurately describes the coverage, premium and terms, and bears across its face conspicuously, in not less than 10-point bold type, the following legend:

THE INSURER(S) NAMED HEREIN IS (ARE) NOT LICENSED BY THE STATE OF NEW YORK, NOT SUBJECT TO ITS SUPERVISION, AND IN THE EVENT OF THE INSOLVENCY OF THE INSURER(S), NOT PROTECTED BY THE NEW YORK STATE SECURITY FUNDS. THE POLICY MAY NOT BE SUBJECT TO ALL OF THE REGULATIONS OF THE DEPARTMENT OF FINANCIAL SERVICES PERTAINING TO POLICY FORMS.

(c) No excess line broker shall deliver, or cause to be delivered by the producing broker any evidence of insurance or represent that insurance will be or has been written by any unauthorized insurer, unless the excess line broker is exercising binding authority pursuant to section 27.4 of this Part or has received confirmation from the insurer that the insurance has been bound.

(d) If, after delivery of evidence of insurance, there is any change in the identity of the unauthorized insurer, in the proportion of the risk assumed by the insurer, or any other material change in coverage as stated in the original evidence of insurance, the excess line broker shall promptly issue and deliver to the insured and any producing broker an appropriate substitute for (or endorsement to) the original document:

(1) accurately showing the current status of the coverage and identity of the unauthorized insurer; and

(2) informing the insured of the insured's right to cancel the policy and to obtain a premium refund on a pro-rata basis, unless such change is made at the insured's request.

(e) No insurance policy or contract of insurance placed with an unauthorized insurer shall be binding upon the insured, and no premium charged therefor shall be due and payable, until the excess line broker has provided, or caused to be provided by the producing broker, written notice to the insured that:

(1) the unauthorized insurer with which the excess line broker has placed the insurance is not licensed by this State and is not subject to its supervision;

(2) in the event of the insolvency of the unauthorized insurer, losses will not be covered by the New York State security funds; and

(3) the policy may not be subject to all of the regulations of the superintendent pertaining to policy forms.