On May 19, 2026, the Connecticut General Assembly passed Substitute House Bill No. 5373, “An Act Concerning the Insurance Department’s Recommendations for Revisions to the Insurance Statutes” (the Act), which became Public Act No. 26-69. The Act represents a broad amendment to the Connecticut Insurance Code including amending, among others, statutes regulating service of process, license suspension, and premium tax assessments. The most consequential change for the surplus lines market is the amendment of Conn. Gen. Stat. § 38a-741(b) effective October 1, 2026, which repeals Connecticut’s longstanding diligent-effort (also referred to as “diligent search”) requirement for surplus lines placements and replaces it with an annual reporting regime administered by the insurance commissioner.

Under the previous version of Conn. Gen. Stat. § 38a-741, a Connecticut-licensed surplus lines broker procuring or renewing a policy providing a line of insurance not appearing on the commissioner’s current published “export list” was required to “first make a diligent effort, as defined by the commissioner, to procure, from any authorized insurer or insurers, the full amount of insurance required to protect the interest of such insured.” As implemented through Connecticut Insurance Department guidance, the former regulatory regime required brokers to obtain and document three declinations from admitted carriers before exporting a risk to the nonadmitted market, with each placement supported by records sufficient to evidence the diligent search.

The surplus lines broker further had to show that “the amount of insurance procured from an unauthorized insurer or insurers is only the excess over the amount so procurable from authorized insurers,” along with “the type of policy” and, for real property risks, “the location of such property.” The surplus lines broker was required to keep, in a form approved by the commissioner and available for examination on request, “all documentation concerning such licensee’s and insured’s diligent effort to procure, from any authorized insurer or insurers, the full amount of insurance required to protect the interest of such insured,” together with “information concerning each policy placed in the surplus lines market.”

The Act strikes that diligent-effort framework in its entirety and replaces it with an annual reporting mandate. As amended, § 38a-741(b)(1) will now provide that, “[t]he commissioner may require, annually, that each surplus lines broker, licensed pursuant to section 38a-794, authorized to place surplus lines insurance in this state, submit a report to the commissioner, in a form and manner prescribed by the commissioner,” containing three categories of information for surplus lines policies issued in Connecticut: “the number and types of policies issued; for any policy covering real property, the location of such property, and the total premium paid by insureds for coverage under such policy; and the number of policies renewed in the prior year.”

The Act also notably amends the exemptions to the requirements placed on surplus lines brokers for surplus lines placements found at § 38a-741(b)(2). The exemption framework continues to exclude from Conn. Gen. Stat. § 38a-741 flood insurance procured from the National Flood Insurance Program and policies procured for an “exempt commercial purchaser” as defined in Section 527 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Notably, for exempt commercial purchasers, the Act removes the prior conditions that had required the surplus lines broker to disclose to the exempt commercial purchaser “that such insurance may or may not be available from an authorized insurer, that may provide greater protection with more regulatory oversight,” and that the exempt commercial purchaser have “subsequently requested such broker, in writing, to procure such policy from an unauthorized insurer.” The Act also preserves the existing exemption for “any policy of insurance where the broker seeks to procure or place such insurance through an unaffiliated wholesale surplus lines insurance broker,” as established by Public Act 25-87 and outlined in CT Bulletin SL-6.

The passage of the Act follows a trend among states toward lessening the diligent-effort burden placed on licensed surplus lines brokers. For example, Florida removed its diligent effort requirements with the passing of House Bill 1549, effective July 1, 2025. Other states are taking a middle path and seeking to lessen the requirement without removing it all together. In that way, the Ohio legislature introduced House Bill 792 on March 25, 2026, which would reduce the number of declinations needed before a surplus lines placement from five to just one. Troutman will continue to monitor and report on any impactful legislative developments regarding the diligent effort requirement in all U.S. jurisdictions.