A non-admitted insurer does not have to follow the same rules in underwriting. They also do not have to set the same rates as admitted carriers. One example of a non-admitted insurance provider is Lloyd’s of London. Lloyd’s is a non-admitted insurer in most of the U.S. In fact, Lloyd’s is not even an insurance company. It is an insurance market. But, they are one of the largest insurance providers in the world. Lloyd’s also has top ratings as being financially stable.
Alternate names: excess and surplus insurance, E&S, surplus lines
How Non-Admitted Insurance Works
Non-admitted insurance answers the need for higher risk coverage. Without non-admitted insurance, many people would be unable to get insurance. They might not be able to buy homes or be insured after a string of bad luck. When you buy any type of insurance, it must be sold to you by a licensed person or agency. Non-admitted insurance still is subject to certain laws. It is just not subject to filing rates and other rules. In the U.S., many non-admitted insurance carriers are licensed as “admitted” in one or more states. This allows them to carry on business in other states. Also, many admitted insurers have non-admitted insurers within their family of companies. If you run into trouble and need help with a non-admitted insurance policy, you should always start by asking your broker or agent. If that fails, you contact the state insurance commissioner’s office. If they are able to assist you, they may refer you to the state surplus lines office.
Types of Non-Admitted Insurance
Non-admitted insurance can apply to many types of insurance products. Some examples are:
Home insurance where an area is considered a high-risk zone (for instance, where the risks of tornado, hurricanes, and wildfires are high) Professional liability insurance High-value home insurance Insurance for people who do not meet standard underwriting criteria (for instance, those with too many claims) Insurance for non-U.S. citizens Long-term care policies
Benefits of Non-Admitted Insurance
Since rates are not regulated by the state, insurers do not have to submit their rates. Further, the policy forms and products are not regulated by the state. These insurers can offer options that help states extend coverage in high-risk markets. This can help people who need to use FAIR plan insurance. This is state-mandated insurance making coverage available to those living in high-risk areas. Some of this coverage may be with non-admitted insurers. Depending on the situation, the rates for non-admitted insurance may cost more. But they may offer coverage that a standard insurer would not.
Are These Insurers Higher Risk?
Non-admitted insurers are not necessarily risky or unstable. They may be better equipped to handle large losses. Also, they may have more experience in high-risk environments than standard insurers. Non-admitted insurers are not subject to the local rules on rate issues. It may allow the insurer to collect rates appropriate to the risk. This in turn may help them to turn a profit. That may make some of these firms more stable. In some cases, a non-admitted insurer has a stronger rating than an admitted one. This can show they are more able to handle claims and losses.
