Often when reviewing your insurance program, your agent may provide coverage options that are from non-admitted insurance companies. As an agency, we often get questions from our clients on what a non-admitted company is, and what difference it can make. The following is intended to simplify the difference between a carrier that is admitted in the state, and one that is not.

Admitted or standard market insurance carriers are licensed in the state in which the policy is sold, and must be sold by an agent who is also licensed in that state.

Admitted carriers are required to comply with the states insurance codes, regulations and financial

requirements, including filing their rates with the state Department of Insurance. Their policy forms must also be reviewed and approved by the state.

For a client, one main result of placing insurance with an admitted carrier occurs in the case that the company becomes insolvent. In Georgia, the states insurance guaranty program will pay the claims of clients belonging to the insolvent company, up to the state pools specified limit.

Non-admitted (sometimes referred to as non-standard, excess, or surplus lines) insurance carriers are not required to follow the same state regulations as an admitted carrier, such as filing rates with the state Department of Insurance. However, they do have to prove to be financially able to conduct business. Coverage is accessed by a licensed surplus lines broker in the state who is appointed to work with the non-admitted carrier. A broker is required to make diligent efforts to place coverage with an admitted carrier prior to going to the nonstandard market.

Unlike an admitted carrier, these carriers are not backed by the states guaranty program, and no claims would be paid by the pool if the carrier becomes insolvent. Also, in many cases, clients will be required to pay a surplus lines tax, in addition to a premium, for a surplus lines policy issued.

Since they do not have to file rates or have policy form approval, a non-admitted company can charge according to the risk and exposure, allowing them to take on higher risks that may not meet the guidelines or appetite of a standard carrier. High loss-potential risks, those with loss history, specialty coverage, or a risk in which there is a shortage of capacity in the standard market, are sometimes written with a non-admitted carrier who can be more flexible or tailor a policy to a clients needs.

Outside of a carriers admitted status, there are other important items to take into consideration when comparing insurance options, such as the financial strength and size of a company. A non-admitted carrier may not be less financially sound that an admitted carrier, and vice-versa. Your agent at Potter-Holden is a valuable resource to help you compare all of your options.