Learn the difference between admitted and non-admitted markets in commercial insurance.

One common misconception is that the carriers themselves are either admitted or non-admitted.
The admitted and non-admitted classification refers to the insurance product itself.
The main difference between the two is related to the regulations that must be followed by carriers who sell admitted products.
When a product is admitted that means that the commissioner has approved the rates and forms of the insurance product that is being sold to the public in your state.
While this definition can make admitted products appear to be more legitimate, that’s not always the case.
The non-admitted classification is an administrative one and has no bearing on the overall quality of the product or the financial stability of the carrier offering it.
An admitted insurance company is backed by the state, which means:
* The insurance company must comply with the regulations set by your state’s department of insurance.
* If the insurance company fails financially, the state will step in to make payments on claims as necessary.
Non-admitted carriers are often referred to as “excess and surplus line carriers,”
The products they sell are not regulated by the state insurance commissioner and instead are regulated by the State Surplus Lines Office.
The excess and surplus market was created to cover risks that standard markets does not want to cover.
A non-admitted insurance company isn’t approved by the state, which means:
* The insurance company does not necessarily comply with state insurance regulations and instead complies with the State Surplus Lines Office.
* If the insurance company becomes insolvent, there is no guarantee from the state that claims will be paid.
Some of the largest insurance providers are non-admitted companies and can be just as financially secure, if not more so, than admitted companies.
Deciding the approach a company should follow comes down to classifying the risks correctly and underwriting thoroughly with the business owner in order to make sure all aspects of the business operations are covered accurately.
Sometimes that will fit with an admitted insurance product and other times it will fit better with a non-admitted insurance product.
Choosing a high-quality product is what’s most important when making this decision, regardless of whether the carrier is offering an admitted or non-admitted solution.
This includes making sure that the insurer can cover all of your risks appropriately, that the terms of the coverage are competitive, and that the company is financially strong.
Please contact us with further questions on this or any other risk management topic. We will see you again soon!