Admitted Carrier

Insurance placed with carriers not licensed (admitted) in the state where the insured risk is located. Non-admitted insurers, also called surplus lines insurers, are not subject to state rate and form approval requirements, giving them flexibility to underwrite unique or high-risk exposures. However, they must meet financial requirements and be listed on the state's approved eligible surplus lines insurer list. Non-admitted policies are not protected by state guaranty funds in the event of insurer insolvency, though historical insolvency rates for surplus lines carriers are low. Non-admitted insurance can only be placed after a surplus lines broker conducts a diligent search in the admitted market and documents that coverage is not available from admitted carriers.

The non-admitted insurance market for risks that cannot be placed in the standard admitted market due to unique characteristics, high risk, or lack of available coverage. Excess and surplus lines insurers are not licensed (admitted) in the state where the risk is located, which provides them flexibility in rates and policy forms not subject to state prior approval requirements. However, they must meet financial requirements and are listed on state-approved eligible surplus lines insurer lists. The E&S market serves as a critical safety valve for the insurance system, providing coverage for unique, high-risk, or emerging exposures. Common E&S placements include high-value properties, unusual liability risks, and specialized commercial coverages. The U.S. surplus lines market exceeded $131 billion in direct premiums written in 2024, representing approximately 12% of the total property and casualty market.

A funding mechanism employed by states to provide funds to cover policyholder obligations of insolvent insurance companies. State guaranty associations are established by state law and funded by assessments on insurance companies licensed in that state. When an admitted insurer becomes insolvent, the guaranty fund steps in to pay covered claims up to statutory limits, ensuring policyholders receive benefits they were promised. Coverage limits vary by state but typically range from $300,000 to $500,000 per claim. Guaranty fund protection applies only to policies issued by admitted carriers; surplus lines (non-admitted) insurance is not covered by guaranty funds. All licensed insurers in a state are required to participate in and contribute to the state guaranty association.

A license issued by a state insurance department that authorizes an insurance company to transact insurance business in that state. Also called a license to do business, the certificate of authority is granted after the insurer demonstrates it meets the state's financial, organizational, and regulatory requirements. The certificate specifies which lines of insurance the company is authorized to write. Insurers must maintain compliance with ongoing requirements including financial reporting, examinations, and solvency standards to keep their certificate of authority in force. Companies holding a certificate of authority in a state are considered 'admitted' carriers in that state and are subject to full state regulatory oversight.

A business professional who analyzes probabilities of risk and risk management, including calculation of premiums, dividends, and other applicable insurance industry standards.

The process by which an insurer evaluates the risk of insuring a person or property and determines coverage terms and premium rates.

The ratio of losses paid plus loss reserves to premiums earned, used by insurers to measure underwriting profitability and pricing adequacy.

The sum of the loss ratio and expense ratio, measuring an insurer's overall underwriting profitability. A ratio below 100% indicates underwriting profit.