Alien Insurer

The world's specialist insurance and reinsurance marketplace, established in London in the 17th century. Lloyd's is not itself an insurance company but rather a marketplace where members join together in syndicates to underwrite insurance risks. The market separates capital provision (members) from underwriting expertise (managing agents). Lloyd's operates through a unique three-tier capital structure called the Chain of Security, which backs all policies written through the market. The Corporation of Lloyd's provides infrastructure and regulatory oversight, while syndicates conduct the actual underwriting. Lloyd's is known for insuring unique, complex, and high-value risks that may be difficult to place in standard markets.

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 National Association of Insurance Commissioners, an organization of state insurance regulators from all 50 states, the District of Columbia, and U.S. territories. The NAIC develops model laws and regulations, provides regulatory support and education, maintains insurance industry databases, and coordinates regulatory oversight across jurisdictions. While the NAIC itself does not have regulatory authority, its model acts and guidelines are frequently adopted by state legislatures and insurance departments, creating consistency in insurance regulation across the United States. The NAIC oversees initiatives including risk-based capital standards, financial reporting requirements, market conduct standards, and the Quarterly Listing of Alien Insurers eligible for surplus lines placements.

An insurance company that is licensed to do business in a state other than its domiciliary state. From the perspective of any given state, a 'foreign' insurer is one incorporated or organized in a different U.S. state. For example, a company domiciled in Connecticut writing business in New York would be considered a foreign insurer in New York. Foreign insurers must obtain a Certificate of Authority from each state where they wish to write business and comply with that state's regulatory requirements. This term is distinct from 'alien insurer,' which refers to companies formed in countries outside the United States. Most insurance companies operate as foreign insurers in multiple states beyond their domiciliary state.

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

The insurance company that provides coverage and agrees to pay for covered losses in exchange for premium payments.

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.