Surplus Lines

An insurance company not licensed in a particular state but allowed to provide coverage for risks that admitted carriers won't insure, typically through surplus lines brokers. Also called 'non-admitted' or 'excess and surplus' carriers.

An insurance company that is licensed by a state's insurance department to do business in that state. Admitted carriers must comply with state regulations including rate and form approval requirements, financial solvency standards, and market conduct rules. Their policies are backed by the state guaranty fund, which provides protection to policyholders in the event of insurer insolvency. Admitted carriers file rates and policy forms with state regulators for approval before use. They are subject to regular financial examinations and must meet ongoing reporting requirements. The admitted market represents the standard insurance marketplace, as distinguished from the surplus lines (non-admitted) market.

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 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.