Admitted / Non-admitted / Excess and Surplus 101

This page is meant to serve as a 101 educational resource for Admitted / Not-admitted / Excess and Surplus insurance.

Admitted Markets / Products

Admitted insurance carriers are licensed by the State Department of Insurance or insurance commissioners where they operate. This means the products offered by these insurance carriers comply with their state’s regulations. The state also verifies their: Policy forms, Rates and Requirements.

On top of this, if the admitted insurance company fails, the state’s insurance fund will help make payments on claims if needed. This guarantees coverage for your small business.

Some of the benefits that come from getting coverage from an admitted insurance company include:

• The state guaranteeing your claims will be covered through the state guaranty fund if the insurance company fails
• Having the option to appeal a decision with the state department of insurance if you think your insurance company didn’t handle a claim correctly

While admitted insurance is a great option for some businesses, certain businesses will require more flexibility in coverage options. This is especially true if the small business faces unique or very specific risks on the job. In this case, admitted insurance may not be able to provide coverage for that business.

A carrier can have both Admitted and Non-admitted/E&S products (insurance policies) that they sell.

Non-admitted markets

Non-admitted carriers do business through wholesale brokers in states where they do not have insurance licenses. This means they aren’t required to follow the same state regulations as admitted carriers. It also means that if the insurance company fails, the state would not step in to make payments on claims. However, non-admitted insurance carriers are regulated by the state surplus lines office.

The benefit of working with non-admitted companies is that you’ll have more flexibility when you’re choosing coverage. This can allow you to get coverage for risks that may be complicated or not typically covered by insurance companies. For example, if your business is located in an area that’s high risk for tornados, hurricanes or other natural disasters, you may need to work with a non-admitted insurance company for property coverage.

Non-admitted markets and insurance carriers are not covered by the state if the insurance company becomes insolvent. In this situation, your claim may not be paid. This is why it’s often considered high risk to work with a non-admitted insurance carrier.

Excess & Surplus (E&S) Lines

Excess & Surplus lines (E&S) is a specialty market that insures things standard/admitted products won't cover. The difficult or high-risk exposures in which E&S carriers specialize may range from a mobile home or a day care center to a multinational oil company and anything in between.

Excess & Surplus vs Non-Admitted Markets

In the insurance industry, the terms "non-admitted" and "E&S" (Excess and Surplus) are related but not exactly the same. They both refer to a segment of the insurance market that deals with risks not typically covered by standard/admitted products of insurance carriers, but they have specific meanings:

1. Non-Admitted Insurance: A non-admitted insurance carrier is one that is not licensed by the state insurance regulatory authority in the state where the policy is written. Non-admitted insurers are often used when the risk is too high or too unusual for standard (admitted) insurers. Policies from non-admitted carriers are not backed by state insurance guaranty funds, meaning if the insurer becomes insolvent, claims might not be paid.
2. E&S (Excess and Surplus) Lines Insurance: E&S insurance refers to a specialized market that provides coverage for risks that cannot be insured in the standard (admitted) market due to their unusual or high-risk nature. E&S insurers are often non-admitted, but the key aspect of E&S insurance is the nature of the risks it covers, rather than the regulatory status of the insurer.

In practice, many E&S insurers are non-admitted because they specialize in unconventional risks and thus operate outside the standard regulatory framework. However, the distinction lies in the type of risk they insure (E&S) versus their regulatory status (non-admitted).