Going to Market: Admitted and Non-Admitted Carriers

October 21, 2021

The hard insurance market over the last several years has resulted in higher premiums, diminished capacity, restrictions in coverage terms and conditions, and greater underwriting scrutiny in most product lines and classes of business. Some product lines (for example, Excess Liability, Commercial Auto, Property, D&O, Cyber, and Professional Liability) and industries have been more affected than others, particularly where there have been significant losses. Multi-million-dollar verdicts, pro-defense juries and social inflation have driven up settlements and have insurers looking for rate adequacy, while other insurers, especially those in the admitted market, have exited certain industry sectors altogether or no longer write specific lines. Often, the non-admitted or Excess & Surplus Lines (E&S) market steps in to provide products difficult to place in the standard or admitted market. 

Admitted carriers are licensed by state regulators. The state commissioner approves the rates and forms of the carrier’s product to be sold to the public. The admitted carriers are backed by the state’s guaranty fund in the event of insurer insolvency. 

Non-admitted carriers are not state regulated but rather fall under the jurisdiction of the state surplus lines office. While non-admitted carriers don’t undergo the same long approval process as their admitted counterparts, they still need to submit company information such as articles of incorporation, a list of officers, and various financial information to the surplus lines office. They are also taxed by the state and all agents working in non-admitted companies need to be licensed brokers. These brokers are responsible for ensuring the surplus lines insurer meets eligibility criteria to write policies in the state and making certain that the insurers they represent are financially sound.

Both types of carriers are evaluated and graded by credit rating agency A.M. Best for their financial strength and ability to meet their insurance obligations. Grades range from “A++” to “S.” 

Two Markets Provide More Options, Coverage Availability

Having both admitted and non-admitted carriers is good for the insurance industry as it provides options and allows for innovative products to be developed. The E&S/non-admitted market is responsible for insuring hard-to-place risks and fills in the gaps when the admitted market is unavailable in a specific niche. Risks typically written in the surplus lines market fall into three basic categories1:

  • non-standard risks, which have unusual underwriting characteristics
  • unique risks for which admitted carriers do not offer a filed policy form or rate
  • capacity risks where an insured seeks a higher level of coverage than most insurers are willing to provide

Manchester Specialty Programs is proud to partner with a select group of “A++” and “A” rated or better financially sound insurance carriers to cover the insurance needs for Home Care, Allied Health and Human/Social Services organizations. For more information about our portfolio of business insurance solutions for the broad spectrum of home health care, hospice, and medical staffing organizations, please contact us at 855.972.9399.

1Wholesale & Specialty Insurance Association (WSIA)