What is the broker saying when he asks if the company is "Admitted paper" or Surplus Lines paper?
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Posted: Thu Oct 07, 2010 07:34 pm Post Subject:
An "admitted" carrier is one that has received what's known as a "certificate of authority" within a particular state to market it's insurance products through regular producers. So commonly, admitted insurers are known as "authorized" insurers. Admitted and authorized, while not exactly the same things, are typically used interchangeably.
"Surplus Lines," on the other hand, is coverage that is not normally available in the admitted markets, usually because the risk is too specialized, unusual or non-standard. Think Lloyd's of London for example. Lloyd's of London is not an admitted carrier in the U.S.- all of their business is written through a special kind of agent known as a "Surplus Lines Agent." These agents normally work through what's called a "general agency" within a geographic region. General agencies will normally seek regular producers to send them non-admitted type of exposures and will have a contract to split commissions and other things arising out of the relationship between the regular producer and the surplus lines agent. Surplus lines agents have a different license classification than regular producers and are usually the only ones that can deal with the non-admitted carriers.
Finally, if coverage is purchased through a non-admitted insurer, most states will provide no protection under the state Guaranty Associations (think the insurance version of the FDIC) for contracts purchased through a non-admitted carrier.
Posted: Thu Oct 07, 2010 07:34 pm Post Subject:
An "admitted" carrier is one that has received what's known as a "certificate of authority" within a particular state to market it's insurance products through regular producers. So commonly, admitted insurers are known as "authorized" insurers. Admitted and authorized, while not exactly the same things, are typically used interchangeably.
"Surplus Lines," on the other hand, is coverage that is not normally available in the admitted markets, usually because the risk is too specialized, unusual or non-standard. Think Lloyd's of London for example. Lloyd's of London is not an admitted carrier in the U.S.- all of their business is written through a special kind of agent known as a "Surplus Lines Agent." These agents normally work through what's called a "general agency" within a geographic region. General agencies will normally seek regular producers to send them non-admitted type of exposures and will have a contract to split commissions and other things arising out of the relationship between the regular producer and the surplus lines agent. Surplus lines agents have a different license classification than regular producers and are usually the only ones that can deal with the non-admitted carriers.
Finally, if coverage is purchased through a non-admitted insurer, most states will provide no protection under the state Guaranty Associations (think the insurance version of the FDIC) for contracts purchased through a non-admitted carrier.
InsTeacher 8)
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