What is the Difference Between an Admitted Carrier and a Non-Admitted Carrier?

First, it’s important to understand what each of these terms means. This article dives into their differences and explains the benefits of each.

What is an Admitted Carrier?

An admitted carrier is an insurance company that has received a license from the state department of insurance for the authority to write specific lines of insurance. Sometimes they are referred to as a standard carrier.

These companies are also bound by rate and form regulations and are strictly regulated. This protects policyholders from a variety of illegal and unethical practices, including fraud. Admitted carriers are also required to financially contribute to the state guarantee fund. This fund is used to pay for losses if an insurance carrier becomes insolvent or unable to pay the losses due to their policyholders.

What is a non-admitted Carrier?

An non-admitted carrier is not required to be licensed by the state, but is allowed to do business in that state. Sometimes, non-admitted carriers are also referred to as E&S or unlicensed carriers. However, E&S carriers are financially stable companies that are regulated in other ways. 

Non-admitted carriers are not bound by most of the rate and form regulations imposed on standard market companies. This allows them the flexibility to change the coverage offered and the rate charged. Non-admitted companies can do this without time constraints and financial costs associated with the filing process. This is good for both the company and the policyholder. 

How Are Admitted Carriers and Non-Admitted Carriers Different?

Admitted and Non-admitted carriers have some similarities. They are both insurance companies. They are both allowed to do business in a specific state. Both are regulated by states they do business in.

To be an admitted carrier, an insurance company must comply with all of the regulations set by the state that has admitted them. In contrast, non-admitted carriers are not backed by the state. They are not required to sell policies that adhere to the same standards as admitted carriers.

There are benefits to working with each type of carrier. When purchasing policies from admitted carriers, consumers often experience the omission of certain fees and taxes. Consumers also have the right to appeal to the state if policies have been handled improperly. 

Non-admitted carriers are not bound by most of the rate and form regulations imposed on admitted carriers. Due to these less rigid standards, non-admitted carriers have more flexibility when designing coverage, selling policies, and writing risks. Companies that are struggling to find coverage in the admitted market often have more success in the non-admitted market.

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