Call Us 866.940.1101 ☰ ˟
866.940.1101
Logo
  • Home
  • About Us
    • About Us
    • Employee Directory
    • Partners Page
    • Event Calendar
    • Refer a Friend
  • Get A Quote
  • Products
    • Lawyers Malpractice Insurance
    • Professional Liability Coverage For Attorneys
    • Accountants Professional Liability
    • Dentist Malpractice Insurance
    • Business Owners Policy
    • Cyber Liability Insurance
    • Workers Compensation Insurance
    • Title Agents E&O Insurance
    • Paralegal Malpractice Insurance
  • Testimonials
  • Common Terms
    • Common Terms
    • Frequently Asked Questions
  • Blog
  • Contact
  • Areas We Serve
    • Grand Rapids, MI
    • Detroit, MI
    • Lansing, MI
    • Kalamazoo, MI
Home > Blog > What is Surplus Line Insurance? Also referred to as the "Non-Admitted" or "E&S/ Excess & Surplus"
THURSDAY, JUNE 23, 2016

What is Surplus Line Insurance? Also referred to as the "Non-Admitted" or "E&S/ Excess & Surplus"

Lee NorcrossThis is an excellent article came from the Surplus Lines Association of Illinois describing Surplus Lines insurance carriers:

In order to understand what surplus line insurance is, it is helpful first to understand a few things about the insurance marketplace and to understand what surplus line insurance is not. 

The first player in the marketplace we'll discuss is the insurance company, sometimes referred to as an insurance carrier or insurer. The insurer is the company that actually writes the policy and accepts the risk that something will happen. They collect your premiums and those of other insureds and invest them. If a claim is made, they pay the claim from this pool of collected premiums. 

Insurers are licensed on a state by state basis in the United States. Generally, an insurer must get a license in any state where it wants to write policies. Each state has a Department of Insurance (or similar regulatory body) that regulates these insurers. The regulation takes many forms and varies from state to state, but it can basically be divided into two general areas. First, the regulators monitor the finances and market conduct of the insurers to see that they are financially sound and using fair and honest business practices. Second, they regulate or approve the insurer's policy forms (the actual content of the policies) or the insurer's rates, or both. These insurers contribute to a state fund, called a guaranty fund, that is used to pay claims if any of these licensed insurers were to fail (go bankrupt). 

The next player is the agent or broker (we'll collectively refer to them as producers). If you are an individual or company that needs insurance, the producer acts as the middleman between you and the insurer. The producer is also licensed and regulated by the state. When you tell the producer you need insurance, the producer must try to find you a policy from one of the insurers that is licensed to operate in your state. There are some cases, however, (generally less than 10% of policies nationwide) where the licensed insurers will not accept a risk because it does not meet their internally established guidelines. The risk may be too big, too unusual or substandard. In these cases, a specially licensed producer called a surplus line producer gets involved. Their special surplus line license allows them to procure a policy for you from an insurer that is not licensed in your state. 

Since this insurer is not licensed in your state, they are not regulated by your state's Department of Insurance in the same way licensed insurers are regulated (they are, however, regulated in the state or country where they are domiciled or located). Since they are not strictly regulated by your state, they are generally free from the form or rate regulations imposed on licensed insurers. This gives them the freedom to maintain broader internal guidelines for accepting risks. They have more flexibility to design and price their policies and can, therefore, accept risks that licensed insurers will not. 

In many states, including Illinois, the licensed surplus line producer is required to ascertain that the insurer meets certain financial standards before buying a policy from them. In many other states the Department of Insurance, or some other authority, monitors the financial condition of surplus line insurers and maintains a list of insurers that surplus line producers are allowed to use.  Whether done by the surplus line producer, the state Department of Insurance, or some other entity, this financial monitoring is an important function because if the insurer were to fail (go bankrupt), there is no guaranty fund protection for you. 

It is important to note that these insurers are generally not unable to obtain a license in your state, rather they choose to operate on an unlicensed, surplus line basis.

https://www.slai.org/faq/insured_06.html

 

Posted 3:41 PM

Tags: legal liability, attorney malpractice insurance, lawyers professional liability insurance, attorney malpractice, accountant e&o, title agency e&o, surplus lines, non-admitted insurer
Share |


No Comments


Post a Comment
Required
Required (Not Displayed)
Required


All comments are moderated and stripped of HTML.

NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive
  • 2023
  • 2022
  • 2021
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015
  • 2013
  • 2011

  • lawyers professional liability insurance(429)
  • attorney malpractice insurance(383)
  • attorney malpractice(337)
  • legal malpractice(223)
  • legal liability(134)
  • cyber insurance(102)
  • data breach(92)
  • ethics(87)
  • erp(57)
  • malpractice insurance(54)
  • claims(39)
  • title agency e&o(36)
  • accountant e&o(34)
  • extended reporting period endorsement(30)
  • tail(29)
  • phishing(25)
  • legal malpractice insurance(21)
  • claims made coverage(21)
  • extended reporting period(21)
  • prior acts(21)
  • cyber security(19)
  • cyber liability(18)
  • accountant errors & omissions(18)
  • claims reporting(17)
  • crime insurance(16)
  • ransomware(16)
  • claim prevention(16)
  • attorney protective cle(14)
  • the hartford weekly newsletter(14)
  • attorney protective cle webinar(14)
  • 2022 mcgowan pro cpe webinar for accountants(13)
  • mcgowan webinar series for cpas 2021(12)
  • professional liability insurance(12)
  • retirement tail(12)
  • business owners insurance(11)
  • legal liability insurance(11)
  • fee suits(10)
  • full prior acts(10)
  • attpro tip of the month(10)
  • accountant errors & omissions insurance(10)
  • non-practicing erp(9)
  • bop(9)
  • cyber liability insurance(9)
  • title agent errors & omissions(9)
  • cyber crime(9)
  • claims made(9)
  • prior acts date(8)
  • webinar(8)
  • step rating(8)
  • lawyers(8)

View Mobile Version
Logo
Quick Links
Home Our Products Customer Service Payment Options Common Terms
About Us Refer A Friend Our Carriers Blog Contact Us
Location
2430 Camelot Ct SE
Grand Rapids, MI 49546

Local: 616.940.1101
Toll Free: 866.940.1101
Email: info@L2ins.com
Facebook Twitter Social LinkedIn
© Copyright. All rights reserved.
Powered by Insurance Website Builder