What characterizes a non-admitted insurer?

A non-admitted insurer is specifically characterized as an insurance company that is not licensed to operate in a particular state but is authorized to provide surplus lines insurance within that state. Surplus lines insurance is used when coverage cannot be obtained from admitted insurers due to unique risks, regulations, or availability of products. Non-admitted insurers typically have greater flexibility in underwriting and can offer policies that might not be available through licensed companies.

The distinction lies in the regulatory framework; non-admitted insurers are not subject to the same state regulations as admitted insurers, which allows them to operate in more specialized markets. This is particularly important in the context of surplus lines, where traditional insurance companies may be unable or unwilling to offer coverage due to high risk or unusual exposures.

Understanding this concept is crucial for anyone involved in the insurance industry, particularly in states like New Jersey, where surplus lines play a significant role in providing necessary coverage to unique or high-risk clients.