What defines a surplus lines broker?

A surplus lines broker is specifically characterized by their ability to place insurance policies with non-admitted insurers. Non-admitted insurers are those that have not been approved to do business in a particular state, which often allows them to offer coverage for specialized or high-risk industries that standard, admitted insurers might not cover. This role is crucial in the insurance market because it provides access to policies for risks that may be too unusual or risky for traditional insurance companies, thereby filling a gap in the insurance market.

Surplus lines brokers are subject to specific regulations that ensure they can operate lawfully while placing these types of policies, often needing to be licensed in the states where they do business. Their expertise allows them to navigate the complexities associated with non-admitted insurance markets, which are essential for businesses or individuals seeking coverage for unique or high-risk situations.