Which statement best describes the relationship between surplus lines and licensed insurers?

Surplus lines are insurance products that are utilized when coverage cannot be obtained from licensed insurers within the state's admitted market. This typically occurs for risks that are considered non-standard, unusual, or high-risk, which licensed insurers may not be able or willing to insure due to various reasons such as underwriting guidelines or capacity limitations.

In New Jersey, as in many other states, surplus lines brokers are allowed to place coverage with non-admitted insurers, which do not hold a state license but are still permitted to operate in the surplus lines market. Thus, the essential role of surplus lines is to provide a solution for insurance needs that licensed insurers cannot meet, making this statement the most accurate description of their relationship.

The other options don't correctly reflect the dynamics at play in the surplus lines market. They suggest either incorrect operational norms or misrepresent the regulatory status of brokers in relation to licensed insurers. Understanding this relationship is key for anyone engaged in surplus lines practices or those preparing for examinations in this field.