Excess & Surplus Insurance - Hard to Place P&C Risk

What is Excess & Surplus Lines Insurance?
E&S, or non-admitted carriers, are a segment of the Property and Casualty (P&C) Insurance Market that allows Organizations and Companies to buy property and casualty insurance for what is classified as hard to place risk, unique risks, or when a client seeks amounts of coverage higher than offered through admitted carriers. Additional names for the E&S market include: special lines, surplus insurance, and hard-to-place insurance. The market is comprised of Property & Casualty Companies that provide insurance that is generally unavailable to organizations in the standard, or admitted market.

What defines non-admitted carriers?
A non-admitted carrier is not licensed by the state, but is permitted to do business in that state. Non-admitted carriers are also referred to as unlicensed carriers. Non-admitted carriers are financially stable companies that are regulated - but not in the same fashion as admitted carriers.

Most states require that non-admitted carriers submit financial information, articles of incorporation, list of officers, and other general details. They also cannot write insurance that is typically available in the admitted market and are not protected by the state guarantee fund.   Non-admitted carriers may pay higher taxes, may only write a policy if it has been rejected by admitted carriers, and the agent placing the business must have a surplus lines license. States maintain a list of approved surplus lines companies, and policies can only be written by companies on this approved list.

Non-admitted carriers are not bound by most of the rate and form regulations imposed on admitted carriers - also known as standard carriers - giving them the flexibility to change the coverage offered and the rate charged without time constraints and financial costs associated with the standard filing process. This benefits both the carrier and the policyholder.

The E&S market is known for developing new and innovative types of coverage types to meet the needs of emerging markets and types of risk. Without the E&S market organizations and businesses would be forced to go uninsured, self-insure their risk exposure or find coverage outside of the U.S.

What defines admitted - standard line carriers?
Admitted Carriers have a license(s) from State Departments of Insurance (for contacts per state see: the National Association of Insurance Commissioners, NAIC)   giving them the authority to write specific lines of insurance in that state. Admitted carriers are stricktly regulated to protect the policyholder against illegal and unethical practices including fraud. In addition, the carrier must contribute to the state quarantee fund. This fund is used to pay for losses from carrier insolvency and or when carriers are unable to pay for he losses of policyholders.

Value of Excess & Surplus Lines
E&S is a very specialized segment of the insurance marketplace. While estimated to be less than 7% of the market, the important roll is in providing consumers coverage when admitted carriers cannot or will no provide it.

Obtaining E&S Coverage
Generally, though not required, it is advised for the Organization or Company in need of E&S coverage to work through a P&C Wholesaler experience in submitting RFPs to E&S Carriers. The wholesaler will have access to a number of markets that can handle a variety of risks. In addition, if they do not have the capacity, they can and will refer the the need to another wholesaler with access to that specific market.