April 17, 2008 
Q - What’s the difference between standard insurers & non-standard (E&S) insurers.
Also, you hain’t posted anything new in a dogs age, where you been bro? - Jumper
Thanks for the question Jumper; where have I been? I work for a small insurance company that sells auto insurance. For the past month or so, courts in several states have been pumping out opinions that have made us redo some of our internal policies; since I write the business processes, I’ve been busy.
Back to your first question:
E&S (excess and surplus lines) usually refers to the brokers who sell insurance through non-admitted insurers.
The difference between admitted and non-admitted insurers:
An admitted insurer is licensed to do business in a state by the state’s own department of insurance. As part of licensing, the insurer supplies the state’s insurance examiners with financial records and documented business practices (forms, underwriting guidelines, rates). Once approved the insurer is under the wings of the state’s insurance guarantee program. If the insurer becomes insolvent, the other admitted insurers in the state will step in and absorb any outstanding claims. In return, the insurer agree to pay premium tax for earned premium in that state and comply with state guidelines.
Non-admitted carriers are not approved by the states. They usually offer unique coverage or insure high risk type businesses at a higher price. Since the state does not collect premium tax, the broker charges state sales tax on the paid premium. Most states will require the agent selling the policy to get from the insured a signed (and notorized) affidavit stating they understand that they’re buying from a non-admitted insurer.
If the non-admitted insurer goes insolvent, you’re seriously out of luck: best case, you lose premium money and your coverage, worst case your claims don’t get paid. One of the duties of an E&S broker is to monitor the health of the non-admitted insurers they sell policies through.
Thanks for the question.
