What characterizes a non-admitted insurance company?

A non-admitted insurance company is characterized by its ability to operate without obtaining a license from the state in which it provides coverage. These companies typically engage in business through surplus lines brokers, who are licensed to place policies with non-admitted insurers. This arrangement allows for greater flexibility in terms of the types of risks that can be insured, including those that might not fit into the standard market offered by admitted insurers.

Non-admitted insurers are important because they can provide coverage for unique or high-risk situations that are not covered by traditional insurance policies. Due to the nature of their operation, these companies do not have the backing of state guaranty funds, which typically protect policyholders of admitted insurers. This means that policyholders of non-admitted companies do not have the same level of security in terms of financial protection if the company were to go insolvent. Additionally, non-admitted insurers might offer various types of insurance products beyond just health insurance, contradicting the idea that they provide only health insurance products.