There are two types of property and casualty insurance carriers: admitted and non-admitted. What sets these apart is whether the carrier meets the regulations set by a state’s Department of Insurance (DOI). Both types serve a purpose but have different values and risks. Learn more to determine the most fitting insurance solution for your needs.
An admitted insurance carrier complies with state regulations, meaning that the state’s DOI reviews and approves the company’s forms, rates, requirements and claims handling. The provider follows strict guidelines to meet this classification.
Pros: If the admitted carrier becomes insolvent and can’t pay claims, the state insurance fund will cover the claims (up to an established limit). More good news for policyholders is that they can appeal to the state insurance commissioner if a claim is not handled properly. They may also avoid paying some fees and taxes when purchasing a policy from an admitted insurer.
Cons: The strict requirements limit the carrier’s flexibility in setting rates and what they can insure. This may result in higher premiums, and they may be unable to provide coverage for complex or high risks.
A non-admitted insurer does not necessarily comply with the state DOI. Don’t be misled by the name — these carriers are legitimate and are regulated by the Surplus Lines Offices (instead of the state). An insurance provider can be admitted in one state but non-admitted in another. They are also known as surplus lines carriers or excess lines carriers.
Pros: Non-admitted insurers operate with less strict regulations, which means they have greater flexibility in setting rates and covering unique risks such as hurricanes, wildfires, tornadoes and earthquakes.
Cons: The downside is that the state will not pay claims if the provider becomes insolvent through bankruptcy or financial failure. Also, the policyholder does not have the right to appeal to the state if a claim is not handled properly.
| Admitted | Non-admitted | |
|---|---|---|
| Regulated by | State Department of Insurance | Surplus Lines Office |
| Strict regulations | Yes | No |
| State covers claims if insurer becomes insolvent | Yes | No |
| Offers high-risk and unique coverage | Not as likely | Likely |
| Policyholder has a right to appeal to the state insurance department if a claim is not handled properly | Yes | No |
| Premiums | Typically higher | Typically lower |
There’s no one-size-fits-all solution — choosing between admitted and non-admitted insurers depends on an organization’s unique needs. Here are a few examples of various scenarios (but keep in mind that coverage will look different for each organization):
You can check ratings from AM Best,1 a third-party credit rating agency specializing in the insurance industry. Carriers are graded on a scale from A++ to D regarding their ability to meet ongoing insurance obligations.2
The stability of an insurance carrier is not determined by its status as admitted or non-admitted. For example, a non-admitted insurer with a B+ rating is more stable than an admitted insurer with a C- rating.
Property and casualty insurance can be challenging to navigate as you explore admitted and non-admitted insurers. At GuideStone®, we help ministry partners understand insurance options and find solutions. We’re your advocate in risk mitigation for all areas of ministry, including best employment practices, auto coverage, religious freedom and more. For more information, contact us at PCSalesSupport@GuideStone.org or (214) 720-2868, Monday through Thursday, from 7 a.m. to 4:30 p.m. CT and Friday, from 7 a.m. to 4 p.m. CT.
This article is for informational purposes only. It is not intended to be construed as legal advice. Readers should use this article as a tool, along with best judgment and any terms or conditions that apply, to determine appropriate policies and procedures for your church’s risk management program.
1AMBest.com
2AMBest.com/ambv/ratingmethodology/OpenPDF.aspx
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