Abram Interstate Insurance Services, Inc., CMGA

Helping Independent Insurance Agents Since 1996

Why Write Non-Admitted Surplus Lines Insurance?

Published on January 26, 2016

Surplus Lines insurance Abram Interstate

For insurance agents and the general public, the term “non-admitted” can feel foreign and second-rate when it comes to a type of insurance. Many agents miss out on huge opportunities for business because they don’t understand, and therefor are not comfortable writing non-admitted (or “Surplus Lines”) insurance business. The reality is, Surplus Lines insurance is not second-rate at all, it’s merely different, and opens up doors to more markets than are available in the admitted sector.

One of the biggest misconceptions about non-admitted insurance is that “non-admitted” means un-regulated. THAT IS NOT TRUE. Non-admitted DOES NOT MEAN Non- Regulated.

Let’s back up. Admitted insurance carriers in any particular state hold a license in that state and therefore, their policies in that state are covered by the state fund in case the company becomes insolvent.

Well, that sounds like a good thing, right? Of course it is.

But non-admitted surplus lines carriers, while not licensed in that state, are allowed to do business within the state and they are still regulated in several ways. States also maintain a list of approved surplus lines companies, and policies can only be written by companies on the approved list.

The A.M. Best organization rates insurance carriers based on their financial strength and size based on policyholder reserves. Many times these non-admitted Surplus Lines Carriers will actually have better financial strength than admitted carriers, and this will be reflected in their A.M. Best rating.

Additionally, according the the American Association of Managing General Agents (AAMGA), studies including those by the respected A.M. Best organization, show that the percentage of excess and surplus line carriers that become insolvent is lower than the percentage of admitted carriers that suffer the same fate.

But why would you choose a Non-admitted Surplus Lines policy for your customer over an admitted one?  The AAMGA provides a great list of possible reasons that you may not find the coverage your customer needs in the admitted market, but that you could find that coverage in the Excess and Surplus Lines Market:

  • The risk does not meet the guidelines of the standard market due to age, location, loss history or cancellation;

  • The policy limits exceed the guidelines for the standard market;

  • The risk is “outside the box” of what the standard carriers are comfortable writing. Sometimes, this is referred to as an “unusual risk”, as there is just no other way to describe pet insurance, coverage for a hole-in-one event, protection for an amusement park, etc.;

  • The risk is “extraordinary” and the standard carriers may not be comfortable covering such a risk. Usually these are very large exposures with equally high potential for loss such as aviation liability insurance, protection for a demolition business, etc.

This is why Surplus Lines carriers are allowed to write business as they do — because their offerings are different enough from the admitted markets, so they add options for you and your customers that the Admitted Insurance markets simply cannot.

If you’ve never entered into the Surplus Lines Market, we at Abram Interstate are experts that are here to help you. We know it can be a little misunderstood, but our experienced account managers are here to help you through the process to the open door of more business opportunities and ways to help your customers get the coverage they need.

Abram Interstate Insurance Services, Inc. is a specialty Wholesale Insurance Broker that’s ready to partner with you to service your customers’ insurance needs.   We are committed to providing solutions to a variety of risks in the interest of helping people. Let us work with you.

Chat with us online now about your risks.

Quote Online Today!

For more information on non-admitted insurance carriers and policies, visit the AAMGA’s Frequently Asked Questions Page HERE to learn more.


Abram Interstate Insurance Services, Inc. is a California wholesale insurance broker (CMGA) that has licensing and expertise to place business in both admitted and non-admitted markets for Personal Lines Insurance, Commercial Lines Insurance, and Agribusiness Insurance in California and surrounding areas.

Quote Online Today.