Understanding Admitted and Non-Admitted Insurance Markets

24 May 2024

When navigating the insurance landscape, it’s essential to understand the distinction between admitted and non-admitted insurance markets. These two categories define the regulatory status of insurance companies and the products they offer, impacting everything from policyholder protections to premium costs. This article will delve into the differences between these markets and explore why non-admitted insurance policies often come with higher costs.

Admitted Insurance Market

Admitted insurers are those that are licensed and regulated by the state insurance department in the states where they operate. Here are the key features of admitted insurance:

Key Features

  • State Regulation: Admitted insurers must comply with state insurance laws and regulations, which include financial requirements, policy forms, and rate approvals.
  • Standard Products: They typically offer insurance products that are standard and widely available in the market.
  • Policyholder Protection: Policyholders are often protected by state guarantee funds. These funds act as a safety net, ensuring that claims are paid even if the insurer becomes insolvent.


  • Regulatory Oversight: The stringent regulations ensure that admitted insurers maintain a certain level of financial stability and reliability.
  • Policyholder Security: The presence of state guarantee funds provides an additional layer of security for policyholders.

For more details on admitted insurance, visit Inszone Insurance Services.

Non-Admitted Insurance Market

Non-admitted insurers, also known as surplus lines or excess lines insurers, operate differently from their admitted counterparts. Here’s what sets them apart:

Key Features

  • No State Licensing: Non-admitted insurers are not licensed by the state insurance department where they sell insurance. However, they must meet certain financial standards to ensure they can fulfill their obligations to policyholders.
  • Specialty Products: These insurers often offer specialty or high-risk insurance products that are not readily available in the admitted market.
  • Limited Policyholder Protection: Policyholders may not have the same level of protection as those with admitted insurers since they are not covered by state guarantee funds.


  • Flexibility: Non-admitted insurers can provide coverage for risks that admitted insurers typically avoid, offering more tailored solutions for unique or high-risk needs.
  • Innovation: With fewer regulatory constraints, non-admitted insurers can innovate and create specialized insurance products that meet specific demands.

To learn more about non-admitted insurance options, check out Inszone Insurance Services.

Why Non-Admitted Insurance Policies Are More Expensive

Non-admitted insurance policies often come with higher premiums, and several factors contribute to this cost difference:

Factors Contributing to Higher Costs

  • Risk Profile: Non-admitted insurers specialize in high-risk or unique coverage types. These high-risk policies typically come with higher premiums to compensate for the increased likelihood of claims.
  • Regulatory Flexibility: Operating outside of state regulations allows non-admitted insurers to adjust premiums based on perceived risk without strict regulatory oversight, leading to potentially higher prices.
  • Limited Competition: With fewer insurers offering specialized or high-risk coverage, the lack of competition can drive up premiums.
  • Additional Costs: Non-admitted policies may include extra fees or surcharges to cover administrative costs and compliance expenses associated with operating outside traditional regulatory frameworks.
  • Lack of Guarantees: The absence of state guarantee funds for non-admitted insurers can be perceived as an added risk, which is often reflected in higher premiums.


Here’s a list of downsides for both Admitted and Non-Admitted Insurance Carriers:

Admitted Insurance Carriers:

  • Higher Premiums: Due to regulatory requirements and the cost of obtaining approval for their policy forms and rate increases, admitted carriers often charge higher premiums.
  • Limited Coverage Options: They may not offer coverage for businesses or individuals facing unique or high-risk situations.
  • Regulatory Constraints: Admitted carriers may face limitations due to the regulatory compliance they must follow, affecting the flexibility of their coverage options.

Non-Admitted Insurance Carriers:

  • Insolvency Risk: If the company becomes insolvent, the state does not cover the non-admitted markets and insurance carriers, which means your claim may not be paid.
  • Variable Pricing: More variability in non-admitted products can make it difficult to compare pricing or coverages.
  • Higher Costs: Premiums are often higher than standard counterparts and may require additional state fees and/or taxes.
  • Lack of Tax Breaks: As a consumer, you may not get the same kinds of tax breaks as you could with an admitted product.

It’s important to weigh these downsides against the unique needs of your business when choosing between admitted and non-admitted insurance carriers. Consulting with an insurance professional can provide further guidance tailored to your specific situation.


The higher cost of non-admitted insurance policies reflects the increased risk, regulatory flexibility, limited competition, and additional expenses associated with this segment of the insurance market. Understanding these factors can help businesses and individuals make informed decisions when choosing between admitted and non-admitted insurance options.

For more insights and a detailed comparison of admitted and non-admitted insurance policies, visit Inszone Insurance Services.

Larry Jefferey - Inszone Insurance Senior Commercial Lines Account Manager

Larry Jeffery

Senior Commercial Insurance Specialist

Larry Jeffery is a Senior Commercial Insurance Specialist at Inszone Insurance Services, joining Inszone in August 2023. Larry’s extensive background in the real estate sector spans over two decades, beginning with acquiring his Real Estate sales license in 2001. Initially, he worked as a residential loan officer and later became a partner in his own brokerage, leading a high-level team of loan originators.

Through the financial challenges of 2008, Larry excelled in handling a substantial portfolio of bank-owned real estate, successfully selling over 900 homes. Acquiring his Broker’s license in 2013, he spent an additional decade originating mortgages, facilitating financing for numerous clients, and engaging in property transactions. Larry’s experience has enriched his professionalism and dedication to both past and future clients. Transitioning into the insurance industry, Larry seamlessly continues his commitment to serving customers’ needs with a fresh perspective. Larry’s outstanding performance has earned him numerous accolades, including multiple years as a Top Performer and Salesman of the Year.

In his free time, Larry cherishes moments with his family, enjoys golfing, and indulges in his passion for surfing while exploring various destinations around the world.

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