Surplus Lines Insurance VS Regular Insurance Carriers

As a fiduciary for clients and potential clients, insurance agents need to know the difference between these types of carriers.

Regular insurance carriers, which are admitted state carriers, will follow state regulations on what they can charge and the risks they cannot cover. Surplus lines carriers, in some cases, are not state admitted but can take on higher risks and rate according to the risk.  The insurance advisor should always look at the carrier’s financial strength for both admitted and non-admitted carriers.

More information on surplus lines insurance includes the section of the market that allows someone to buy property and casualty, life insurance, as well as other markets, and is also called specialty lines or surplus insurance and is for hard to place markets. Surplus lines carriers provide coverage for both individuals and businesses.

More information on admitted insurance carriers includes the section of the market for insurance carriers that have to follow state agency departments that can step in to make claims payments on behalf of the company.

Lloyd’s of London, with an A+ rating from Standard & Poor’s, AA- from Fitch and A from A.M. Best, has 24% + of this market.  They have billions in surplus lines premiums and are called an Alien insurer, while other insurers in the United Kingdom make up the rest of the surplus lines market. Other examples of this type of carrier include American International Group, Liberty Mutual, Chubb INA Group, Berkshire Hathaway, USA Group and Markel Corporation Group.  Surplus Lines Brokers, do not receive a rating from the rating companies, but rather rely on the financial ratings of the Lloyd’s market or other non-admitted carrier they might use.

One example of common surplus lines coverage is for flood insurance through the Natural Catastrophe Insurance program which offers an alternative to the Federal Emergency Management Agency (FEMA) flood Insurance program.

Insurewiz can cover almost any risk in the life and health markets.  These include high limit disability income for individuals, businesses, and athletes, very high limit accidental death, high limit failure to survive key man coverage, life insurance for a quick closing on a property loan, and impaired risk life insurance with health exclusions.  Just call us and we will research for you.  Call and ask for Jarad, Jason, Tonia or Margaret.