ADMITTED CARRIER VS. NON-ADMITTED CARRIER

An Admitted Carrier means that they are "licensed" to transact business in the applicable state. Licensed insurance carriers submit to examination and financial requirements by the individual state Insurance Department. Admitted Carriers can only sell what the State has approved. All rates and forms must be filed and approved by the State before an Admitted Carrier can offer insurance coverage. Admitted Carriers also participate in the State Insolvency Guarantee Funds.

Non-Admitted Carriers are "not licensed" in the State, however, they are approved to conduct business in that state. Non-Admitted Carriers are not subject to form and rate filings by the State. Most States prohibit competition between Admitted and Non-Admitted Carriers, and allow Non-Admitted Carriers to sell insurance only when coverage is not available through an Admitted Carrier.

Non-Admitted Carriers can only write coverage through an Excess & Surplus Lines Broker (such as H.T. Bailey) that is licensed in the jurisdiction. When coverage is written through a Non-Admitted Carrier, most states require some sort of Affidavit be completed and filed with their State Excess Line Association. Policies written with a Non-Admitted Carrier are subject to a policy fee and state tax (varying by state). In addition, Non-Admitted Carriers maintain a minimum earned premium (generally 25%) should the policy cancel short term.