Admitted and Non-Admitted Insurance Companies
Admitted Insurance Companies:
The state’s Department of Insurance has granted a license to an admitted or standard insurance company, allowing it to write specific types of insurance. A variety of illegal and unethical practices, including fraud, are prohibited by rate and form regulations, financial examinations, and strict regulation of these companies. A state guaranty fund is in place to cover losses incurred by insurance carriers that become insolvent or unable to pay policyholder losses.
The National Association of Insurance Commissioners (NAIC) requires admitted insurance companies to comply with state insurance regulations. A company may be forced to make claims payments by the state if they fail to do so. However, non-admitted insurance carriers lack such back-up protection mechanisms. If a customer purchases coverage from an admitted carrier, certain fees and taxes aren’t charged. In addition, if policies are handled incorrectly, admitted insurance policyholders have the right to appeal to their state insurance department.