Selling Non-Admitted Insurance Products vs Admitted: What's the Difference?

When it comes to insurance, there are two major regulatory types: admitted and non-admitted. 

Admitted insurance refers to insurance products that have been licensed by the Division of Insurance (DOI) in the state where they are being sold, and are subject to state regulations. In addition to meeting state standards on things like price, coverage, and packaging, admitted insurance products offer additional protection to their end buyers - if the carrier fails, the state will pay a certain amount of its outstanding claims.

Non-admitted insurance, on the other hand, refers to products that are not licensed or approved by the state DOI, and do not have the same financial protections from the state. There can be many benefits to offering non-admitted insurance products, but because they aren’t regulated by the state, there are unique responsibilities that agents, brokers, and insurance have to keep in mind.

In this blog, we will break down 3 important areas where non-admitted products differ from admitted ones and explain the implications for agents and brokers. 

Declinations

By nature, non-admitted insurance products exist to cover hard-to-place risks that most admitted products won’t cover — whether that be insuring a barrier island home that is frequently at risk of flooding or covering Beyoncé’s voice in the event of injury.  In order to sell non-admitted policies that cover these unpredictable, difficult-to-price, high-risk situations, regulations require an agent or broker to first get a number of declinations from separate admitted insurance carriers. The exact number can vary by state, but the standard is typically three declinations.