What distinguishes admitted insurers from non-admitted insurers?

Admitted insurers are distinguished from non-admitted insurers primarily by their authorization to operate within a specific jurisdiction. This means that admitted insurers have received a license from the state's insurance regulatory authority to sell insurance products in that state. They must adhere to state regulations, including rules related to the rates they charge, policy forms, and the handling of claims. This regulatory oversight provides a level of consumer protection, ensuring that admitted insurers maintain certain financial standards and practices.

On the other hand, non-admitted insurers do not hold a state license and are not subject to the same regulatory scrutiny. While they can still provide coverage, often in specialized areas or for higher-risk clients, they may charge different premiums and have more flexibility in the types of policies offered. However, since they operate outside of the state’s regulatory framework, consumers purchasing from non-admitted insurers may not have the same level of protection regarding claims and financial stability.

The distinction regarding regulation and authorization to transact insurance is critical for understanding the dynamics of the insurance market and the protections available to consumers.