insurance definitions?

Question

In regards to insurance companies, what is the difference between

non-admitted and admitted basis?

Answer 1

An admitted carrier is regulated by the state it's doing business in, which makes it subject to that state's rules and regulations. Any policyholders would be protected against claims if they should go bankrupy, by the state insolvency fund. If you have a complaint about that carrier, you could write to the insurance department, and they can intervene if they find your complaint valid.

A non-admitted carrier is NOT regulated by that state, the policyholders are NOT protected against insolvency, and most of the time there is an additional tax and stamping fee in addition to the premium that is charged.

Answer 2

The above posts were pretty good (especially Mbrcatz; as always), but I wanted to expand a little. Most insurance companies that write insurance on a non-admitted basis also write on an admitted basis as well. They have formed separate companies that allow them more flexibility. The non-admitted companies will have a lot more flexibility with their rates and can accommodate some risks that the standard market can not. Asbestos abatement, oil well fields and other high risk categories can not be written through standard because the risk is way too high for the standard premium. The non-admitted company can charge the higher rates (sometimes 10-20 times higher than standard) to get enough money to turn a little profit. They typically specialize in a few niche areas and know what to look for to properly rate the risks.
What you need to watch out for are the non-admitted companies that come and go. Find out what the corporation is like: who are they owned by, where are they domiciled, what is their AM best rating, etc.
Do your homework or work with an independent agent that you know to help you out.
The commission you pay to your agent is well worth the amount of knowledge that they carry with them.

Good Luck!

Answer 3

Admitted companies are those who the state verifies and regulates, and has some control and responsability over. In other words if an admitted company files bankrupcy then the state will take over the debt of that company and pay any oustanding claims to the current insureds.

A Non admitted company on the other hand altough is regulated by the state insurance commisioner, can get out of doing business in a state without having to pay any unsettle or outstanding claims, and the state will not be responsible for any of that.

Answer 4

Some states accept insurance companies to do business within the state. Our state has a fund that all insurance companies that are accepted to do business in the state pay into. This fund will cover claims in the event that one of those companies goes out of business (for whatever reason). If you are insured by a non admitted company and they go out of business - say from huge losses as those associated with a natural disaster etc. - then the fund does not protect your interest because that company had not payed into the fund. Think this might be what you are referring to.
OR - are you asking about health insurance where you are admitted to the hospital for an over night stay so the deductible is higher as opposed to same day procedures that would be less costly for the insurer and less co pay for you?