What distinguishes admitted insurers from non-admitted insurers?

Admitted insurers are distinguished primarily by their licensing and regulatory status. They are licensed and regulated by state departments of insurance, which means they must comply with state laws and regulations regarding solvency, rates, and policy forms. This oversight ensures that admitted insurers are financially sound and capable of meeting their policyholders' claims, contributing to consumer protection in the insurance market.

The regulatory framework for admitted insurers also includes requirements for maintaining adequate reserves and adhering to specific guidelines on the types of insurance they can offer. This regulation provides policyholders with a certain level of confidence regarding the insurer's ability to fulfill its obligations.

In contrast, non-admitted insurers, or surplus lines insurers, are not subject to the same level of state regulation and oversight. They can offer coverage that may be considered too risky for admitted insurers, but this flexibility comes with less consumer protection in terms of financial stability and claim payment assurances. Hence, the clear regulatory distinction between these two types of insurers is a crucial aspect of understanding their roles and functions in the insurance market.