What is a key characteristic of a Surplus Lines Insurer?

A key characteristic of a Surplus Lines Insurer is that it allows for certification exemption. Surplus lines insurance is designed for risks that cannot be covered by standard insurance carriers due to the unique or high-risk nature of the coverage required. Because they deal with these specialized risks, surplus lines insurers typically do not need to be licensed in the state where the risk is located, as they are exempt from standard certification requirements.

Standard insurers are required to be licensed, which means they must meet specific regulations and offer types of coverage that are generally available on the market. In contrast, surplus lines brokers and insurers operate in a more flexible regulatory environment that allows them to provide coverage for those unique or high-risk situations, hence the exemption from certain certification requirements. This creates an essential role for surplus lines insurers by providing solutions for risks that traditional insurers may not accept.