J & N REALTY, INC.

ADMITTED VS. NON-ADMITTED INSURANCE CARRIERS  

There are many carriers that are admitted in California that are not domiciled in California.  The state where a carrier is domiciled is where their offices are physically located.  Probably most of the admitted carriers in California are domiciled elsewhere.  A carrier is only domiciled in one state but can be admitted in many states.  Thus, a “California Admitted Carrier” can be domiciled in another state than California. 

California Admitted carriers participate in the California Insurance Guarantee Association or CIGA.  Non-Admitted carriers do not participate in this fund.  The California Insurance Guarantee Association (CIGA) operates under Sections §1063-1063.77 of the California Insurance Code. CIGA provides a mechanism for the payment of covered (as defined by the Insurance Code and specific case law) property, casualty, and workers' compensation insurance claims of insolvent insurance companies.  It is the mission of the association to pay claims on a timely basis with no excessive delays and to help relieve the financial burden placed on claimants when insurance companies fail. 

CIGA has three separate funds organized by line of business that cover (1) workers' compensation claims, (2) homeowners and automobile claims (including personal injury), and (3) all other claims (e.g., products liability and commercial property and liability). Claims and/or statutory benefits pursuant to a policy under categories (2) and (3) above are limited to no more than $500,000. CIGA's revenue for each of its three funds is derived from assessments of Member Insurers, distributions from the estates of insolvent Member Insurers, and investment income. Revenues received are allocated into the three separate funds and are used to pay the claims and costs allocated to the applicable line of business. 

Non-Admitted carriers are also referred to as Surplus Lines carriers.  They typically write risks that Admitted carriers will not write.   

The stability or size of an insurance carrier is not directly related to whether it is Admitted or Non-Admitted.  There are many A++ rated carriers that are non-admitted that use industry standard forms, just as there are admitted carriers that are B rated and are much smaller in the financial size category, and some carriers use manuscript forms (non-industry standard or non ISO forms).  It is often a matter of whether a particular carrier decides to operate in California (or in any other state) as Admitted or Non-Admitted.  Some carriers operate as Admitted in other states but Non-Admitted in California.  There are carriers that switched from being Admitted to Non-Admitted, such as companies that are sister companies with one being Admitted and the other Non-Admitted that moved business from the Admitted to the Non-Admitted carrier when the insurance market was very hard.  One of the reason carriers do this is that it gives them more leeway in changing rates than if they were admitted.  It makes more possible for them to remain competitive and raise rates (in hard market) or lower them (in soft market) faster than if they were Admitted carriers.