What are the two approaches used by states to identify acceptable non-admitted insurers?

States typically use two primary approaches to identify acceptable non-admitted insurers: name listing and broker responsibility.

The name listing approach involves maintaining a list of non-admitted insurers that have been vetted and approved by the state. This list serves as a reference for brokers and insureds to determine which non-admitted insurers are deemed acceptable for conducting business in that particular state. This helps ensure that the insurers meet certain financial and regulatory standards.

Broker responsibility complements the name listing approach by placing the onus on insurance brokers to conduct due diligence when placing business with non-admitted insurers. Brokers must ensure that the insurers they select are financially sound and capable of fulfilling their obligations, even if the insurer is not on the state’s approved list. This encourages brokers to be more proactive in evaluating the reliability and reputation of the non-admitted insurers they choose to work with.

By using both name listing and broker responsibility, states can effectively regulate the surplus lines insurance marketplace, ensuring consumer protection while also allowing for flexibility in coverage options through non-admitted insurers.