Here in California, we have two types of insurance companies. Admitted and non-admitted.
Admitted companies are backed by a safety net called the State Guarantee Fund, which would pay for any unpaid claims if the company becomes insolvent. Interestingly, these are generally very large companies with lots of assets, and can afford the costs involved with being admitted in California.
The surplus market utilizes mostly non-admitted insurance companies. They are not backed by the State Guarantee fund, so they could go under and leave claims on the table. Fortunately, they are usually also large companies, and not likely to go under………but they could.
The surplus lines market provides us an avenue for riskier types of insurance and specialized insurance, which often is lower volume business for the company.
Sometimes the lines cross. For example, I recently was referred a plumbing contractor, for whom I submitted applications to the usual surplus lines companies. Then I discovered that there are two admitted companies who might take on a plumber with low receipts, new in business, no track record, and so on.
You never know if such markets exist unless you have access to many, many markets through your large marketing division, which we have at Commercial Services Insurance.
If you want to check more markets than you currently have, contact us at www.thecsia.com .