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Admitted insurance is any type of insurance policy that is made available by a provider that is licensed to sell insurance within the area where the policyholder resides. In many cases, the coverage is secured through an agent or broker that is recognized by the local jurisdiction as empowered to establish a business relationship between the holder and the company that underwrites the policy. Becoming an admitted company within a particular jurisdiction requires that the scope of coverage and the forms used to manage the transaction comply with regulations put in place by that jurisdiction.
Many different types of insurance coverage are offered as admitted insurance. This includes property insurance, health insurance, reinsurance coverage, and even auto and casualty insurance. As with other types of businesses, admitted providers are free to offer competitive rates to potential customers, as long as they comply with the requirements of the local jurisdiction. While many states and other forms of jurisdictions require the same type of compliance as other areas, there is always the possibility that a specific jurisdiction has enacted statutes that are unique to that area. In order to gain admitted status, the carrier must also comply with those unique requirements as well as the more common regulations.
For the most part, any type of insurance coverage that is sold within a jurisdiction will be of the admitted type. There are special circumstances in which jurisdictions allow what is known as non-admitted coverage to be sold. Typically, insurance of this type must be some sort of coverage that is not readily available from admitted insurance providers who are already operating within the area. In the United States and some other areas around the world, a non-admitted carrier is not regulated by the state. Furthermore, the non-admitted provider does not contribute to any type of state guaranty fund, whereas admitted insurance providers do contribute to funds of this type.
One of the main benefits of purchasing coverage from an admitted insurance carrier is that the provider must comply with regulations enacted by the local jurisdiction. In many cases, those regulations are drafted for the specific purpose of protecting the rights and welfare of people residing within the borders of the region or state. While most non-admitted carriers would normally abide by those same regulations by choice, there is no legal recourse if they choose to do otherwise. Should an admitted insurance carrier fail to comply with local statutes, there is the possibility of recourse by the consumer, as well as penalties and fines levied by the jurisdiction.
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