What Are White List States?

Surplus lines insurance refers to the list of insurance firms that allow states to keep up to date and may utilize to get specialist or additional coverage from unaffiliated insurers.

Insurance for surplus lines guards against a financial risk too significant for a traditional insurance provider to assume. Businesses may utilize excess line insurance, or individuals can acquire it. This kind of insurance is not limited to a single state; it may be purchased from any insurer. However, the surplus lines insurer must have a license in the state where it is headquartered.

Understanding White List States

In essence, “allowlist states” are those places in the United States where insurance firms can utilize non-admitted insurers to provide specific liability or property coverage for the policy. Surplus-line insurance is the term used to describe this activity. A non-admitted insurer provides surplus line insurance if state-licensed insurers do not offer coverage. Licensed insurers will only take risks if they adhere to their policies or if the risk is unusual or too significant to cover.

Each state may have a lengthy list of qualified surplus line vendors. A company’s classification as surplus line insurance does not preclude it from obtaining a license in that state. Instead, they usually decide to operate in certain jurisdictions without a license and on a surplus line. Since they are not subject to the same restrictions as licensed insurers in that state, according to the state’s Department of Insurance, they have more flexibility regarding rate and form regulation. This is because they are not permitted in that state.

Surplus Lines The market for surplus lines is also known as the non-admitted, specialty, or excess lines market—insurance for extra lines guards against a financial risk too significant for a traditional insurance provider to assume. Unlike regular insurance, additional lines of insurance may be obtained from an insurer that does not have a license in the state where the insured resides. However, the different lines of insurance must still hold a license in the state where they are headquartered.

An insurance agent must have a surplus lines license to sell an extra lines policy. Surplus lines insurance, also known as excess lines insurance, allows organizations with unique risks not typically covered by insurers or those with a history of claims that render them uninsurable overall to get insurance.

AIG, Nationwide Mutual Insurance, W.R. Berkley Corp., Zurich Insurance Group, Markel Corp., Chubb, Ironshore Inc., Berkshire Hathaway Inc., Fairfax Financial Holdings, CNA Financial Corp., XL Group PLC, and Lloyd’s of London are a few prominent examples of surplus lines insurers.

Flood insurance is one kind of surplus line insurance that customers may buy. The Natural Catastrophe Insurance Program, which offers an alternative to flood insurance from the Federal Emergency Management Agency (FEMA), is how Lloyd’s provides this insurance. Surplus lines insurance may be more cost-effective for customers who deem FEMA’s insurance too costly. Nevertheless, since surplus lines insurance guards against higher-than-usual or exceptional risks that other insurers won’t cover, it is often more expensive than standard insurance.

Conclusion

• In essence, “allowlist states” are those places in the United States where insurance firms can utilize non-admitted insurers to provide specific liability or property coverage for the policy.
• Surplus line insurance is the term used to describe this activity.
• Licensed insurers will only take risks if they follow their rules and are covered by surplus line insurers because the risk is too significant or peculiar.