What type of insurer operates without a Certificate of Authority?

A nonadmitted insurer is one that operates without a Certificate of Authority. In the insurance industry, insurers must obtain this certificate to legally conduct business in a given state. Nonadmitted insurers, by definition, have not gone through this authorization process, which allows them to underwrite certain types of risks that admitted insurers may be unable or unwilling to cover.

One key aspect of nonadmitted insurance is that it often caters to specialized risks, often referred to as surplus lines. These insurers are not strictly bound by the same regulations as admitted insurers, which allows for greater flexibility in how they underwrite policies, although they may lack the consumer protections that come with admitted status.

The distinction between nonadmitted and admitted insurers is significant because while nonadmitted insurers can sometimes offer coverage for unique risks, policies from these insurers generally do not have the same level of regulatory oversight. Consequently, consumers seeking coverage from nonadmitted insurers may face different financial safeguards compared to those who choose policies from admitted insurers.