by Lj Jaime Cordle

Created on: January 10, 2010   Last Updated: January 12, 2010

HOW ARE ADMITTED AND NON-ADMITTED INSURANCE COMPANIES DIFFERENT

The definitions of such insurance terms as “admitted”, “non-admitted”, “domestic”, “foreign”, “alien” and “surplus lines” are found in the model laws and regulations promulgated by the National Association of Insurance Commissioners (NAIC).  The state insurance codes of most of the individual states follow the models very closely. 

The state law and regulations available to me as I write this article are those of the state of Florida. They very closely follow the NAIC models. The definitions which I offer here are from the Florida law.

As you will see, being “admitted” in a given state does not necessarily mean that the company’s home office is in that state. In fact, an insurance company can be “admitted” in a state and have no office of any kind in that state. It is very common that this be the case. 

Being “admitted” simply means that the insurer is authorized to do business in the state, must file rates, forms and rules as required by the state insurance authorities and follow all of the other requirements of the authorities.

"Admitted” means licensed to do business in the state. “Non-admitted” means not licensed to do business in a particular state.

A “domestic” insurer is one which is formed under the laws of a given state.  The insurer must comply with all of the laws of that state. Not all of the states have precisely identical requirements in regard to minimum capital and surplus.  There are instances in which investors from one state wish to form an insurance company in a state with low capital and surplus requirements. 

They do so and maintain the principal office of the company in their home state even though the company is considered “domestic” in the state under the laws of which it was formed and “foreign” in the state where the investors maintain the home or principal office. 

Here I shall paraphrase the pertinent definitions of insurers as per the Florida insurance code:

“Domestic” Formed in accordance with the laws and regulations of the state of Florida.

“Foreign”  Formed in accordance with the laws and regulations of another state of the United States of America.

“Alien”  Formed in accordance

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