A difference you are entitled to know about
Admitted and excess line
Some risks cannot be placed with an admitted carrier. Excess line is a legitimate and sometimes the only answer, and it carries one difference that matters enormously and is easy to leave unsaid.
An excess line insurer has no state fund behind it. Some risks cannot be placed with an admitted carrier and go instead to the excess line market. That is legitimate, and sometimes it is the only option, but it carries a real difference you are entitled to know about before you buy: an excess line insurer is not backed by the New York Property/Casualty Insurance Security Fund, so if that company fails there is no state fund standing behind your claim. When we place excess line we say so on the proposal, in those words, and we say why the admitted market declined it.
An admitted carrier is licensed by New York, files its rates and forms with the Department of Financial Services, and participates in the state security funds. An excess line — or non-admitted, or surplus lines — insurer is not licensed here in the same way, is not rate-and-form regulated in the same way, and is accessed through a specially licensed excess line broker.
That freedom is the point of it. Excess line exists so that risks the standard market will not write can still be insured, on terms tailored to them. It is a normal and necessary part of the market. It also comes with one consequence that ought to be stated in words rather than buried in a stamp on the policy.
The security fund, and what its absence means
New York maintains security funds that pay covered claims when an admitted property and casualty insurer becomes insolvent. Excess line insurers do not participate in them, and policyholders of an excess line insurer are not protected by them.
So if an excess line carrier fails, there is no state fund standing behind your claim. That is not a reason never to buy excess line — many excess line insurers are large and financially strong, and for some risks there is simply no alternative. It is a reason to know which kind of policy you have, and to weigh the carrier's own financial strength more heavily than you otherwise would.
When excess line is the right answer
When the admitted market declines the risk outright: an unusual trade, a poor loss history, a vacant building, work at height with a difficult profile, a business with an exposure the standard forms are not built for.
When the cover you need does not exist in the admitted market in the shape you need it. Excess line carriers can write manuscript wordings and unusual limits, which is genuinely useful for a risk that does not fit a box.
And, occasionally, when the excess line price is simply better for a risk the admitted market prices punitively. That last case deserves particular scrutiny, because that is where the security fund trade-off is being made for money rather than out of necessity — and that should be your decision rather than ours.
What else changes
Rates and forms are not filed and approved in the same way, so the wording can differ from the standard forms in ways worth reading. Coverage triggers, exclusions and conditions may not be what you expect from an admitted policy, and the differences are sometimes to your advantage and sometimes not.
Excess line premiums also attract New York premium tax and stamping fees, which appear on the invoice as separate charges. They are real taxes rather than agency fees, and you should be able to see which is which on your bill.
And there is a diligent search requirement: an excess line placement generally requires evidence that the admitted market was approached and declined. That is a protection for you, and it means we can tell you which admitted carriers said no and why.
What we do about it
We say it on the proposal, in those words: this is an excess line placement, the insurer is not backed by the New York Property/Casualty Insurance Security Fund, and here is why the admitted market declined it.
We tell you which admitted carriers were approached. We give you the excess line carrier's financial strength position so that you can weigh it, and we distinguish taxes and stamping fees from premium on the invoice. And at each renewal we re-approach the admitted market, because appetites change and a risk that was unplaceable three years ago sometimes is not any more.
In order
How this works in practice
The admitted market is approached first
And has to decline before an excess line placement is made. You are told which carriers and why.
The proposal says it plainly
That this is excess line and that the state security fund does not stand behind the insurer.
The carrier's strength is weighed
It matters more here than on an admitted placement, because there is no fund behind it.
Re-approached each renewal
Appetites change. A risk that was unplaceable three years ago is sometimes placeable now.
Questions we are actually asked
Admitted and excess line — frequently asked
What is an excess line insurer?
A non-admitted insurer — not licensed by New York in the ordinary way and not rate-and-form regulated in the same way — accessed through a specially licensed excess line broker. It exists so that risks the standard market will not write can still be insured.
Is excess line insurance safe?
Many excess line insurers are large and financially strong, and for some risks they are the only option. The material difference is that they do not participate in the New York Property/Casualty Insurance Security Fund, so if the carrier fails there is no state fund behind your claim. That makes the carrier's own financial strength more important, not less.
Why was my business placed in the excess line market?
Because the admitted market declined it — an unusual trade, a loss history, a vacant building, a height exposure, or a cover shape the standard forms do not offer. There is a diligent search requirement behind that, so we can tell you which admitted carriers were approached and what they said.
What are the extra charges on my excess line invoice?
New York premium tax and stamping fees, which are taxes and regulatory charges rather than agency fees. They should appear separately from the premium on your invoice, and we will identify which is which.
Read next
Related reading
Bring the declarations page and we will read it with you
Ask us what it would cost
Send or bring the summary pages of what you already have — those two sheets are where most of the useful conversation is. We will tell you what we would place it with and what that would cost, what we are paid for doing it, and whether you should move at all. Quite often the answer is that your current policy is priced fairly and you should keep it, and that is an answer we give in writing like any other.