Admitted Company Details

For an insurance company to be identified as an admitted company, it must be permitted to operate within a given state or country. The insurance regulatory authority usually grants permission to operate in a state. The authority issues an insurance license as a confirmation for approval.

All admitted companies must deal with commodities or services that are legally acceptable within that country. After forming the admitted insurance company, it is the work of the agent to sell the insurance to customers. Agents must ensure that they deal with legally accepted commodities.

In admitted companies, if the company cannot meet its obligations, the government can step in and handle the obligations for them. This means that the customers of admitted companies are always protected since they are guaranteed compensation.

Real World Example of an Admitted Company

People deal with admitted companies every day. Admitted insurance companies in the United States are LibertyMutual, All-State, and Geico, to name a few. These companies are licensed to operate in the US and the states within them.

Admitted Company vs. Non-Admitted Company

Admitted companies fall under one classification of insurance companies. The other classification is non-admitted companies. A state does not officially approve a non-admitted company. But people often seek them out in high-risk coverage situations because admitted companies won't cover them. This type of company does not comply with the state or country's regulations.

As an agent of an insurance company, you can sell products and represent insurance companies that are admitted. You are not allowed to sell products or represent a non-admitted company in some countries. In some countries, if you do not comply, you may be fined or lose your license to work as an agent.

When it comes to customers of an insurance company, the law protects them. This means that it is not your duty to know whether the company is admitted or non-admitted. This responsibility falls under the agent. If the agent sells to you products or represents non-admitted companies, they bear the punishment if it is prohibited. As a customer, once you realize you are a member of non-admitted company, the state insurance department can help you either enforce the contract or make the contract void. As a customer of an admitted company, the government will cover the insurance company's debts or financial requirements in case of insolvency. For a non-admitted company, the government is not liable and does not guarantee secured funds.

Significance of Admitted Company

There are benefits to being legitimate—admitted companies would know. An admitted company has a relatively low premium rate compared to non-admitted companies. As a customer of an admitted company, if you feel that the insurance company didn't handle your claim fairly, you can inform the country's insurance department to check into it.

Admitted companies are not associated with surplus lines that are subject to surplus policies. And since admitted companies are local, tracing paperwork, visiting the office, or working within the local culture is easier.