An insurance company that has not applied or was denied a Certificate of Authority in a state is called what?

An insurance company that has not applied for or has been denied a Certificate of Authority in a state is defined as a nonadmitted insurer. This term is used to categorize insurers that are not licensed to operate within a specific state. Nonadmitted insurers are those that might provide coverage that is not available from admitted insurers, usually in the surplus lines market where unique and high-risk needs can be met.

Such insurers can sell policies without being licensed in that state, but they often carry higher risks because they lack regulatory oversight in that jurisdiction. Clients opting for coverage from a nonadmitted insurer usually do so through a licensed surplus lines broker who can facilitate the process.

Recognizing the nature of a nonadmitted insurer is essential for understanding how insurance markets function, especially in states where certain types of coverage may not be readily available from authorized (admitted) insurers. Understanding this distinction is crucial for anyone involved in the insurance field, particularly when dealing with unique or specialized products.