Unauthorized insurers are commonly referred to as what?

Unauthorized insurers are commonly referred to as excess or surplus lines insurers because they are not licensed by the state where the insurance is being sold. These insurers typically provide coverage for risks that cannot be adequately covered by traditional, licensed insurance companies. Such risks may include unique or high-risk situations that standard insurers find too challenging or unprofitable to insure.

Excess and surplus lines insurers play a crucial role in the insurance market as they offer options for obtaining coverage that might be unavailable in the standard market. Their unlicensed status in a particular state does not inhibit their ability to operate as they may still be entirely legal under surplus lines regulations, which allow policyholders to seek coverage from these insurers when the necessary risk cannot be found through authorized insurers.

Understanding the function of excess or surplus lines insurers is essential for comprehending the broader insurance landscape, particularly in scenarios where unique or complex risks need to be addressed. This terminology is critical for navigating the complexities of surplus lines regulations and practices, especially within the context of South Carolina's insurance market.