What is true about excess and surplus lines insurers in most states?

Excess and surplus lines insurers, which provide coverage that is not available in the standard market, operate under a unique regulatory framework. One key aspect of this framework is that individual states maintain an approved listing of these insurers. This means that states conduct evaluations and approvals of excess and surplus lines insurers to ensure they meet certain standards, even though these insurers are not required to be fully licensed in the same manner as admitted insurers.

By having an approved listing, states can help agents and brokers identify which surplus lines insurers are acceptable for placement of specialty risks. This enables more orderly market practices while still allowing for flexibility in underwriting and coverage options that these insurers provide.

The other answer choices do not accurately reflect the nature of excess and surplus lines insurers. They are not fully licensed by states like admitted insurers, they are not primarily regulated by federal law, and their tax obligations can vary, but they are not universally higher than those imposed on admitted insurers.