How does a surplus lines broker operate?

A surplus lines broker operates by placing business with non-admitted insurers when necessary. This role is essential in the insurance market because some risks are too unique or high-risk for standard or admitted insurers, which are licensed to operate in specific states and subject to state regulations. Surplus lines brokers have the ability to access these non-admitted carriers to help businesses get coverage that might not be available through traditional means.

This is particularly important in cases where specific types of insurance, such as specialized liability coverage or catastrophic risk coverage, are needed. Since non-admitted insurers do not have to comply with the same regulatory requirements as admitted insurers, they often have more flexibility in terms of pricing and underwriting, which can benefit clients with unique needs.