Bulletins & News

Nonadmitted Does Not Mean Non-regulated

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POLICY - Surplus line insurance policies are sold by “nonadmitted” carriers through licensed “surplus line brokers.” Other insurance agents and brokers must go to a licensed surplus line brokerage to access nonadmitted carriers. When such companies are on California’s LESLI List (see above notice), they are regulated.

THE STATE OF CALIFORNIA - Since 1937, The Surplus Line Association of California (SLA), a nonprofit statutory advisory organization, has monitored surplus lines and advised the California Department of Insurance (CDI) regarding nonadmitted carriers and surplus line brokers to protect California companies and citizens.

NONADMITTED OR SURPLUS LINE - nonadmitted does not mean nonregulated, as evidenced by this document. Nonadmitted carriers on the LESLI List have been reviewed and approved by the California Department of Insurance (CDI) for surplus line insurance in California. nonadmitted carriers on the LESLI List are actually “admitted” insurance carriers, in a state or domicile other than California. Surplus lines have been written by nonadmitted carriers since the 1800’s, and generally are used when a risk is unusual, unusually large or when coverage is not available from carriers licensed in California.

SOLVENCY REGULATIONS - nonadmitted insurers on the LESLI List must demonstrate to the State of California their financial stability, reputation and integrity; maintain a minimum of $15 million in capital and surplus at all times; have 3 years seasoning (or qualify for an exception); have a valid license to transact insurance in their domicile; file financial information with the Department of Insurance, and adhere to specific capitalization, investment and solvency standards established under the California Insurance Code.

CALIFORNIA LAW - The California Department of Insurance (CDI) is the official regulatory agency for insurance in California, including the surplus line industry. The Surplus Line Association of California (SLA) is officially a nonprofit, advisory organization which performs statutory duties for the CDI. The SLA’s recommendations are considered and incorporated into the legally binding decisions of the CDI when appropriate.

LIST - California’s LESLI List (List of Eligible Surplus Line Insurers) was first issued by the California Department of Insurance (CDI) in 1995. Licensed surplus line brokers are forbidden by law from using nonadmitted insurers that are not on the List (with narrow exceptions). Make sure your carrier is on the LESLI List!

NONADMITTED MEANS…

• Insurance carriers that are not licensed by the State of California (also called “surplus lines carriers”)

• Carriers on the LESLI list (are actually “admitted” insurance carriers, in a state or domicile other than California)

• Carriers that must meet strict surplus line laws and regulations in order to provide insurance to California businesses and
  residents

• Carriers that are regulated by their state or country of domicile, including stringent requirements regarding reputation and
  integrity, capitalization and solvency, licensing, and business practices

WHAT IS THE SLA?

• The Surplus Line Association of California (SLA). A nonprofit organization, the SLA has been working with the California
  Department of Insurance (CDI), since 1937, to maintain a responsive and lawful California surplus line market

• The SLA performs statutory duties within the California insurance industry under the direction and supervision of the CDI.

WHAT IS THE LESLI LIST?

• The “List of Eligible Surplus Line Insurers”

• Established and regulated by the CDI.

• Monitored by The Surplus Line Association of California

WHO REGULATES SURPLUS LINES TRANSACTIONS IN CALIFORNIA?

• CDI legally regulates transactions

• SLA monitors and advises

• Brokers and agents have strict compliance responsibilities to promote and protect consumer awareness

SUMMARY

The Surplus Line Association (SLA) is charged with and committed to the protection of California consumers of surplus lines of insurance.  It is the only organization with advisory and statutory powers to the California Department of Insurance (CDI) regarding such transactions.   A nonprofit organization, the SLA has been working with the CDI, since 1937, to maintain a responsive and lawful California surplus line market.   This document is an introduction to the market, its participants, regulations, and the role of the SLA as it works to protect you.