What is a non-admitted insurer?

A non-admitted insurer is defined as an insurance company that does not hold a license to conduct business in a particular state but is permitted to sell surplus lines insurance within that state. Surplus lines insurance is coverage provided by non-admitted insurers for risks that traditional market companies are unwilling or unable to insure, usually because the risks are deemed too high or unusual.

The key to understanding a non-admitted insurer is to recognize that while they are not regulated by the state's insurance department in the same way admitted insurers are, they still play a critical role in offering specialized or essential coverage that may not be available through licensed insurers. States usually have specific laws and regulations governing the sale of surplus lines insurance to ensure consumer protection even while allowing the flexibility of non-admitted insurance.

The other answer choices pertain to different types of insurers and their licensing status in relation to various states, but they do not capture the specific function and definition of a non-admitted insurer as clearly as the correct answer.