I'm working on building an insurance company that will be selling a specialty insurance product. We are wondering what the benefits and risks are of selling the product as a non-admitted, rather than admitted product. The focus of the insurance coverage is mainly for property (think expensive sports gear in the $10's of thousands), with some personal injury and third party liability included as well.
Being an insurance consultant from Europe I had to look up admitted vs. Non-admitted carriers:
http://www.clarkeandsampson.com/blog/admitted-vs.-non-admitted-carriers
I think that the article nicely sums up some of the considerations of the choice between admitted (guaranteed claims payments) and non-admitted (broader risk appetite and flexible pricing outside standards).
From a european perspective, I would definitely say admitted as all current changes in solvency legislation focuses on ensuring, that enough money is available to pay all claims. Especially given, that you include some longer-tailed business in personal injury and third party liability.
However, I would add some more parameters you should consider before you choose:
- Is it necessary for you to carry the risk yourself, or could you have a risk carrier and instead act like an agent? The carrier could then worry about being admitted or non-admitted.
- How do you plan to distribute - f.ex. Through partners? Would you being admitted/non-admitted be important to your partner? This is about them investing their good name in you as a risk carrier - you would not want to let them down.
- What do the endusers think? Is this an important distinction for them, or can you motivate your choice no matter if you are admitted or non-admitted.
- Since your product is specialty, can it even be an admitted insurance? If not, then your choice is easy.
Good luck with your insurance venture! If you have additional questions, I am happy to continue the dialogue over the phone.
Best regards
Kenneth
