We hold that the Department has a fair point, albeit a relatively small one: there is the need for oversight of policy rates and forms, for sure, but we feel that as long as a New Jersey workers' compensation policy remains in full compliance and is fully insured by the financial strength of an admitted insurer
, business owners should be free to retain any amount of risk they desire through subsequent reinsurance.
* Broker: "A person who, for compensation and on behalf of another person, transacts [insurance]...with, but not on behalf of, an admitted insurer
An insurer that wanted to write in all states would have a primary company licensed in a state as an admitted insurer
that could be eligible to issue surplus lines policies in the other 49 states --all states except its domiciliary state.
Put another way, a surplus lines insurer is an admitted insurer
in at least one state."
The problem, however, is that a number of foreign countries have implemented laws requiring that the D&O policy be purchased from a locally admitted insurer
or an insurer that is owned by local interests.
Before then, only insurance buyers that no admitted insurer
considered attractive would approach surplus lines insurers, Bolig said.
There are many quality non-admitted companies, but an admitted insurer
is superior, if available.
In Brazil, for example, if the company's D & O coverage is not provided by a locally admitted insurer
, payment of loss is prohibited into the country from an insurer outside the country.
The regulations also require that the admitted insurer
maintain "[R]ecords of the anti-fraud training provided to all staff [and that it] shall be prepared at the time training is provided and be maintained and available for inspection by the Department on request.
State law requires that when risk is insured in Washington, it be done through an admitted insurer
or through an unauthorized insurer placed through a licensed surplus line broker.
Assuming that the New York insurance agent or broker meticulously complies with all aspects of New York law in the placement of the coverage and properly explains the nature of the coverage to the underlying insured, there may be no greater errors and omissions exposure writing with a non-admitted insurer than with an admitted insurer
. (Note, from an errors and omissions defense attorney's point of view, I still cling to the ridiculous, and urge all New York insurance agents and brokers to write with only New York admitted companies--an obvious impossibility.)