What is the primary purpose of surplus lines insurance?

The primary purpose of surplus lines insurance is to cover high-risk exposures that aren't acceptable to standard insurers. Surplus lines are specifically designed for situations where the risk is too great or unique for traditional insurance markets to underwrite. This can include niche industries, specialized risks, or situations that don't fit neatly into conventional insurance categories.

Surplus lines insurers are not bound by the same regulations as standard insurers, allowing them the flexibility to take on risks that might be deemed unacceptable by more conventional providers. This ability to underwrite higher-risk policies is critical in ensuring that businesses and individuals who fall into these categories can still obtain necessary coverage.

Consequently, the nature of surplus lines insurance is to act as a safety net for those who may otherwise find themselves without coverage options due to the elevated nature of their risk profile. This function is essential for maintaining market balance and ensuring that all types of risks can be insured in a financially sustainable manner.