Why might a business seek surplus lines coverage?

A business might seek surplus lines coverage primarily because it has insurance needs that cannot be met in the admitted market. The admitted market consists of insurers that are licensed and regulated by the state, ensuring that they adhere to certain standards and requirements. However, some businesses may face unique or complex risks that standard insurance providers are unwilling or unable to cover.

Surplus lines insurers, on the other hand, are not subject to the same state regulations and can provide coverage for these specialized or higher-risk scenarios. This flexibility allows them to tailor policies to meet the specific needs of businesses, especially when traditional markets do not offer suitable solutions. Examples of such needs could include unconventional operations, emerging risks, or industries that are considered high-risk.

While options like lower deductibles, common risks, or insurance for international exposure play a role in insurance needs, they do not directly address the core reason businesses turn to surplus lines. The key factor driving them to seek surplus lines coverage is the lack of available options in the admitted insurance market for their unique circumstances.