Residual markets and relation non-admitted/surplus insurers
Are residual markets very similar to non-admitted insurers in that they both cover high risk insureds that have a hard time obtaining coverage in the primary/voluntary/admitted markets? Are residual markets are still subject to the same regulations as those for admitted insurers?
Or are they subject to less regulation as with non-admitted/surplus line insurers (like not needing to file rates and being exempt from guaranty funds)?
I am having a hard time understanding the differences between the two.
Comments
"Residual markets" are generally state-led organizations that high-risk insureds get assigned to involuntarily, and their costs are shared among voluntary market insurers. Surplus insurers are private sector entities that voluntarily underwrite high-risk insureds.
Residual markets are subject to some of the same regulations as admitted insurers.
Thank you for the clarification!
Sure, good luck.