Types of insurers
Insurers are classified by their domicile, meaning the place where they’re legally formed and incorporated.
A domestic insurer is organized under the laws of California. A foreign insurer is organized under the laws of another U.S. state or territory but does business in California. An alien insurer is organized under the laws of another country and is authorized to operate in California.
- Domestic insurer: An insurer formed under the laws of California (CIC §26).
- Foreign insurer: Formed under U.S. laws but in a state other than California (CIC §27).
- Alien insurer: Formed under the laws of a foreign nation (CIC §§27 and 1580).
Admitted vs. non-admitted insurers
In California, insurers are also classified by whether they’re licensed to conduct insurance business in the state.
- Admitted insurer: Licensed by the California Department of Insurance to conduct business in the state (CIC §§24-25).
- Non-admitted insurer: Not licensed in California. Only surplus lines brokers may place business with non-admitted insurers (CIC §§1760-1780).
An admitted insurer has a certificate of authority from the California Department of Insurance. That means it’s licensed and regulated by the state, and it must participate in the state’s guaranty fund, which helps protect policyholders if the insurer becomes insolvent.
A non-admitted insurer isn’t licensed by California to transact insurance directly with consumers. You typically access these insurers through a specially licensed surplus lines broker, who may place coverage with a non-admitted insurer when coverage isn’t available from admitted insurers.
This approach gives the market flexibility while keeping stronger consumer protections in place when admitted coverage is available.
Consumer implications:
- Policies issued by admitted insurers are backed by the California Insurance Guarantee Association (CIGA).
- Non-admitted insurer policies are not protected by CIGA, increasing the consumer’s financial risk.