Insurers are classified by their domicile, or the location where they are legally formed and incorporated. A Domestic Insurer is one that is organized under the laws of California, meaning it is headquartered and primarily regulated within the state. A Foreign Insurer, by contrast, is formed under the laws of another U.S. state or territory but conducts business in California. Finally, an Alien Insurer is one that is organized under the laws of another country but is authorized to operate within 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 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).
In California, insurers are also distinguished by whether or not they are licensed to conduct business in the state. An Admitted Insurer is one that has received a certificate of authority from the California Department of Insurance, meaning it is licensed, regulated, and required to participate in the state’s guaranty fund, which provides protection to policyholders if the insurer becomes insolvent.
A Non-Admitted Insurer, on the other hand, is not licensed by California to transact insurance business directly with consumers. These insurers are generally accessible only through specially licensed surplus lines brokers, who may place coverage with them when insurance is not available from admitted carriers.
This system allows flexibility in the marketplace while maintaining consumer protections where 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.