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Admitted vs. Non-Admitted Insurance Products: 5 Commonly Asked Questions

By The Boost Team on Feb 24, 2023
7 min read
Answers to 5 common questions about the differences between admitted and non-admitted insurance products.

In the world of insurance, there are two kinds of products: admitted and non-admitted. Simply put, admitted insurance products are those that are approved and regulated by the state, and non-admitted insurance products are those that are not—but this explanation can raise more questions than it answers.  

In this blog, we break down the major differences between admitted vs. non-admitted insurance products and answer some commonly asked consumer questions. 

1. What’s the difference between admitted and non-admitted insurance?

Admitted Insurance

An admitted insurance product is one that has been licensed and approved by the Division of Insurance (DOI) in the state where it’s being sold. Each state’s DOI has requirements for everything from how much carriers can charge to what kind of coverages are offered to how the carriers communicate with customers. The process of getting a product admitted through this office—or even making changes to a product that has already been admitted—is lengthy and complicated for carriers. But in return, the carrier and its customers get some financial protection from the state. 

As a consumer, you can be sure that if a product is labeled as “admitted,” it has gone through all the necessary scrutiny of its policy requirements, language, and rates, and it meets your state’s DOI regulations.  In the event that your carrier “goes under,” you will have an additional, state-funded safety net wherein debts can be paid by the state up to a certain amount. 

Non-Admitted Insurance

On the other hand, non-admitted insurance products are those that have not been licensed and approved by a DOI. These products fall outside of the standard market for that particular state and, therefore, don’t meet its requirements. 

When a product falls outside of the standard market, it doesn’t mean that it’s covering an illegitimate risk or that insurance wouldn’t be helpful protection. It simply means that it’s a risk the state doesn’t want to cover. If an insurance carrier wants to sell that product anyways, they can—they would just need to sell it on a non-admitted basis. Being non-admitted allows these products to operate outside of DOI regulations and restrictions. This makes them much more flexible in what they can cover, but they also don’t receive the same financial protections from the state. 

Examples of non-admitted products include parental leave insurance or crypto wallet insurance. They don’t fall into the standard market insurance category that products like health insurance, home insurance, car insurance, or pet health insurance do, but they still offer important protection that people are willing to pay for. 

2. Are non-admitted insurance products entirely unregulated? 

This is an understandable and common misconception. When people hear that non-admitted insurance products aren’t licensed or regulated by the state, they might think that non-admitted products are entirely unregulated or even illegal. But this isn’t the case. 

Non-admitted products are legitimate insurance products that undergo their own forms of approval before going to market. While they don’t have to go through the intense approval processes with the DOI, the companies that create these products do need to submit articles of incorporation, a list of officers, and various financial and company information to the surplus lines office, which is run and regulated by the state.

Additional state guardrails for non-admitted products include taxes and licensing. All non-admitted products are subject to being taxed by the state and all agents who sell these products need to be licensed brokers in the state where they conduct business. 

In short, the state is definitely involved with non-admitted products, but the regulation of these products is significantly less intensive when compared to those of admitted products. 

3. Are admitted insurance products always the best choice? 

Because admitted products are “approved by the state” and non-admitted products are not, you might assume that admitted is always the more responsible choice as a consumer-—but that isn’t always the case. There are many reasons why choosing a non-admitted insurance product could provide better protection than an admitted one. 

First, the distinction between admitted vs. non-admitted is largely administrative and doesn’t say much about the overall quality of the product or the stability of the carrier offering it. You might be in the market for home insurance, and there are both admitted and non-admitted options available, but the coverage of the admitted product doesn’t meet your needs. 

This is an especially common problem for people who live in areas with frequent natural disasters like fires or hurricanes: their risk is often outside of what an admitted product is built to cover, and so they may not qualify for the level of protection they need. In some cases, if your home is deemed too high-risk, you might even not be able to buy an admitted policy at all. Since non-admitted products are more flexible in what they can cover, you may be able to buy a policy that provides more robust protection from natural disasters (though it will likely cost more than an admitted product might).

Second, there are situations where you could benefit from insurance, but no admitted products exist to provide it. In these situations, non-admitted insurance products are the only option. For example, cryptocurrency is an increasingly popular market for consumers, but there are currently no admitted crypto wallet insurance products available. This can be a serious problem for crypto wallet holders because there are billions of dollars in cryptocurrency being held in online custody. Additionally, crypto theft and large-profile hacks are increasingly common, but less than 1% of consumer assets are insured.

There are some options for crypto institutions to have insurance, but even in those cases, it does not provide explicit protection for individuals. In the event of a hack, consumers can lose all or a portion of their holdings with no guarantee from the crypto institution that they will be reimbursed. The only way for an individual consumer to protect their cryptocurrency holdings would be through non-admitted crypto wallet insurance.  

4. How does state approval impact consumer policies? 

The distinction between admitted and non-admitted insurance products has an abundance of implications for insurance carriers, agents, and brokers, but the biggest impact that this difference has on consumers boils down to pricing and coverage options.

Because states aren’t able to set rates for non-admitted insurance, non-admitted policies usually cost more than comparable admitted insurance. Additionally, as a consumer, you may not get the same kinds of tax breaks as you could with an admitted product. But one of the reasons non-admitted product costs often run higher is that they can have more robust options for protection and coverage than admitted products do.  

For example, if the state were to set a rate on pet insurance and tell carriers they can’t raise rates on policies above a certain threshold, this would impact policies significantly. The state might also have more stringent rules that could impact your eligibility for coverage, such as age restrictions, breed restrictions, pre-existing condition restrictions, etc. In order for carriers to affordably meet the state’s requirements, they would have to limit the actual benefits of the coverage. 

A more affordable, admitted product might not be able to include certain protections, or might exclude certain pets entirely based on eligibility. A non-admitted product would cost more to buy, but would also have the flexibility to offer more coverage to more people. While an admitted product will be a good choice for many consumers, non-admitted options are important for the subset of people who aren’t a good match for what admitted products can offer.

5. What happens if an insurance carrier can’t pay its debts?

The biggest benefit for admitted products is that they are backed by the state’s guaranty fund in the event of a carrier’s insolvency. Insolvency is when a carrier is unable to pay its debts—maybe the carrier underwrote too much risk, or a global event caused customers to max out the carrier’s borrowing capacity. Insolvency is relatively rare, but it does happen occasionally, and the effects are different depending on the kind of product. When this happens to carriers with admitted insurance products, the state will pay the carrier’s claims up to a certain amount. 

This can give consumers peace of mind because it ensures that costs won’t come back around to them. You could confidently pay your monthly premium on your admitted insurance policy knowing that if your carrier can’t cover the cost of your claims, the state will.  

On the other hand, if a carrier were to become insolvent, any of their non-admitted products would not be protected by the state. For consumers in this situation, the financial losses that should have been covered by your insurance policy will most likely come back to you, and you could be tied up in legal disputes during the liquidation of the carrier. 

As a consumer of insurance, it is always important to do your research on your carrier and understand your insurance policy. You can check sources like A.M. Best Ratings—or other similar rating agencies—that can help you make sure a potential insurer is financially solid and worthy of your trust. 

Knowing the difference between an admitted vs. non-admitted insurance product can help you to make a more informed decision, ensure that you are getting the biggest bang for your buck in terms of coverage, and help you know what to expect if your insurance carrier “goes under.” After reading our breakdown of admitted vs. non-admitted insurance questions, we hope you’re feeling more comfortable with the topic. 

Boost makes it easy for anyone to understand the world of insurance or to get started offering embedded insurance themselves. Contact us to learn more.

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The Boost Policy Admin System: How We’re Different
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As an insurance infrastructure-as-a-service partner, Boost provides more than just white-label insurance products: we also provide the technical infrastructure necessary to digitally offer those products on your website.  The most important part of any insurance tech stack is the policy administration system (PAS), which is the system of record for every transaction related to an insurance policy. As part of Boost’s API platform, we deliver a state-of-the-art policy admin system (PAS) to support our products at every stage of their policies’ lifecycle. What makes Boost’s policy admin system so special? Here are seven factors that set us apart. One of the most complex parts of building a PAS is accounting for the differences between state insurance regulations. Insurance products must be approved by each individual state that you want to sell in, and each state has its own laws, regulations, and requirements regarding the sale of insurance. 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When your customers suffer a covered loss, a fast, easy claims process helps deepen their relationship and engagement with your brand. With Boost’s PAS, the potentially complex claims management process is made simple. Rather than having to manually contact carriers and manage the process yourself, our first notice of loss (FNOL) API acts as a unified point of entry to all the services you need. Our FNOL API is connected to all appropriate claims administrators. When a customer submits a claim for their policy, we automatically route that claim to the right administrator, along with all available supporting documentation. The administrator gets everything they need to start working on the claim, in real-time. This helps reduce the overall time needed to process a claim, which then means faster resolution for your customers.  User experience is a vital component of any digital service, but we’re equally concerned with developer experience. Our insurance API was built from the ground up to leverage modern RESTful patterns, and to be easy for developers to build to and implement.  The API is also designed for consistency, so that once developers understand a given resource, they understand how to use it across our platform. From issuing a policy to executing a renewal, midterm endorsement, or cancellation, once your engineers understand how to do it once, they can do it anywhere.  An essential piece of a developer-friendly API is good documentation, and so we make sure that our documentation is exceptional. Boost’s API documentation is intuitively organized, personalized to your business, and updated in real-time - so you’ll never need to worry about working with outdated docs. You’ll also get permanent access to a dedicated testing environment, so you can build out integrations and test new platform features with no surprises when you go live.  All this makes it easier than ever to get your developers up to speed, which means you can get to market or make updates to your integration that much faster. One reason why building a PAS is a complex and expensive process is that the system must be separately configured for each insurance product it supports, and each additional product adds to the cost and timeline. This can be a roadblock for insurtechs looking to expand their offerings with new lines of business. At Boost, our partners can choose from seven white-label insurance products (with more to come). Our PAS is fully configured to support each product at their launch, so our partner can easily add new LOBs by simply updating their existing API connections to include additional Boost products. Rather than needing to work with multiple insurance providers to get the breadth of products that you want to sell, and having to integrate multiple other systems and products into a PAS, you can integrate one time with Boost and still benefit from multiple lines. Growing your business by expanding your LOBs has never been simpler. It may feel like the entire world has gone all-digital, but a surprising amount of insurance isn’t quite there yet. Many traditional carriers provide partners with the ability to rate and quote customers digitally…but then switch to manual processes to complete the transaction. Critical insurance functions like issuing policies, creating endorsements, filing claims, or processing renewals regularly require you to contact the carrier, then wait for a response. Boost’s policy admin system supports an entirely digital workflow end–to-end, allowing you to offer your customers a truly seamless digital insurance experience. 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To learn more about insurance infrastructure-as-a-service through Boost, contact us, or dive into building your insurance program with Boost Launchpad
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What Makes a Good API?
Jan 13, 2023
APIs have become ubiquitous in modern technology - and in modern tech marketing. If you’ve ever looked into buying a software service or platform in the last ten years, the odds are that a good API was listed as one of the selling points. But what exactly makes an API “good?” Before we dive into that question, let’s take a minute to recap what APIs are, and why they’ve become so central to business and technology. Application Programming Interfaces (APIs) are the mechanisms that allow computer software to communicate with each other. APIs ensure that when one software system makes a request, another system can understand the request and respond correctly. When discussing the relationship between two software systems, the application sending the request for action is called the client, and the application sending the response is called the server For example, your bank’s software system houses all of your banking data–that software system is the server. The banking app on your phone is the client. When you initiate actions in your banking app, like making transactions, checking your account balance, or even chatting with a representative, the app communicates with the bank’s software via its API and tells it which action to perform. The server provides an API for the client to use to perform actions. Let’s say that you want to make a transfer of funds from your checking account to your savings account. You open your banking app and navigate to the transfer tab where you are asked which account you are transferring from, which account you are transferring to, the amount you want to transfer, and any additional notes before you can submit the request. 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What is Parental Leave Insurance?
May 10, 2022
If you’ve never heard of parental leave insurance, you’re not alone. Parental leave insurance is a relatively new product on the market but an increasingly necessary one. Let’s explore a few of the reasons why parental leave is important and what solutions insurance can offer.  Becoming a new parent is a major life event that can be happy and exciting, but it can also present challenges in the workplace for both employees and employers. Over 60 million Americans are parents, but the U.S. is one of the few countries worldwide with no universal parental leave requirements. As such, nearly 30% of working women quit their jobs after giving birth. In states that do require paid parental leave, however, the rate of mothers leaving the workforce dropped 20-50%. 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Though paid parental leave is a highly requested benefit, it can be expensive for businesses to cover. For SMEs, this often prohibits them from offering any benefit at all. Adding to the difficulty, paid parental leave is also an unknown liability on the balance sheet. Employers can't predict if or when their employees will use it, which translates to a potentially large expense that they can’t accurately plan and budget for.  The Facebooks and Googles of the world can afford to be generous and pay that out of pocket, but many smaller companies can't. This puts those smaller companies at a disadvantage for both acquiring and retaining talent. In the absence of a national parental leave solution, it’s up to the private sector to find ways to support new parents in the workforce. Parental leave insurance is a business insurance innovation designed to make parental leave affordable for small and medium enterprises. This is how it works: an insurance provider offers the parental leave insurance product, sometimes as part of a larger business insurance suite. The SME chooses a package that covers the kind of leave they want to offer their employees. This includes factors like what percentage of the employee’s salary will be covered and the length of leave the SME will offer.  The SME then buys the policy, and pays the insurance provider a recurring premium based on their selected benefits and employee demographics. When a covered employee takes parental leave, the small or medium enterprise will file a claim through their insurance provider’s claims process. The SME will then be reimbursed for the cost of paying the employee during the covered leave period, as spelled out in the parental leave insurance policy.  It’s a solution for providing this benefit that mitigates large, unexpected leave costs. Instead, the employer pays a regular, planned amount in premiums, and can rest easy knowing their insurance policy will protect them. No more unknown liabilities on their balance sheet. Meanwhile, the SME can reap the benefits of attracting and retaining top talent by offering parental leave. With over 30 million small and medium enterprises in the U.S., there is a significant opportunity for insurtechs and embedded insurance providers to help businesses affordably provide this valuable benefit to their employees. Offering a first-of-its-kind, highly desirable insurance product is a forward-thinking way to set yourself and your clients apart in the market.  By offering parental leave insurance, you can help your clients attract and retain top talent. Employees are far more likely to work for a company where they feel supported, and this product is an effective way to establish your brand as focused on employees’ well-being while helping your clients to do the same. More than ever, employees want competitive, comprehensive, and inclusive insurance packages, and offering parental leave is an opportunity to positively impact employee experience and perception of their employer.  Additionally, adding parental leave insurance to your product lineup creates new cross-sell opportunities to boost revenue and LTV with your existing customers, and deepens their business relationship with you.  Parental leave insurance provides an opportunity to stand out from the competition. This is a first-of-its-kind product that is not being offered by many insurtechs, but benefits employers and employees alike. You have the opportunity to get ahead of the curve with this innovative white label insurance product.  If you want to learn more about growing your customer LTV with Boost’s Parental Leave Insurance, contact us.
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