What type of client transaction occurs if a producer handles a non-admitted insurance company?

When a producer handles a non-admitted insurance company, the transaction is classified as surplus lines. These types of insurers are not licensed to do business in a particular state and therefore do not have the backing of the state’s insurance department. Surplus lines insurance typically covers unique or high-risk situations that standard admitted insurers are unwilling to cover.

Producers must follow specific regulations when transacting in surplus lines, such as ensuring that the client understands the implications of using a non-admitted insurer and that the coverage is indeed needed due to the nature of the risks involved. This type of coverage is beneficial for clients who are unable to find adequate coverage through traditional insurance providers.

Other options, such as standard lines and admitted lines, refer to insurance offered by companies that are fully licensed and regulated by the state, and primary lines is not a commonly recognized term in this context.