What is meant by "non-admitted insurer" in the context of surplus lines?

A "non-admitted insurer" refers to an insurance company that is not licensed in a particular state to conduct business. However, it can still provide coverage under the surplus lines market. Surplus lines are necessary when the standard insurance market cannot offer the required coverage for a specific risk. Non-admitted insurers typically handle high-risk businesses or unique risks that the conventional market is unwilling or unable to insure.

In this context, option B correctly identifies that a non-admitted insurer provides coverage under surplus lines without being licensed in the state where the coverage is sold. This is a critical aspect of surplus lines insurance, as it allows for more flexibility in addressing specialized or complex insurance needs that are unmet by admitted insurers.

The other options describe characteristics that do not accurately reflect what a non-admitted insurer is. For instance, an insurer licensed by the state pertains to traditional, admitted insurers that must adhere to strict regulations and are subject to state oversight. The reference to covering only personal risks limits the definition incorrectly, as non-admitted insurers can cover a wide range of risks, both personal and commercial. Lastly, the notion that an insurer is automatically exempt from regulations does not capture the reality of non-admitted status; these insurers still must operate within the framework of respective