White List States: What They Are and How They Work

White list states are U.S. jurisdictions that permit admitted (licensed) insurance companies to place coverage with non‑admitted insurers when needed. This placement of coverage with non‑admitted insurers is commonly called surplus lines (also known as excess lines or specialty/non‑admitted insurance).

Key takeaways

• White list states allow admitted carriers to use non‑admitted insurers for specialized or hard‑to‑place risks.
• Surplus lines insurers take on risks that admitted insurers decline because they are unusual, unusually large, or outside standard underwriting guidelines.
• Surplus lines insurers are typically licensed in their home state but not licensed in every state where they write business, and they generally operate with different regulatory constraints than admitted insurers.
• A licensed surplus lines producer (agent/broker) is required to place surplus lines coverage.

How surplus lines work

Surplus lines insurance provides coverage when state‑licensed insurers cannot—or will not—cover a particular exposure. Common characteristics:
* Coverage can be obtained from an insurer not licensed in the insured’s state (a non‑admitted insurer), provided the surplus lines insurer is licensed in its domiciliary state.
A surplus lines producer must hold a surplus lines license to place these policies.
Because non‑admitted insurers are not licensed in the insured’s state, they are not subject to the same rate and form regulations imposed on admitted insurers in that state. That can allow more flexibility in policy terms and pricing.

Why businesses and individuals use surplus lines

Surplus lines fill gaps in the insurance market by insuring:
* Unusual or high‑severity risks (specialty liability, unique property exposures).
* Entities with poor claims histories or other characteristics that make them uninsurable in the admitted market.

Examples and consumer use

Major players active in the surplus lines market include AIG, Chubb, Markel, Berkshire Hathaway, Lloyd’s of London, and others. One consumer example is flood insurance: some buyers who find the federal National Flood Insurance Program (NFIP) or other admitted products unaffordable or unsuitable may secure alternate flood coverage through surplus lines markets such as Lloyd’s’ specialty programs.

Considerations and tradeoffs

• Access: Surplus lines can provide access to coverage that would otherwise be unavailable.
• Cost: Surplus lines coverage often carries higher premiums because it covers elevated or unusual risks.
• Regulation and protections: Because surplus lines insurers are not admitted in the insured’s state, policy forms and rates may be less regulated, and protections tied to state‑admitted markets (such as certain state guaranty fund coverage) may not apply. Buyers should work with a licensed surplus lines producer and understand policy terms and the insurer’s financial strength.

Conclusion

White list states enable the surplus lines market to operate across jurisdictions, expanding options for insuring unique or high‑risk exposures. While surplus lines can be essential for obtaining needed coverage, buyers should weigh the benefits of availability and tailored terms against higher costs and different regulatory protections.