Which entities are permitted to issue surplus lines insurance?

Surplus lines insurance is designed to cover risks that are not readily insurable by traditional admitted insurers. This type of insurance is issued by non-admitted insurers who are not licensed in the state where the insurance is being sold. However, these non-admitted insurers are typically authorized to provide coverage in other states and are recognized by the regulatory authorities for their financial stability.

The correct choice reflects that only non-admitted insurers authorized in specific states can issue surplus lines insurance. This means that while these insurers may not be licensed in the state providing the coverage, they must meet certain regulatory requirements and be approved in other jurisdictions.

In contrast, admitted insurers typically have to follow established state regulations and are restricted to operating within the normal insurance market, making them unsuitable for issuing surplus lines. Government-owned insurance entities primarily focus on covering specific risks in the public sector and do not cater to the broader spectrum of surplus lines. Furthermore, brokers must be licensed to place surplus lines insurance; therefore, brokers without any licensing are not legitimate entities authorized to issue such insurance. This understanding reinforces the significance of non-admitted insurers' role in providing necessary coverage for unique and high-risk situations that cannot be insured through traditional means.