ADMITTED COMPANY Meaning and
Definition
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An "admitted company" refers to a specific term in the insurance industry. It is used to describe an insurance company that has met the regulatory requirements of a particular state or jurisdiction and has been granted the necessary licenses or "admitted" status to conduct business there.
To become an admitted company, an insurer must meet various criteria set by the regulatory authorities. These requirements typically include demonstrating financial stability and solvency, maintaining adequate reserves, and complying with certain legal and ethical standards. Admitted companies are also obliged to follow the specific rules and regulations set by the state or jurisdiction where they are admitted.
The status of being an admitted company provides several benefits. For policyholders, it ensures that the insurance company is legitimate and reliable, as it has undergone rigorous scrutiny by the regulatory authorities. It also allows policyholders to have access to state-backed guarantee funds that provide protection in case the insurer becomes insolvent.
In contrast, a non-admitted or surplus lines company is an insurance company that has not met the regulatory requirements of a particular jurisdiction but can still provide coverage through the surplus lines market. While non-admitted companies may offer coverage for risks that may be hard to place, they do not benefit from the same level of consumer protection and oversight that admitted companies do.
Etymology of ADMITTED COMPANY
The term "ADMITTED COMPANY" does not have a specific etymology, as it is a combination of commonly used words in the context of insurance and business.
"Admitted" typically refers to insurance companies that have met certain requirements and are authorized by the state insurance department to sell insurance in a particular state. These companies comply with regulations, maintain certain financial reserves, and are licensed to operate within the state's insurance market.
"Company" refers to a business entity that offers goods or services, in this case, an insurance company. The word "company" has its roots in the Old French word "compaignie", meaning "society" or "friendly association", which in turn derives from the Latin "com-" (together) and "panis" (bread). This indicates the idea of people coming together to share a meal, representing a shared purpose or interest.
