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Tyler (00:00):

Non-admitted ENS was kind of like a bad word in our industry, you know, about 10 years ago. It meant that you were a bad,

Julie (00:06):

bad risk. It was a dirty word. It wasn't even a bad word. It was a dirty word.

Julie (00:17):

Alright, welcome to the Risk Rundown episode. About admitted and not admitted with my co-host Tyler Banks. Thanks Tyler for joining.

Tyler (00:26):

You're welcome Julie. And you know this podcast is so important that whether in sickness or in health, Julie, we are here for you. We are here to inform you what's going on in the insurance industry.

Tyler (00:37):

Julie's a little bit under the weather, but just like the post office she delivers in rain, sleek, or snow, she is here for you guys.

Julie (00:45):

But I think this is a good topic. This is something that you and I are talking about all the time, and that topic is admitted. Non-admitted and self-insuring. Right.

Tyler (00:56):

And if I just look, five years ago there was admitted opportunities up and down the coast in California without any issue.

Tyler (01:05):

Now we're in 2026. Julie, there's no such thing as an admitted product for a $20 million home in California. It's just not out there. Everything over $20 million that we are seeing. Falls into the non-admitted market, um, because it just gives 'em flexibility with a, with a rate and it gives 'em flexibility with the contract, but it's just not available in California for anything.

Tyler (01:30):

Not even coastal property for anything over $20 million. Um, vast majority of that is going into the non-admitted market.

Julie (01:37):

Can you kind of explain a little bit about what the differences are between the admitted product and a, not admitted, not necessarily the coverages, but why, how they're structured?

Julie (01:47):

Right.

Tyler (01:49):

Great question. And again, non-admitted ENS was kind of like a bad word in our industry. You know, about 10 years ago, it meant that you were a bad, bad risk. It was

Julie (01:57):

a dirty word. It wasn't even a bad word, it was a dirty word.

Tyler (02:01):

No one wanted to, like if you were with an ENS non-admitted product, that means that you were really not insurable.

Tyler (02:08):

Right. Yeah. Something had happened. Either a profile or there's something you know, inherently wrong with your

Julie (02:13):

property claims.

Tyler (02:14):

Yeah, exactly. So an admitted program, you know, in, in a basic sense means that the department, you will file a rate and a product with the Department of Insurance, whatever state that you're in.

Tyler (02:25):

And the state of California, the state of Virginia, wherever you happen to live, will say, okay, you can sell a product at that rate, you know, to whoever comes to you. Everything is strictly managed by their Department of Insurances on what you could charge per thousand in a particular geography for your product and not admitted.

Tyler (02:47):

In a sense. It's like you are circumventing. You know, that appeal process to increase, you know, the rate on a policy, and you're saying, I am coming up with what? With with my own rate guidelines for something that I feel is appropriate for your geography and for my profile, and you are going to charge a rate accordingly.

Tyler (03:06):

So because you're not going through the department insurance, there's a lot more flexibility with rate increases. We talk a lot about manuscript. You're manuscripting a lot of these forms. Um, a lot of times the carrier or the broker needs to charge you a little bit of a fee for that, that non-admitted product.

Tyler (03:24):

But we're in a situation now that non-admitted is commonplace. If you live in ca, you know, catastrophic prone areas like a Florida, like a California, even if you're in Texas with the convective storms and, and some of the flooding that they've had.

Julie (03:38):

I mean, and, and let, let me tag onto what you said. Um, real quick too, is the admitted product, it's all regulated, it's guar, the funds are guaranteed, right?

Julie (03:48):

Where the non-admitted, it's, it's kind of more of a, like you said, a manuscript policy. Like for example, um, a non-admitted, um, policy in, uh, Florida, let's say. They can have different coverage limits on wind and hail or hurricane. That's why it's so important to be able to have a knowledgeable insurance agent to work on your behalf, to be able to, um, work and talk with these insurers to talk about, um, what type of, uh, coverage coverages are at clients really want to expose themselves to.

Julie (04:22):

Right. And kind of getting into the self-insurance realm, what kind of high deductibles are they, are our clients willing to take?

Tyler (04:29):

But I, I'd also like to maybe kind of dive in a little bit, Julie, around, you know, when we talk about, again, the non-IT policy, we talk about, you know, manuscripting, some of these things, more clients are choosing to self-insure than ever before.

Tyler (04:44):

And, but that can take on numerous, you know, forms when you're self-insuring. It could be. On the bottom end through a deductible. It could be on the top end by putting something again on an agreed value cap versus a full value cap replacement cost cap. A cap. Um, or again, you can choose not to ensure the item itself.

Tyler (05:04):

Can you just talk about some of the things that you are seeing on the not admitted side that's more creative, um, today than what we just had a few years ago?

Julie (05:14):

Yeah, I mean one of the main things now, especially for the people that have multiple um, properties and multiple homes, is really blanketing a policy, right?

Julie (05:23):

So instead of ensuring just one, one policy, ensuring one house to be able to actually streamline that process and have one policy that includes a blanket limit for all locations, it is really helpful for that client. Right? There's also ways of, um, including sublimates. Adding supplements into that policy.

Julie (05:45):

If it be for earthquake, if it be for flood, if it be for, you know, putting a cap on wildfire, like you have a $20 million home, but you're gonna cap out the wildfire exposure and the wildfire coverage up to 10 million, right? Normal policies, maybe you could get maybe a hundred thousand dollars deductible and that's all you could get.

Julie (06:06):

That's the max that admitted policy will be able to offer to you, but a non-admitted product. It can be a million dollar deductible on a whole blanket policy. Right. So there's different ways to look at it. To your point, I'd love to get your thoughts on this. There's a, a, a fine line that you can actually integrate the non-admitted and the admitted products.

Tyler (06:27):

Mm-hmm.

Julie (06:28):

Right? So you can have an admitted property or policy, maybe a not admitted. Layer up on top.

Tyler (06:35):

Absolutely. Sometimes you can get a basic homeowner's policy, right, that covers, you know, some of your basic perils, and then you can get a policy that sits on top of that that gives you additional coverage and additional limits on your home.

Tyler (06:49):

So this is actually pretty common on the commercial. Side, right? Yeah. So if, let's say you have a hundred million dollar high-rise building, rarely do you see one carrier ensuring that entire risk, right? You're starting to see layered approach when it comes to these types of risks. And it's interesting because we're also starting to see a, a, a direct correlation with the exact risk.

Tyler (07:10):

So if you're in a severe wildfire zone, you're going to see a higher wildfire. Deductible. Right. I think another thing Julie to kind of point out is that, you know, when we had the catastrophe out here again, just a little bit over a year ago here in, in, uh, the Pacific Palisades, um, a lot of clients were not as insured to the actual placement cost of their home.

Tyler (07:36):

Right. So unfortunately, a lot of these clients that went to the direct market. I'm not gonna name any names, but the direct markets mean that you're calling a a certain insurance carrier and they're giving you a policy. They are not going out and inspecting the home to give you an accurate depiction of what it would cost to replace your home.

Tyler (07:54):

So we feel it's really important to do inspections regularly. Right, so to make sure that you are constantly up to value in the and, and everyone thinks that they know what it's cost to replace their home. I'm sorry you don't know what the cost is if you are in a catastrophe.

Julie (08:12):

But to kind of loop that into a not admitted, admitted, it's important for people to understand those valuations if they are going to self-insure.

Julie (08:20):

Or if they're going to cap out that policy. If you think that you have a, if your home is $10 million, but really it's 20 and you make decisions on a $10 million exposure versus a $20 million exposure, you're not making the same decisions. That's why it's really important to be able to have, even if you aren't insuring it to full replacement cost, it's important to know what that replacement cost is.

Julie (08:43):

So you are well educated about making those decisions about what you're willing to self-insure. So I think to kind of like bring this full circle, I think it's really tempting for people to say, oh, I'll self-insure for those people that are of significant wealth. And I think it's really tempting for them to say, oh, I'll just self-insure that.

Julie (09:01):

I don't wanna spend the premium on it. It can be very tempting, but it's also very, very risky. And you know, when the rubber hits the road and there's a claim, no one is thinking in their, in their right mind, they just aren't. Right. You need to make those decisions. Prior to a claim and have a full conversation about what's gonna happen in the event that there is a claim, and how the policy is going to respond and what they are responsible for versus what the insurance company is responsible for.

Tyler (09:31):

You know, Julie, the, the joke in our industry is when do people buy flood insurance and earthquake insurance? Right after a flood and right after an earthquake, we get inundated with phone calls. I need to look at my insurance, you know, my, my earthquake policy. I need to look at my flood in policy. I don't know if I have enough flood.

Tyler (09:50):

So don't be that person that is reactive. You know, to market. Yep. And weather conditions. We can't control the weather. All. The only thing we can do is protect against it. Right. But I still don't think that you necessarily, if, if you've got, um, significant means, you don't necessarily have to ensure everything to value.

Tyler (10:09):

Right. Use some, let's do some analytical discussions around what your risk tolerance is, um, what the market will bear. And I think we can find a solution for most clients that would be reasonable.

Julie (10:22):

It's definitely a balancing act, right? The key is to balance risk and appetite and all that different kind of stuff.

Julie (10:29):

So as we many times do, we have kind of like a rapid fire thing between the two of us.

Tyler (10:35):

Alright, Julie, here's one for you. A client assumes that admitted products are always cheaper. What's the truth behind that?

Julie (10:45):

Not true because the, the insurers are, have built in coverages into that contract that they have to price for.

Julie (10:53):

And so they have to gain, um, the premiums on that where a not not admitted product, um, and policy. They can tailor what they want to exclude and what they want to include. And if there's high risk exposure on a certain property that they don't want to include, they don't need a price for that. So sometimes a non-admitted feature.

Julie (11:14):

Is less expensive, but the coverages are definitely not the same. We're not comparing apples to apples. One more for you, Tyler. A client wants to self-insure wildfire risk. What's the danger in that? What is the, what are the pros and cons for that?

Tyler (11:29):

You know, Julie, it's such a tricky question because if you live in a wildfire area, to be quite honest, premiums are extremely high.

Tyler (11:37):

So people are always looking at do I Sure Do I not, do I self-insure? Uh, it's funny 'cause I'm now, uh, from my view, I'm looking over Hollywood Hills. Has burned, you know, several times over the last couple of years. I remember having a conversation with a client who had a home on the beach and they said, why do I need fire insurance?

Tyler (11:57):

I have the Pacific Ocean surrounding me, right? Why? How could my home, you know, burn? And then the Pacific Palisades happened, and all those homes all the way down to the beach actually burned. So I do think that you can self-insure. A portion through a wildfire deductible or maybe even something on an agreed value basis.

Tyler (12:20):

Um, so you can get creative with self-insuring, but you know, we highly recommend if you live anywhere near a fire. Wildfire zone, self-insuring wildfire, um, is not something that is recommended highly in our industry.

Julie (12:34):

It's a valid, it's a valid concern.

Tyler (12:36):

So here's one for you. So you have a guest who, um, is at your home for, let's say a little get together or party.

Tyler (12:45):

They slip and fall and they injure themselves. How does liability play out? If you're self-insured,

Julie (12:52):

So this is my take on things. If you're self insur, self-insuring liability, it's first dollar paid out no matter what, right? If you're self-insuring liability, that is a complete unknown about how much a settlement is gonna cost, how much a judge is going to award, how much a, a, a jury is going to award.

Julie (13:11):

So you are really rolling the dice. You're really gambling when you're self-insuring liability. So we always tell people that if you're gonna self-insure anything, self-insure a property. Like an actual physical asset and put that savings towards increasing liability, because that's the complete unknown.

Tyler (13:28):

You know, Julie, these, these jury awards are becoming astronomical. I know. And so as a family, you gotta protect those assets because for the most part, you know, um, the, the cost per, per million on a liability policy is, is fairly affordable. So it's, you know, we're always gonna recommend higher liability limits, but more importantly, it's the defense cost as well that can also skyrocket.

Tyler (13:58):

Especially if something's litigated. So, um, if you can get a policy where defense limits are included into the policy, that's always best. Um, I think some insurance carriers, especially on the non-admitted side, right, they, they may exclude defense costs. They may exclude, you know, libel, libel, lander, they may.

Tyler (14:18):

Slander, right. Uh, so there's a lot of things that we are starting to see an exclusion in a liability policy. You can still get it, but it may be a little watered down, um, versus what you're able to get in the admitted market.

Julie (14:32):

Well, I just wanna say thank you. We have so many of these conversations offline, you know, we

Tyler (14:37):

do.

Tyler (14:37):

This is, this is just another conversation we have on a daily basis. Joey, I, this really is, I know this, this is what we're discussing off screen, you know, with our clients, you know, with each, with each other, constantly strategizing, you know, what's, what's the market to bear? And let me tell you that the market is moving at a very fast pace.

Tyler (14:53):

A year ago, we didn't think we would have any options for insurance here in the state of California after one of the worst wildfires ever. Yep. We now have several options, several carriers that are willing to take a look and, and provide, um, policies or before, again, a year ago we did not have that. So yeah.

Julie (15:12):

Well, thank you for joining us today. We appreciate your viewing, and as always, stay safe and stay protected.

00:00 — From “dirty word” to standard solution
The episode opens by revisiting how non-admitted insurance was once viewed negatively in the industry. What used to signal a “bad risk” has now become a common and necessary solution in today’s evolving insurance landscape.

01:00 — The disappearance of admitted options for high-value homes
The conversation highlights a major market shift: admitted coverage is increasingly unavailable for high-value homes, particularly in California. Properties over $20 million are now almost exclusively placed in the non-admitted market.

01:45 — Understanding admitted vs. non-admitted structures
The hosts break down the core differences between admitted and non-admitted insurance. Admitted products are regulated and filed with state departments of insurance, while non-admitted policies offer more flexibility in pricing, underwriting, and coverage design.

03:30 — Why non-admitted coverage is now the norm
In catastrophe-prone areas like California, Florida, and Texas, non-admitted insurance has become commonplace. The market has shifted from avoiding these products to relying on them as a primary solution.

04:00 — Flexibility comes with responsibility
Non-admitted policies allow for customized coverage, including varying limits for risks like wind, flood, earthquake, and wildfire. This flexibility makes it critical for clients to work with knowledgeable advisors to fully understand their exposure.

04:30 — The growing role of self-insurance
Clients are increasingly exploring self-insurance strategies, whether through higher deductibles, capped coverage, or excluding certain risks altogether. The discussion emphasizes that self-insurance is not all-or-nothing, but a spectrum of decisions.

05:15 — Creative program structures and layered solutions
The hosts discuss more advanced strategies such as blanket policies across multiple properties, sublimits for specific risks, and layering admitted and non-admitted policies to create more comprehensive protection.

07:10 — The importance of accurate valuations
A key risk highlighted is misunderstanding replacement cost. Without accurate property valuations, clients may make poor decisions about coverage limits and self-insurance, leaving themselves underprotected.

09:30 — The danger of reactive decision-making
The conversation warns against waiting until after a loss to review insurance. Many clients only reassess coverage after events like floods or earthquakes, when it’s already too late to adjust their protection.

11:30 — Self-insuring wildfire risk: high stakes decisions
With rising premiums in wildfire-prone areas, self-insuring can be tempting. However, the hosts caution that wildfire losses can be catastrophic and unpredictable, making full self-insurance a risky approach.

12:30 — Liability risk and the cost of being wrong
The episode closes by emphasizing that liability is the most dangerous area to self-insure. With rising legal awards and defense costs, insufficient liability coverage can expose clients to significant financial risk, especially as some non-admitted policies may exclude key protections.