What distinguishes the surplus lines market from the standard market?

The surplus lines market is distinguished from the standard market primarily because it deals with unique or harder-to-place risks that may not be accommodated by standard insurance policies. This market allows insurers to underwrite these unusual or specialized risks without the requirement for state approval of rates. Therefore, surplus lines insurers can quickly adapt their offerings, tailoring coverage and pricing based on the specific needs and characteristics of the risk.

In contrast to this, the standard market typically involves standardized rates that are regulated and require state approval. The surplus lines market fills a critical gap by providing coverage for non-standard risks, offering more flexibility and innovation in product offerings for insurers catering to unique circumstances. This flexibility often results in policies that are highly customized compared to those found in the standard market.