Which type of risk is so specialized that admitted insurers are unwilling to insure it?

The correct choice is unique risk, which refers to risk types that are so specialized or unusual that traditional, admitted insurers consider them too high-risk or unconventional for their underwriting criteria. These risks might pertain to niche markets, specialized businesses, or specific activities that do not fit the standard coverage models used by admitted carriers. As a result, these risks are more likely to be placed with surplus lines insurers, who are willing to underwrite risks that standard insurers may find unacceptable or beyond their capacity.

In contrast, the other terms do not align with this specific context of risk specialization. Distressed risk typically refers to risks associated with entities facing financial challenges, which may make them unattractive to insurers but not necessarily due to specialization. High-capacity risk might imply large amounts of coverage that are difficult to place, but it does not specifically relate to the unique nature of the risk itself. Common risk usually points to risks that are widely covered by standard insurance policies, further differentiating it from the idea of unique or specialized risks.