Non-Admitted Insurance Clause
The non-admitted insurance clause provides that a master policy in an international programme covers a risk directly in a given country only where placement without a local licence is legally permitted there, otherwise pointing to a locally admitted policy.
- Clause type
- Condition
- Origin/Market
- International programme
- Favours
- Neutral
- Negotiability
- Negotiable
Purpose
Many countries prohibit or restrict non-admitted insurance, meaning cover written by an insurer that is not licensed to transact business there. The non-admitted insurance clause makes this restriction visible in the wording of the master policy: it clarifies that the central policy only covers a subsidiary directly in a given country where placement without a local licence is permitted. Otherwise, a locally admitted policy must be in place so that the master policy can supplement it through difference-in-conditions mechanisms.
Effect and limits
The clause does not create a legal basis for otherwise impermissible placements; it merely documents the master policy’s limits and points to local requirements. Breaching non-admitted rules can lead to fines, tax consequences and, in extreme cases, unenforceable claims settlement locally. The clause therefore does not replace a country-specific review but structures how the programme deals with its outcome.
Negotiation and practice
In practice, the non-admitted insurance clause is usually negotiated together with financial interest and DIC/DIL clauses, since these close the gaps a strict non-admitted restriction leaves behind. Risk managers should have each programme reviewed on a country-by-country basis to establish whether, and in what form, placement is permitted, as rules and their enforcement change frequently.