Unauthorized insurers must abide by the rates and forms specified by the state.

Unauthorized insurers, also known as surplus lines insurers, operate outside the traditional state-regulated insurance market. In general, these insurers do not have to comply with the state's established rates and forms because they are not licensed by the state to conduct insurance business. Instead, they provide coverage for risks that approved, licensed insurers may not be willing to underwrite, which often includes higher-risk policies.

The premise behind surplus lines insurance is to allow flexibility in terms of pricing and policy forms, enabling them to meet the unique needs of clients with non-standard risks. This is essential in markets where traditional insurers cannot provide appropriate coverage. As a result, the assertion that unauthorized insurers must adhere to state-specified rates and forms is false.

Understanding the operational dynamics of unauthorized insurers highlights the rationale behind their exemption from state-imposed regulations, allowing them to offer products and prices that best suit the diverse and sometimes more complex needs of their clientele.