E&O that Covers if Carriers Go Under

[jb60]

Hi,

I just found out from my insurance carrier (Marsh -- the E&O for less), that if I write a policy with a company and they go under, then the insurance doesn't cover that at all. I've checked around and have found some companies that will cover a company that goes down IF they were A or better when the business was written. I've found one company that will cover some specific companies that a particular FMO has down to a B++ but only for the defense (rationalle that state insurance funds would cover rest, but really!).

Does anyone know of an E&O carrier that would cover down to a B+ or better at the time business is written. I'm thinking about annuity and LTCi companies here.

Thanks,

 

[tomoverton0123]

Hi,

I just found out from my insurance carrier (Marsh -- the E&O for less), that if I write a policy with a company and they go under, then the insurance doesn't cover that at all. I've checked around and have found some companies that will cover a company that goes down IF they were A or better when the business was written. I've found one company that will cover some specific companies that a particular FMO has down to a B++ but only for the defense (rationalle that state insurance funds would cover rest, but really!).

Does anyone know of an E&O carrier that would cover down to a B+ or better at the time business is written. I'm thinking about annuity and LTCi companies here.

Thanks,

Contact Calsurance. They don't care if the original is rated A+ or not rated at all as long as the company that takes over is rated B+ or better.

 

[EO4U]

Yes, Liberty Mutual Agency Underwriters' Insolvency Exclusion carves out carriers rated B+ or better. Just remember the exclusion is only triggered "IF" the carrier goes insolvent and you have a claim against you because of the insolvency. Read your endorsement or the language in the policy carefully. NOTE: LMAU's policy is targeted toward P&C agents.

 

[dblsurety]

Check the fine print in your policy. Mine in particular covers down to B+ and those carriers who were rated B+ at the time coverage was placed regardless of their rating afterwards.

 

[EO4U]

You are correct, if a policy has an insolvency exclusion on it and carves out a certain AM Best Ratings then coverage is "at time of placement". This being new or renewal business. E&O carriers expect agents to keep up with the rating of where they place business. So if you place an account this year while the carrier is rated A and in 6 months they drop to C or Non-rated, you need to move it if possible as soon as you can but for sure at renewal. Because if it renews while the rating is less than required and the carrier goes under you will have no coverage for a claim against you because of the placement. You also need to make sure you make your insureds aware of the rating fall off. It may not mean anything to them, but if they are curious they will ask and should a claim arise at least you can say..."Here is the documentation where I informed you."

My agency did have a carrier go under. As soon as the rating began dropping we cut our contract and moved the accounts as quickly as we could. When the carrier went under there was no coverage, for our insured - period. The insureds had to find alternate coverage and what they paid for the failed policy was never returned. They were highly upset. Accounts undergoing a claim were without an attorney, there was no more defense paid because the carrier was gone. It was a big mess.

Moral of the story, keep up with the ratings of your carriers.