Best Practices for Responding to Carrier Insolvency
When a carrier is declared insolvent, it is your responsibility as an agent to notify your clients and and take reasonable care to protect them.
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Offer replacement coverage before the cancellation becomes effective
- Let the policyholders make the decision regarding replacing coverage.
- Have them confirm the option selected in writing. Begin taking steps to place coverage elsewhere.
- Confirm with customer that they want you to do so.
- Begin marketing as if you were transferring coverage from one carrier to another in a normal situation
- When new policy is placed, BE SURE TO REVIEW TO DETERMINE ANY DIFFERENCES IN COVERAGE AND POINT OUT ANY MAJOR DIFFERENCES.
- Advise customer in writing to read the policy and contact you if they have any questions.
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Premium, return of premium, payment of claims
- Don't make any payments or refunds of premium
- Don’t offer to pay any outstanding claims
- Contract is between the carrier and the customer
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Notify your client in writing and make them aware of what protection exists
View a sample letter: Notifying Insureds of Carrier Insolvency
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Document. Document. Document.
Document all communications with the client. If by telephone, email a confirmation of the conversation to the client and keep the confirmation in their file.
