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Carrier Insolvency

E&O Tips for Responding to Carrier Insolvency

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.

  1. 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.

  2. 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

  3. Notify your client in writing and make them aware of what protection exists

    View a sample letter: Notifying Insureds of Carrier Insolvency

    Texas Insurance Guaranty Association

  4. 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.

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Cari Senefsky

Director of Professional Liability
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Gunnar Kephart

E&O Advocate

Thank You to Our Lead Underwriters

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