One of an insurance producer’s most important tasks is ultimately choosing where to source a client’s risk—particularly if it is considered unique or “hard to place.” Needless to say, in an environment of lingering financial uncertainty, the solvency and ratings of carriers is of prime importance.
And while the excess and surplus market in the US continues to rake in premium dollars, there are some in the industry who say working with non-admitted carriers should never be a solution.
Enter Tory Brownyard, president of national program administrator W.H. Brownyard Corporation. According to Brownyard, carrier solvency is “one of the most important things when reviewing an insurer,” and while he has worked with the surplus market in the past, his first choice is always the standard market.
“With a non-admitted insurer, you are stuck,” says Brownyard.
Brownyard stresses that with an admitted insurer, state regulatory bodies guarantee funds and have access to more clients. While acknowledging that surplus markets “have a place,” he believes most agents and brokers don’t understand them and considers them a “kind of last resort.”
“Some brokers will go wherever the lowest premium is, and that’s necessarily the right choice,” says Brownyard. “I think the ultimate policyholder isn’t really familiar with the negative implication."
Yet another issue is the lack of regulation from state bodies.
“If you have a problem, or trouble with a claim, you don’t have the ability to go to a state insurance department,” adds Brownyard.
Not all in the profession share Brownyard's views, however. Candace Bourg, a manager with Program Risk Specialists, says non-admitted markets have their advantages. While agreeing that financial ratings of any carrier are of paramount importance, Bourg suggests there may be circumstances in which non-admitted carriers are even be the superior choice.
“There’s been a pretty widespread perception that E&S paper is somehow inferior or a market of last resort,” says Bourg. “I think that has changed dramatically. In some states, it may even be more appealing to operate on a non-admitted or E&S basis due to the regulatory environment.”
That attracts quality carriers with financial stability, she says.
And the primary benefits of an E&S carrier? Speed to market and more creative approaches to risk.
Bourg also added that she has never had a problem handling claims or other difficulties with an E&S carrier, and that “carriers in general will respond to complaint” as it is in their best financial interest.
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