Technology innovation, changing demographics and legislative updates have created exposures that are not commonly insured in the standard lines market. As the nation's largest wholesaler and the largest distributor for Lloyd's, we know how and where to find coverage for your insureds on the cutting-edge.
Technology innovation, changing demographics and legislative updates have created exposures that are not commonly insured in the standard lines market. As the nation's largest wholesaler and the largest distributor for Lloyd's, we know how and where to find coverage for your insureds on the cutting-edge.
Emerging risks are new, unforeseen circumstances your clients haven't yet faced. And in a world that constantly evolves, so do these risks. From cryptocurrency to standardization around cannabis, there's no shortage of classes that require specialty insurance.
Working to keep you and your clients ahead of the curve, Amwins offers a variety of coverage options for specialty classes and emerging risks. We know that the challenge in emerging risks is not about simply keeping up with new risks that emerge. Rather, it's about anticipating their impact, ensuring a proactive response that sets your clients up for success today, tomorrow and 150 years from now.
With specialty insurance teams adept at uncovering emerging risks, Amwins has the intellectual firepower and resources to protect your clients against a world of uncertainty.
Standing at the crossroad of client needs and what markets offer allows us to provide unique insight to our retailers.
From designing a proactive claims management plan to engaging on difficult and complex claims, Amwins supports you when you need us most.
Amwins offers access to legal counsel, including advising and representation to help protect your clients' assets.
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Seeing the words “not licensed”, “insolvency” and “payment of claims may not be guaranteed” on an insurance policy can, understandably, cause concern with insureds, especially those with little to no experience with the excess and surplus (E&S) marketplace.
Let’s take a closer look at required disclosure wording used on surplus lines policies so when your insureds have questions, you can put them at ease.
1. “This insurance has been placed with an insurer that is not licensed as an admitted carrier by the State of Michigan.”
Wording on a policy that references an unlicensed carrier means that the policy was issued by a non-admitted insurance company. A non-admitted insurance company is not licensed in the state where the risk or insured is domiciled and does not file rates in that state. “Not licensed as an admitted carrier” does not mean unregulated. Each insurer must meet certain criteria to be an eligible non-admitted market, including regulations for solvency. It does mean that the carrier has the ability to set their own rates for the classes of business they write, leading to the flexibility in rate and form that is a key differentiator in the E&S marketplace.
2. “In case of insolvency, payment of claims may not be guaranteed.”
This means that the state fund will not compensate a qualified insured if the carrier goes bankrupt and cannot pay claims. While this seems intimidating on the surface, there is not a substantial difference in the risk to an insured. In fact, while the surplus lines market more than doubled between 1993 and 2013, their ratings and impairment experience has remained above average. According to A.M. Best’s 2014 “Best’s Special Report”:
It’s important to note that the guarantee funds ability/authority to pay claims in case of an admitted carrier insolvency is typically very limited. This negates much of the perceived value of admitted over non-admitted paper. In fact, guaranty funds vary by state and can impose limitations on the collection of funds. Some of these limitations include:
Understanding your broker’s protocols for placing business with non-admitted carriers is crucial. At AmWINS, our market security team reviews and approves all new markets; with few exceptions, our minimum standard is a carrier with an A- rating. However, in a case where a market is relatively new, growing quickly, or otherwise warranted, a carrier with less than an A- rating may be approved. In this situation, we ensure that our client is aware of the carriers rating prior to binding business. In the event that a carrier is downgraded, AmWINS proactively communicates with our clients and is willing to remarket the account mid-term if instructed.
This article was authored by Kendra Schaendorf, member of AmWINS’ national Professional Lines practice.