Signing on to sell products for a new carrier is a little like buying a new car—you really want to get under the hood, so to speak. One thing that needs your careful consideration (but is often overlooked) is a carrier’s ratings.
The general public is becoming increasingly savvy when it comes to purchasing policies rated A- and below. And they can find this information easily with the click of a button. But what does it mean to you as a producer to sell B-rated products? I looked at the E&O policy for my company and found this specific exclusion related to a carrier’s ratings:
This Policy does not apply to any Claim based upon, arising out of, directly or indirectly, or in any way involving: Any financial inability or refusal to pay, insolvency, receivership, bankruptcy, or liquidation of any entity in which an insured has placed or recommended to be placed, coverage or the funds of a client; however, this Exclusion shall not apply to any insurer that was rated A- or better by A.M. Best at the time of the insured’s act.
Please understand that I am not calling for all producers to immediately cease selling product from B-rated carriers. However, I do implore you to check your E&O policy to see if a claim involving a company that was B-rated at the time of application would, in fact, be covered.
It is the nature of our society to run to court and sue if we feel we have been wronged. Don’t risk disaster by leaving yourself vulnerable during a suit. Please check with your E&O company and educate yourself about your protections.
Wendy Swanson has been working with and coaching insurance agents and advisors since for nearly 15 years. As a marketing coordinator for Senior Market Sales, Inc., she coaches advisors on practical marketing tips and sales approaches for annuities and life insurance. She can be reached at email@example.com.