Monday, August 8, 2011

Your Responsibility or Not?

What do you do when one company or MGA is following the rules and another is not? As an agent you want to write the business. Is it really your concern if the MGA is following all the state guidelines and filing the correct forms with the correct agency in a timely fashion? Is it your problem as an agent to know how the company you are writing with runs their operations and if they are abiding by state laws and regulations?
Sure, there are MGA’s and carriers out there that will place business just to get numbers on the books. They will not look for declination letters, or proper licenses, or proper appointments, etc. And some of these carriers and MGA’s have been successful operating this way for many years.
However as an insurance agent, you have a commitment to your insured to present the best insurance program – whether the premium is for $500 or $500,000. You have an obligation to know the laws in the state you are writing and abide by them. If a carrier or MGA is not abiding by the laws and regulations and you still choose to place business with them, where does that leave you (and your E&O) in the event of an uncovered loss?

Associations are working hard to make it easier for agents to write business across state lines. They are looking everyday to better define “home state” and make the instructions for writing in their state easier. But in the end it is your job as an insurance professional to know the laws. Impossible to know the laws in every state you say? Yes, it is. That is why you should be utilizing all of your resources – whether state or national trade association, state departments of insurance / finance, etc.

For example, are you aware of the Non-admitted and Reinsurance Reform Act (NRRA)? Do you know what the requirements are in each state? Here is a link to the Compliance Guide put together by AAMGA (www.aamga.org) detailing what is required and where each state stands with regards to this regulation.

http://www.aamga.org/files/NRRA/NRRAComplianceGuide_72611.pdf

The better informed you are, the more vital your input and knowledge is to your client(s).



Ask questions of your carriers and MGA’s and if they do not know the answer ask them where you should go to find the answer. Ask your trade associations. Be in the know… this is one of the many things that make independent agents more valuable than a click or a phone call.