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... investments (junk bonds, too much real estate) Agent grapevine is giving some ...olvencies will continue to be of major and immediate concern for agents during...

...lines” is a misnomer, because it’s really a list of the agency’s contractual b...omply with all applicable laws, rules, and regulations.

... , then comment on its applicability to Big Red: ORGANIZATIONAL FACTORS Has the company been in business for less than 15 years? Yes. The insurer was organized in 1978 (see Exhibit 1) . Does the company write primarily Private Passenger Auto, Workers Comp, Commercial or E&S /Specialty business? Yes. Almost two thirds of Big Red's premium volume was Workers Comp and one third other Commercial (see Exhibit 6) . Have there been any recent atypical ownership/management changes, heavy use of MGAs, or ... . No warranties, express or implied, are made that the list is either a predictor or a guarantor of a company's financial condition. To illustrate the use of the Insolvency Checklist, please download this financial information excerpted from a 1983 A.M. Best report on a real carrier we'll call the Big Red Insurance Co. (to protect the innocent, guilty, and embarrassed) . Big Red was declared insolvent in 1985. The document presents seven categories of A. M. Best information as exhibits:General Information (Exhibit 1 ... there been any negative operating income or sustained underwriting losses during the past three to five years? Yes. Exhibit 5 indicates a significant deterioration of underwriting and bottom-line operating losses over the past five years. Has the company made any questionable investments (in affiliates, real estate, cash increases, low yields, etc.)? Yes. Using the yields and asset values from Exhibit 2, Big Red's return on investment was only about 2% . In addition, the cash component of the investment portfolio increased from 12.2% to ...

... corporations), with the flexibility and tax advantages of a partnership. However, along with those benefits and flexibility comes its inevitable corollary: complexity. The very fact that you have so much flexibility means that you're dealing with a complex entity. Every agent in the Commercial Property/Casualty insurance marketplace is seeing a steadily increasing number of clients organized as LLCs. To serve them properly and avoid E&O exposure, agents needs to know the basics of LLCs. It's also nice to be aware of their additional sales opportunities! ... or from their own professional malpractice; but they do provide protection from cross-liability for E&O and torts of the LLP's other participants. Your clients-and you-can benefit from LLCs in a number of ways: Consider using one instead of a partnership or sole proprietorship to hold real estate (such as your agency office building) . Benefits include tax, cash and profit allocation opportunities, and Liability protection. Consider them as one asset-protection strategy. For example, clients often place individual apartment buildings into a series of separate LLCs to compartmentalize their ... portfolio in case of catastrophic lawsuits or under-insured losses involving any of their buildings. They're a good way to shield owners of raw land from runaway jury awards to trespassers or the like. In joint-venture situations, they can make dissolution ( 'divorce') of the LLC's members easier and more tax efficient. LLCs can be very effective in estate planning. Members can achieve a step-up in basis at death. LLCs can also substitute for a trust or family limited partnership in many cases. You can use discounting' concepts you may ...

...lex entity. Every agent in the Commercial Property/Casualty insurance marketp...ary E. Jacobson, JD can be reached at Vander Wel, Jacobson, Bishop & Magnusson...

... , wholesalers and service providers. Negotiate lucrative contracts with carriers and wholesalers. Net result. More revenue for your agency! Clients & Prospects will research you, your co-workers and your agency here. The most comprehensive online insurance industry reference library for - Personal Lines Professionals Commercial Lines Professionals Life/Health & Benefits Professionals Online newsletters and content that you can use for your clients and social media efforts. Ability to attach leads and clients to your specific market searches, with e-mail alerts for all the market, articles, blogs and people ... Dramatic changes in written premiums from one year to the next Surplus growing faster than 10% a year (could be unstable growth) Transfer of loss reserve portfolio (manipulation of the financial statement) Consistently under-reserving on your claims Questionable investments (junk bonds, too much real estate) Agent grapevine is giving some negative signals SECTION III-ITEMS THAT COULD BE INDICATIONS OF SOME FINANCIAL DIFFICULTIES: Assign one (1 ) point for every YES answer on the portion of the checklist. Consistently poor business decisions being made Information coming from branch inconsistent with ... from home office Employee morale down and turnover among underwriters up Letter from company denying rumors (add extra point if you hadn't heard rumors) Change in agency contracts, especially termination or profit-sharing procedures Extensive changes in agency force (many appointments or terminations) Makes erratic changes in underwriting authority, either more or less Slowdown in paying claims Slowdown in processing return premium endorsements and audits Overall deterioration in service Much lower rates or higher commissions than similar companies Enters new lines of business or markets that other companies are avoiding Sudden withdrawal from a territory ...

... , wholesalers and service providers. Negotiate lucrative contracts with carriers and wholesalers. Net result. More revenue for your agency! Clients & Prospects will research you, your co-workers and your agency here. The most comprehensive online insurance industry reference library for - Personal Lines Professionals Commercial Lines Professionals Life/Health & Benefits Professionals Online newsletters and content that you can use for your clients and social media efforts. Ability to attach leads and clients to your specific market searches, with e-mail alerts for all the market, articles, blogs and people ... Dramatic changes in written premiums from one year to the next Surplus growing faster than 10% a year (could be unstable growth) Transfer of loss reserve portfolio (manipulation of the financial statement) Consistently under-reserving on your claims Questionable investments (junk bonds, too much real estate) Agent grapevine is giving some negative signals SECTION III-ITEMS THAT COULD BE INDICATIONS OF SOME FINANCIAL DIFFICULTIES: Assign one (1 ) point for every YES answer on the portion of the checklist. Consistently poor business decisions being made Information coming from branch inconsistent with ... from home office Employee morale down and turnover among underwriters up Letter from company denying rumors (add extra point if you hadn't heard rumors) Change in agency contracts, especially termination or profit-sharing procedures Extensive changes in agency force (many appointments or terminations) Makes erratic changes in underwriting authority, either more or less Slowdown in paying claims Slowdown in processing return premium endorsements and audits Overall deterioration in service Much lower rates or higher commissions than similar companies Enters new lines of business or markets that other companies are avoiding Sudden withdrawal from a territory ...

...er amount of coverage to obtain on real property, absent a special relationshi...ell as contract claims. Gilmer v. Intestate/Johnson Lane Corp. (1991) ___ U.S....

...e Passenger Auto, Workers Comp, Commercial or E&S/Specialty business? Yes....uating a carrier’s financial stability and minimizing the risk of an E&O c...