IIABNY members who place business through wholesale brokers know the drill. Client writes check to retail broker; retail broker deposits check and writes a new check to wholesale broker; wholesale broker deposits check and writes a new one to insurance carrier; carrier deposits check and issues policy; everyone lives happily ever after.
Unless, of course, one of those checks gets lost. A New York broker found out last year that the cost of a check mailed to the wrong address can be steep.
An executive recruiting firm retained the broker to obtain errors and omissions coverage. The broker obtained coverage from Liberty Surplus Insurance Corp. via a wholesale broker that acted as Liberty’s program administrator. One week before the end of the first policy term, the broker sent the insured a renewal application. The insured completed the application and sent it back to the broker. Twelve days after the renewal date, the broker forwarded the application to the program administrator and requested a quote for the new term. The wholesaler immediately asked Liberty for a quote and permission to backdate coverage. Liberty issued a quote the same day and gave the administrator permission to issue the renewal upon receipt of the premium payment.