Loss Control Results Usually Require Disclosure. An agency that uses non-carrier loss control services, regardless of whether it is a third-party firm or an agency’s in-house loss control service, almost always has to disclose any recommendations to the carrier. In other words, just because the agency managed the loss control review does not mean the agency does not have a duty to report. The exception may be if the agency is a broker and has a brokerage contract with the carrier versus an agency contract. As an agent to the company, the primary responsibility regarding underwriting information is usually to the carrier, not the insured. If adverse information is discovered and the agent does not report it to the carrier, and the insured has a loss, the agency may find themselves being sued by the carrier for failure to disclose. Carriers suing their own agencies is a material portion of E&O suits, especially, anecdotally, suits agencies lose.
Another facet of loss control is whether it is considered rebating to offer free loss control. Be sure to comply with your state’s rebating rules if you are offering free loss control services. I believe many states will consider this a rebate.
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