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As a retail broker in California, in light of the recent negative activity with CRM, is there a way a broker can better protect themselves by using disclosures and/or strengthened agreements to avoid litigation in the event of insolvency or breach of contract by an SIG? Or just avoid them completely?

It all comes down to picking good business partners. There are succesful and well run SIG's and PEO's (CCN and BBSI are examples) but if you play with snakes like the guys that were running CRM, you will probably be bitten at some point. Many of us held our nose and worked with them because they offered a cheap rate and a product that was unique and could open doors to large and middle market accounts... and now we get to deal with the fallout from their failure.

As a former insurance deputy commissioner I can tell you there is no perfect insurance system. Traditional insurance carriers go insolvent from time to time as do self-insurance groups.

When you see rates of groups dramatically lower than the traditional marketplace, as a broker you need to apply some due diligence. The same can be said for traditional carrier rates.

Check with your insurance regulator about the solvency of a self insurance group you believe has rates too low to justify. Regulators will take action and investigate when consumers question the solvency of a self-insured group or traditional carrier with some concrete examples.

There are many very strong and successful self-insurance groups operating throughout the U.S. As with any insurance organization, however, they remain successful so long as there is integrity in the executive management rank, strong underwriting and actuarial support and strong loss control and claims management.