Minimum and Deposit Premium GL

[CoJones]

Has anyone see this ?

The agent stated that the policy was auditable based on sales and that the year-end sales had been lower than expected, which indicated a return of premium to the client. The agent stated that the insurer refused to provide a return premium because the policy was written with an annual minimum and deposit premium. The agent did not state the amount that was charged as the annual minimum and deposit premium.


If so, what carrier's are doing this, if not all of them ?

[rcenters]

Surplus lines policies can often be written that way. Not impossible in the standard market, but unusual.

Hasn't happened to me, but I've seen a situation where an Umbrella quote was auditable and also minimum annual earned, and it was shown on the both the quote (and the CSR missed it and didn't bring it to the insured's attention at time of binding), and the policy (and what insured reads their policy?).

[mccluney]

In my experience most Surplus Lines Policies are written with minimum deposit premiums. When this occurs, the policy contains the endorsement that clearly indicates this fact. As the endorsement is not part of the "boilerplate", the endorsement should be easy to find. The insured also has an obligation to read his policy and ask his agent about any terms he does not understand. The information should also have been included in the proposal.

[kevinraz]

Not just the E&S market does this on GL. If you have GL placed with a standard carrier but written in their high hazard area it's frequently has a minimum & deposit provision.

It should be made fairly clear on quotes and the policy.

[mightyquinn]

A 100% policy MP for auditable policies has been the rule among SL carriers and the Sp Risk divisions of admitted carriers for at least 25 years just like the 25% MEP at inception.

if your insured's sales or receipts stand a good chance of falling under those on the app you should tell your wholesaler or underwriter to secure or grant a reduced MP at audit. That can fluctuate from 85% to 95% of the policy MP. This should not be abused but it is a good tactic for contractors in this market and for newly introduced products.