Gateway Insurance

[GrowthAgent]

I've come across a company named Gateway Insurance. Its an admitted market that will write contractor risks (GL, Auto & WC), but it has a B+ rating. What is the hang up about B paper? Especially for residential contractors. I understand the contractual issues for commericial contractors for GL, but why is it an issue for WC?

Its not like an A rated carrier can't go insolvant (check Kemper).

Is it an E&O issue? My E&O will allow me to sell B paper.

I'm just curious about the hang up. I write business in NY and this market will write tough risks like roofers.

Any feedback is welcomed.

[LadyBroker]

For contractors, sometimes their contracts, especially with a municipal agency, require their carriers to be rated no less than A-7. I completely agree with you about A rated carriers going insolvent, but what can you do?

The more important component of that rating, though, is the financial portion. Are they a B+3, or a B+15? Sometimes if the financial number is over a 7, you can get an exception.

Good luck!

[doyourhomework]

The theory about "B" rated carriers is that their writings usually do not exceed their policyholder surplus because "A" carriers are preferred. The policyholder surplus is the claims paying ability of the carrier.

Ultimately,unless the carrier has a niche that "A" markets do not have, their ability to pay claims will deteriorate unless they write what business they can write which is usually that which the "A" carriers do not want.

Again, if they have no niche, that business will be what no one else wants and while their writings might then exceed surplus, the writings will be adverse selection issues so the chance that carrier will enter a downward spiral is greatly enhanced.

Unfortunately, to be brief, it is the old theory that "crap begets crap" in action.

My E&O also permits carriers rated as low as B+, 5 but I only use "B+" carriers when they are the best of the bunch, which in itself is a scary statement.........and then I get "chicken letters" from the insureds.

[LadyBroker]

Well, sometimes Golden Bear will offer terms on admitted paper for a fabulous price, and then the client has to decide whether the rating is more of an issue than the price. I try to consider whether the carrier's rating is continually getting better (as in the case of Golden Bear), or if it's in a downward spiral, which would make me not want to even quote business with them.

In the end, A rated admitted carriers still go insolvent more often than non admitted A rated carriers. Makes you wonder what makes being admitted so special...