Quote from @Sahand Vafadary:
Quote from @Aaron Letzeiser:
@Aaron Letzeiser
I was hoping to work with Obie, but on the last page before signing the documents, I came across this disclaimer, which made me rethink my decision.
"PART 2. SIGNED STATEMENT OF INSURED AS REQUIRED BY SECTION 3905.33 OF THE OHIO
REVISED CODE
The named insured ___________, acknowledges that the insurance policy (other than life insurance) as described above is to be placed with an insurance company not authorized to do business in Ohio.
The insured understands that the insurance company is not a member of the Ohio Insurance Guaranty Association and that Chapter 3955. of the Ohio Revised Code is not applicable to claimants or insureds of said insurance company. The surplus line broker shall collect the Ohio tax of five percent of the amount of the premium for the insurance policy at the time the insurance policy is delivered to the insured."
does anyone know what this means and how this is going to affect the potential claims? This is the only reason I am not going to consider going with Obie!
any explanation is greatly appreciated
Thank you
Hi @Sahand Vafadary! This is a great question and one that's similar to Xian's above from a few months ago. I also see you're newer to the BP community and this is your first post. Welcome! I think you'll find a ton of useful content and a supportive community here!
Your question is a very common question, and I can appreciate your concern here. Each state has what's known as Admitted and Non-Admitted Carriers. While there are some nuances here, the basic premise is that an Admitted Carrier submits their forms and rates to the state for approval. If the state approves, then the state will back that policy in the event the carrier goes out of business. A Non-Admitted carrier does not submit to the state for approval. As a result, if that carrier goes under and is unable to pay claims, the state is not required to backstop the policy. The state also requires that companies list the language you posted on every policy document.
It's very important to note that just because a carrier is Non-Admitted, it does not mean it's any better or worse of an insurance company than an Admitted carrier. Some of the largest and most successful insurance companies in the world choose to only offer their products on a Non-Admitted basis. Lloyd's of London is one of those, for example.
For Non-Admitted carriers, the important item to then pay attention to is the AM Best rating (or equivalent rating agency). This rating will give you a sense of the carriers financial solvency. Typically, a rating of A- or better is a very strong company. The carrier rating for Obie policies range from A+ to A-.
You are probably aware that many carriers are leaving the State of California due, in part, to the significant regulatory challenges they have with making adjustments to their products that the state always has to review and approve. State Farm recently announced they would cancel 70,000 policies because of these challenges. These are all primarily Admitted carriers. Many, I would now assume, may eventually return to the state and offer Non-Admitted products.
If you have any other questions, please feel free to reach out to us
