Switching WC Carriers & 10% Short Rate Penalty

[kew]

My wife is an executive coordinator for a company that is moving into the US market. They just purchased a WC policy from agency 'A, and after receiving very bad service from agency A, they decided to go with agency B for both WC, and GL. Her company explained to agency B their dissatisfaction with how things were being handled at agency A, and that they wanted agency B to now handle all of their insurance needs including WC, instead of doing an AOR they wrote them a new WC through another carrier. So now agency A is telling them that Summit has a short rate of 10% against their premium, they are also telling them that this info was in the policy, well they hadn't even received the policy yet.

Now this is where it gets really sticky, agency B has issued them a binder but they have yet to sign paperwork or give them a check.

My question is can they cancel the policy with agency B?

BTW, the reason they did not want to go with agency A was that they left out an out of state employee that was in California and Summit does not write in California, thus leaving this employee that is driving all over the state without WC.

Thank you all for taking the time to read this long winded post.

 

[AZDave]

All commercial policies subject to short rate cancellation penalty. Stay with agent A and need to disclose to carrier the CA worker. Work comp carrier will then cover - they must, but have the right to cancel mid term, or non renew. If they cancel, then policy is pro rated, no penalty.

Why agent b issued a binder with no signature and no money - we are not hearing the full story here. Will he be able to flat cancel the policies that he issued, on behalf of the insured? Should be. Won't be getting a Christmas card from this agent.

 

[1manshow]

All commercial policies aren't subject to a short rate penalty here in Pa. Obviously that may vary from carrier to carrier. In Pa the client would have to satisfy the minimum premium requirement on the comp. as well as a possible short rate penalty. Really have to be unhappy to be willing to pay those extra charges just to switch.

 

[kew]

AZDave, they did in fact disclose the employee in California, and yet they did not find coverage for the employee. That was why they were so upset with agency A.

As for binding coverage without either a signature or payment, we're in Georgia and I've seen that sort of thing happen a lot. Maybe it's something specific to Georgia?


Now that I think about it, maybe the company should just do an Agent of Record on the WC.