The Security of a Disability Policy Backed by Lloyd’s
Many Insurance Agents become concerned when they read government required affidavits that are attached to Surplus Lines insurance policies. “THIS INSURER IS NOT ADMITTED IN THIS STATE AND IS NOT SUBJECT TO THE FINANCIAL REGULATION THAT APPLY TO THIS STATE, INCLUDING PARTICIPATION IN THE GUARANTEE FUND.” This type of statement would scare any unknowing person and unfortunately it often deters many from going through with the purchase, thus leaving them financially vulnerable.
Petersen International Underwriters issues surplus lines policies which require such affidavits, but what is not disclosed is information about the financial strength and security that is behind our policies. While we design our products and underwrite the cases, the risks are held by certain syndicates at Lloyd’s which fund the policies. Lloyd’s holds a long and successful history of financial stability.
Rated A (Excellent) by A.M. Best, A+ (Strong) by Standard & Poor’s and A+ (Strong) by Fitch, Lloyd’s has never denied paying a valid claim in its 327 year history. Several different sources of funding support Lloyd’s ability to pay claims, called the “Lloyd’s Chain of Security,” which includes reserves, trusts, individual and corporate wealth as well as the Lloyd’s Central Fund. There is a Lloyd’s Central Fund for all US policies which is held in a New York bank.
Assessments on all Lloyd’s policies are deposited into the Central Fund which will pay any claim should the supporting syndicate be unable to meet their obligation. 100% of any policy liability can then be handled by the Central Fund. Compare this to a typical state Guarantee Fund that only cover portions of the liabilities. For instance, the Guarantee Fund of our home state of California, as of February 1, 2011, will only cover a maximum of $465,553 for a disability claim.
We trust this information provides you with some insight and confidence as to the security behind each and every risk that we proudly place at Lloyd’s on behalf of your clients.