Specifications:
Waiver Type: Renewal/New Origination
Insurance Type: Property
Insurance Term: Property Damage - Carrier Rating
Template Outline:
#1 - What information should be included in the opening section of the waiver?
The opening section of the waiver should clearly state the requestor’s identity and the purpose/type of the exception being requested. The example provided below can be used for further assistance if required.
<Organization/Borrower name> is currently seeking the exception of insurance coverage requirements pertaining to the insurance carrier’s ratings.
<Agent name> is currently seeking the exception of insurance coverage requirements regarding the insurance carrier’s ratings on behalf of <Organization/Borrower name>.
#2 - How to provide details about the current insurance carrier?
When applying for a waiver, the borrower should provide all details about their current insurance carrier. These details may include the provider’s name, their current rating, and other information, such as when the provider started working with the organization/borrower. Provided below is an example that can be used for further assistance if needed.
<Organization/Borrower name> currently has <Insurance coverage 1> and <Insurance coverage 2> from <Insurance provider name>. The <Organization/Borrower name> has worked with the <Insurance provider name> since <date>. The <Insurance provider name> currently has a <type of rating> of <Insurance provider’s current rating>.
#3 - How to elaborate on the reasons for non-compliant rating of the carrier?
In addition to providing information about the current insurance provider, the organization/borrower can also provide details as to why the provider has a non-compliant rating. Such details may include a change in rating metrics/provider operations or one aspect of the provider having a compliant rating and the other non-compliant. Below is an example that can be used for additional guidance if required.
As of <date>, the <Insurance provider name> has a rating of <Insurance provider rating>. However, until <date> the provider was rated as <Insurance provider rating>. This change in ratings is due to <Rating change details>. In addition, the <Insurance provider name> has a rating of <Insurance provider rating> for <Rating category name> which is compliant, whereas the rating for <Rating category name> is non-compliant.
#4 - How to provide details about the provider’s reinsurer?
The organization/borrower can also provide details about their insurance carrier’s reinsurer. This can help demonstrate that the provider is backed by an organization allowing them to handle risk beyond their capabilities. These details can include the reinsurer’s name, the duration they have worked with the provider, and their rating details. The example provided below can be used for further assistance if required.
<Company 1 name> is currently serving as the reinsurer for <Insurance provider name>. <Company 1 name> has been the reinsurer of <Insurance provider name> since <date>. The <Company 1 name> has a rating of <Reinsurer rating> for <Rating category 1> and a rating of <Reinsurer rating> for <Rating category 2>, both of which are compliant.
#5 - How to emphasize compliance efforts when applying for a waiver?
The borrower should also provide all details about compliance efforts or failure of the efforts they have made to ensure compliance. These details can include efforts to acquire a financial guarantee endorsement for the policies in place. Provided below is an example that can be used for assistance when writing this section.
<Organization/Borrower name> has made efforts to acquire a financial guarantee endorsement for <Insurance coverage 1> and <Insurance coverage 2> that are currently in place from <Insurance provider name>. However, due to <Reason of failure>, the <Organization/Borrower name> has failed to obtain such an endorsement.
#6 - How to provide details about not changing providers?
In addition to providing details about the financial guarantee, the borrower should provide information as to why they have not changed their insurance provider. These details can include the sufficiency of the current coverage and costs associated with a switching to an insurance provider with a compliant rating. Below is an example that can be used for additional guidance if needed.
<Insurance coverage 1> and <Insurance coverage 2>, being offered by <Insurance provider name>, currently amount to <dollar amount> in total and are sufficient for the <Organization/Borrower name>. Despite this, the <Organization/Borrower name> has obtained quotes from <number of insurance providers>, each of which as a compliant rating of <Insurance providers’ rating>. However, acquiring coverage from any of these carriers would increase premium payments by <dollar amount>.
#7 - How to provide a justification for the requested exception?
Before submitting the waiver, the borrower should provide a justification for the exception that is being requested. This justification can be based on the benefits and sufficiency of the current coverage from carriers with non-compliant ratings. The borrower can also provide details about why their current insurance carrier has a non-compliant rating.
In addition, they may emphasize that they have sought coverage from carriers with a compliant rating, however, acquiring the coverage can lead to increased costs. Furthermore, details about the financial position of the current carrier and loan maturity date can help strengthen the request for approval.