Understanding Insurance Carrier Options and Requirements

Choosing an insurance carrier can be a daunting task, especially with so many options available. There are over 1,000 insurance carriers in the US alone, each with their own unique offerings and requirements.

Some carriers specialize in specific types of insurance, such as health or auto insurance, while others offer a broader range of policies. For example, a carrier like Blue Cross Blue Shield focuses primarily on health insurance.

The type of insurance you need will play a significant role in determining which carrier is right for you. Do you need coverage for a specific type of vehicle or a particular health condition? Researching carriers that cater to your needs can help narrow down your options.

Check this out: What Insurances Do I Need

Insurance providers can be licensed by the state to offer admitted insurance policies.

To be licensed, insurance companies must meet specific requirements, such as proof of financial security, and contribute to the state's insurance fund.

Admitted insurance providers can seek assistance from the state's insurance guaranty fund if they're unable to pay a claim.

Insurance companies can sell both admitted and non-admitted products, even for the same type of coverage.

The classification of admitted and non-admitted refers to the insurance product itself, not the insurance provider.

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Non-admitted insurance providers are often misunderstood, but the truth is that they are legitimate and financially stable companies. They need to have secure reinsurance options or a massive monetary reserve to offer coverage for high-risk events.

Just because a non-admitted insurance provider doesn't have access to the state insurance guaranty fund doesn't mean it's an illegitimate provider. They still need to be licensed, which involves a significant amount of regulation.

Admitted insurers have a different process when it comes to liquidation. The state's guaranty fund takes over the processing and payment of current and future claims. However, the guaranty fund's cap limits the amount it can pay.

Policyholders may find themselves at a disadvantage if the state is dealing with multiple large liquidations simultaneously. The guaranty fund may be unable to cover their true loss amount, sometimes not even close to it.

As an insurance agent or broker, you know how crucial it is to partner with the right insurance carrier. Producers should aim to appoint with carriers who offer the products their clients are looking for.

A good product/market fit is key to success, so consider carriers with a wide range of options, especially if your clients are looking for specific types of insurance, like flood insurance in a flood-prone state.

Insurance carriers with a proven track record of meeting their financial obligations are a safer bet, so check their score with a rating agency if possible. This can give you peace of mind and help you make informed decisions.

A smooth onboarding process is essential, so look for carriers that leverage modern technology and automation to make the process more efficient. This can get you ready to sell faster and show a carrier's commitment to offering a world-class producer experience.

An insurance agent and an insurance broker are both intermediaries between insurance buyers and the insurance market, but they have distinct roles.

Agents represent the interests of insurance providers, whereas brokers represent the client's best interests.

Agents can complete insurance sales and bind coverage, but brokers cannot. This means agents can finalize a transaction with a client, whereas brokers must turn to an agent or insurance provider to bind a selected policy.

Businesses that know their coverage needs well might find an agent suitable for their needs, while those facing unique risks may benefit from an insurance broker's expertise.

Here's a quick summary of the key differences between agents and brokers:

Ultimately, the choice between an agent and a broker depends on your specific business needs and circumstances.

Umbrella and Agency Appointments can be a real headache for insurance agents and brokers. Some states require carriers to appoint all agencies and other business entities that work downstream of them.

This means carriers must pay for all of an agency's producers to be appointed with carriers they'll never actually sell products for. In some cases, an agency's producers will be automatically authorized to operate under the agency's "umbrella" if they're affiliated at the state level.

Tracking down state-specific appointment regulations can be its own burden. You can find answers to questions like "Where do carriers renew their appointments in Texas?" on our state-by-state insurance carrier appointment FAQ page.

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Insurance agents and brokers often have different levels of authority when it comes to handling claims. Homeowners might assume their standard policy covers all water-related damage, but that's not always the case.

A standard homeowners policy typically covers sudden and accidental water damage, but not gradual damage from things like leaks or poor maintenance. As an example, a burst pipe would be covered, but a leaky faucet might not be.

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Insurance agents and brokers are often authorized to handle claims up to a certain amount, known as the lines of authority. This means they can make decisions and take actions on behalf of the insurance company without needing to escalate to a supervisor.

In some cases, the lines of authority can be limited, requiring the agent or broker to seek approval from a higher authority before making a decision. This can be frustrating for homeowners who need to get their claims resolved quickly.

The FEHB Program is a key initiative aimed at improving the health of federal employees and retirees. It evaluates health insurance carriers on parameters like clinical quality, customer service, and resource use.

OPM's goal is to provide high-quality, consumer-focused healthcare to federal employees and retirees, while also making insurance benefits more affordable. They use measures from HEDIS and CAHPS to assess carrier performance.

The FEHB Program encourages carriers to join the National Committee for Quality Assurance's Digital Measurement Community to learn about digital performance measures. This helps carriers improve their performance and provide better care to enrollees.

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Here are some key publications related to the FEHB Program:

To participate in the FEHB Program, a carrier must be a comprehensive, prepaid medical plan. This means they need to offer a complete line of medical services.

Carriers must provide a range of services, including doctor's office visits, hospitalization, emergency care, prescription drug coverage, and treatment of mental conditions and substance abuse. They should be able to cover all aspects of medical care.

Only comprehensive medical plans are eligible for participation in the FEHB Program. This excludes limited services like dental and vision plans, prescription drug plans, and supplemental insurance.

The FEHB Program does not consider applications from fee-for-service carriers. This means carriers that charge per service are not eligible to participate.

To increase their chances of being considered, carriers can aim to become Federally qualified or an approved Competitive Medical Plan (CMP). This is determined by the HHS, Centers for Medicare and Medicaid Services (CMS).

Related reading: What Is a Health Insurance Carrier

The FEHB Program Plan Performance Assessment is a key aspect of the Federal Employees Health Benefit (FEHB) program. OPM's goal is to improve the health of the populations they serve and provide affordable insurance benefits to federal employees and retirees.

OPM evaluates FEHB carriers on key parameters of clinical quality, customer service, resource use, and contract oversight. They use measures from the Healthcare Effectiveness Data and Information Set (HEDIS) and Consumer Assessment of Healthcare Providers and Systems (CAHPS) to assess performance.

Scoring measures against national benchmarks helps OPM recognize top-performing health insurance carriers in the program. This information is used to inform enrollee choice and link objective performance to profit.

FEHB carriers are encouraged to join the National Committee for Quality Assurance's Digital Measurement Community to learn about digital performance measures. They can also find proven value-based payment models on the Health Care Payment Learning and Action Network website.

Here are some resources for FEHB carriers interested in learning more about plan performance assessment:

OPM also encourages carriers to join the PPA Best Practices Workgroup to share knowledge and best practices. Details can be found in Carrier Letter 2017-10.

You can find more information on FEHB Plan Performance Assessment in the following publications:

Insurance carriers have a responsibility to pay customer claims, but their ability to do so isn't always guaranteed. Producers should aim to get appointments with carriers who have a proven track record of meeting their financial obligations.

A good product/market fit is essential for producers to appoint with carriers. This means offering products that their clients are looking for, such as flood insurance in a flood-prone state or life insurance for newlyweds.

Carriers with a strong financial record are more likely to be able to pay claims. Checking a carrier's score with a rating agency can provide valuable insight into their financial strength.

To make the appointment process more efficient, carriers can leverage modern technology and automation. This can help get producers ready to sell faster and shows a carrier's commitment to offering a world-class producer experience.

Here are some key factors to consider when choosing which carriers to get appointed with:

Insurance producers can also look to the FEHB Plan Performance Assessment for information on carriers' performance. The assessment evaluates carriers on key parameters such as clinical quality, customer service, and resource use.

Insurance carrier compliance can be a daunting task due to the 50 states and multiple territories each having their own set of appointment rules.

These rules can be contradictory, making it challenging to manage producer compliance throughout the appointment process manually.

Using a compliance-as-a-service platform can ease the process and reduce the chance of error by drawing directly from the insurance industry's source of truth.

Non-admitted insurance is a policy that's not licensed by the state, but still allowed to operate under special circumstances.

These policies are not bound by state regulations regarding rates or policy forms. State insurance departments allow non-admitted insurance providers to operate for a number of reasons.

The primary reason is that the company offers a necessary service that admitted policies do not provide. Non-admitted policies may cover higher-risk or unique situations.

Many non-admitted insurance providers still follow procedures and requirements similar to those of admitted providers.

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Insolvency and Liquidation is a serious issue that can affect insurance providers. Insolvency refers to a financial situation in which a company cannot meet its financial debts or obligations as they come due.

Policyholders never want to see their insurance policies insolvent, but it does occur in the real world. Insolvency can lead to liquidation, where a company distributes its assets to creditors.

The state's guaranty fund takes over the processing and payment of current and future claims when an admitted insurance provider faces liquidation. However, the guaranty fund is not obligated to pay claims in full, as regulations limit the amount it can pay according to the fund's cap.

If a company has an exceptionally high revenue threshold, it might not qualify for any state coverage at all. This leaves policyholders at a disadvantage, as they may receive much less coverage than they originally paid for.

Payments from the guaranty fund can take a long time to process, leaving policyholders with very little support in obtaining their payments.

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State licensing and compliance can be a daunting task for insurance carriers. There are 50 states and multiple territories, each with their own set of appointment rules, which can be overwhelming to manage manually.

The appointment process is a crucial part of compliance, and getting it wrong can lead to errors. State nuances mean that insurance carrier appointments can be a time-consuming and tedious process.

Using a compliance-as-a-service platform can ease the process and reduce the chance of error. This type of platform draws directly from the insurance industry's source of truth, making it a reliable option for carriers.

By using such a platform, carriers can offer their distribution partners a world-class experience and ease their compliance team's burden. This can be a game-changer for carriers looking to improve their operations.