Questions and Answers About Our Carriers

Q: Can you tell me more about National Union Fire Insurance Company of Pittsburgh, Pa. ("National Union") and Lexington Insurance Company?

A: National Union Fire Insurance Company of Pittsburgh, Pa. ("National Union") and Lexington Insurance Company are member companies of Chartis. Chartis is a world leading property-casualty and general insurance organization serving more than 40 million clients in over 160 countries and jurisdictions. With a 90-year history, one of the industry's most extensive ranges of products and services, deep claims expertise and excellent financial strength, Chartis enables its commercial and personal insurance clients alike to manage virtually any risk with confidence.

Q: I now have coverage through Lexington Insurance Company. It is my understanding that Lexington is a surplus lines carrier. Does this mean the company is not licensed in my state?

A: Lexington Insurance Company ("Lexington") is a "surplus lines" insurance company and as such, is not required to file its rates and policy forms for approval. "While surplus lines companies may not be regulated as traditional carriers, that does not mean they are not regulated. Each company must be licensed in one of the 50 states and must meet the solvency requirements of that state." (Source: NAPSLO-National Association of Professional Surplus lines Offices, Ltd.) Each surplus lines insurance company is regulated by the state in which it is domiciled. For Lexington, that state is Delaware.

Although the claims payment obligation of surplus lines insurance companies is not backed by the state guaranty fund, it is important to note that "since 1994 the A.M. Best Company has performed an annual survey of the excess and surplus lines market and has found that its solvency record is as good, if not better, than the overall (insurance) industry." (Source - NAPSLO). Surplus lines insurance companies provide much of the professional liability insurance coverage issued in the United States to hospitals, large group practices, nursing homes and other healthcare organizations.

Q. What is "surplus lines coverage"?

A. Surplus lines is insurance available through non-admitted insurance companies. Since 1994, the A.M. Best Company has conducted an annual survey of the surplus lines market and has found that its solvency record is as good, if not better, than the overall industry. (Source: NAPSLO) There are three basic categories of surplus lines risks: non-standard risks which have unusual underwriting characteristics; unique risks which admitted carriers do not offer a filed policy form or rate; and capacity risks where a client seeks a higher level of coverage. Examples of such risks include aviation, product liability, earthquake, and professional liability.

Q. What is the difference between surplus lines carriers and admitted carriers?

A. Admitted carriers must file forms and rates with each state insurance department. Surplus lines carriers do not file with the state insurance departments and do not have to meet the same capitalization requirements as admitted carriers.

Surplus lines coverage is not protected by any state’s guaranty fund except in New Jersey. Please keep in mind, however, that since 1994, the A.M. Best Company has conducted an annual survey of the surplus lines market and has found that its solvency record is as good, if not better, than the overall industry (Source: NAPSLO)

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