Mr. Wilson says that insurance providers often think they are protected from insurer insolvency because they have errors and omissions insurance, their state has a guaranty fund, or they rely on the Texas Higginbotham court case [Higginbotham & Associates, Inc. v. Greer, 738 S.W.2d 45 Tex. App. 1987], which implies that agents aren't liable when an insurer becomes insolvent.

Mr. Wilson argues, however, that the Higginbotham case didn't necessarily absolve agents and brokers of all responsibilities and that they owe it to their clients to reasonably monitor the financial status of their carriers.

"Some agents and brokers may ask, ?Why should I bother?'" says Wilson. "To answer a question with a question, agents should ask themselves if they would suggest to their insureds that they rely on only one limited-risk management technique to address their exposures to loss."

To monitor a carrier's financial indicators, Mr. Wilson recommends that agents invest in fee services such as A.M. Best, Standard & Poor's, Moody's Investors Services, Duff & Phelps, Weiss Research and others.

Additionally, he said, financial information can be obtained from other sources such as annual statements and stockholder reports, insurance departments, trade periodicals, and other agents and brokers.