A recent court case illustrates why wholesale brokers should carefully review the contractual language before signing with a surplus-lines carrier an agreement that obligates the producer to ensure that risks being submitted comply with the insurer’s underwriting criteria.

In GeoVera Specialty Insurance Co. vs. Graham Rogers Inc., the Eighth Circuit ruled that although insurance-brokerage firm Graham Rogers Inc. did not act negligently, it was still liable to underwriter GeoVera Specialty Insurance Co. based on the language in the agreement between the two parties—which placed the duty on Graham to apply GeoVera’s underwriting guidelines to all applications of insurance submitted by retailers.

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