September 6, 2023

In the ever-changing landscape of commercial insurance, it’s crucial to stay updated on market shifts, especially those that could affect the stability of financial relationships. One recent development that has captured industry attention is AM Best’s decision to place its A- rating of Clear Blue Insurance Group under review. This action stems from allegations concerning the authenticity of certain letters of credit backing the company’s reinsurance agreements. Given the uncertain nature of these events, ClassicPlan will be putting a hold on accepting new business from Clear Blue Insurance Group until AM Best concludes its review.

The Backstory

Clear Blue had confirmed that it was aware of the allegations of fraudulent letters of credit issued by the China Construction Bank on behalf of Vesttoo, an Israel-based insurtech. These letters were intended to act as reinsurance collateral for Clear Blue, which entered into a partnership with Vesttoo in 2022. This partnership provided Clear Blue’s P&C lines with reinsurance capacity sourced from capital markets investors totaling $1 billion.

AM Best has stated that Clear Blue will “remain under review” while it engages in discussions with the group’s management regarding their ability to “replace certain programs and/or letters of credit to allow for proper reinsurance credit at the time of financial statement filings.”

Implications for the Insurance Industry

For commercial insurance agents, this serves as a reminder of the critical role of due diligence in vetting carriers and financial institutions alike. It’s not just the solvency of the insurer that matters but also the quality and reliability of its reinsurance arrangements.

How ClassicPlan is Addressing the Situation

In response to these developments, ClassicPlan will temporarily pause accepting new business with Clear Blue Insurance Group. Our primary concern is to ensure the financial stability and security of all our clients. This precautionary measure will be in place until AM Best’s ongoing review is concluded, which will provide a clearer picture of Clear Blue’s financial position.

What You Can Do As An Agent

Stay Informed: Keep an eye on updates from rating agencies like AM Best.

Communicate: Inform your clients about any changes that might affect their coverage.

Diversify: Consider alternative carriers for new policies to mitigate risk.

Review Existing Contracts: Examine current agreements that could be affected by this development.

Looking Forward

While Clear Blue is aggressively looking to address concerns raised by AM Best, there remains “execution and timing risks” associated with this process. In the meantime, we remain committed to safeguarding our clients’ interests and will closely monitor the effectiveness of management initiatives in mitigating any potential impact on their policies.

By remaining vigilant and proactive, we can navigate the complexities of the commercial insurance landscape together. Thank you for your continued trust in ClassicPlan.

ClassicPlan offers a full range of flexible premium finance solutions for insurance agency producers that fit their clients’ individual situations.