How is fronting detected?
Fronting will most likely be discovered when a claim is made. If it is the named driver who is involved in a collision, for example, an insurance provider may launch an investigation. Should the insurer conclude that fronting has occurred, it may refuse to pay for any damage.
How does fronting work in insurance?
A fronting policy is a risk management mechanism in which an insurer underwrites a policy to cover a specific risk or a set of risks, then cedes the risk(s) to a reinsurer. Fronting policies are most often used by large organizations that operate in multiple states.
What is a fronting relationship?
Essentially, fronting insurance is a term that describes a relationship between two entities: one is an admitted carrier of commercial insurance and the other is an unrelated captive or organization that cannot write insurance coverage.