You fail to notify the excess carrier of a claim. Who can impose a penalty?

• A. Administrative Director
• B. Excess Carrier
• C. Manager of SIP
• D. California Insurance Commissioner

Answer: (B)

Notifying the excess carrier promptly is essential because the excess carrier relies on timely information to manage the claim, reserve funds, and coordinate defense. If you fail to alert them, it disrupts their ability to handle the exposure, so the contractual penalties to deter late reporting fall to the excess carrier. Regulatory bodies like the Administrative Director or the California Insurance Commissioner oversee SIP compliance, but they don’t impose the specific penalty for failure to notify in this context. The Manager of SIP administers the program, not the penalty for late notice. The penalty in this scenario comes from the excess carrier’s rights under the excess coverage agreement.