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

• A. the excess carrier
• B. The CA Insurance Commissioner
• C. The administrative director
• D. The manager of SIP

Answer: (A)

When a claim isn’t reported to the excess carrier, the penalty comes from the contract that governs the excess layer. The excess carrier has the right under the excess policy to impose a late-notice penalty to protect its claim-handling rights, prevent prejudice, and preserve the excess coverage for properly reported claims. Regulatory bodies like the California Insurance Commissioner enforce statutes and can sanction insurers for violations, but they don’t typically levy the contractual late-notice penalty that the excess policy itself provides. The administrative director or SIP manager aren’t the ones who impose this penalty in this context. So the party empowered to impose the penalty is the excess carrier.