Cindy Hawley, CPCU, is area senior vice president of Charity First; Mike Komar serves as marketing director.
Nonprofit entities--whether hospitals, museums, group homes, thrift stores, or religious institutions--exist to serve the public good. In carrying out their mission, nonprofits face an array of exposures to loss, some of which can have catastrophic potential. Garden-variety coverages clearly don't address the complex needs of these organizations, and that's where Charity First comes in. Based in San Francisco, this specialty managing underwriter is a subsidiary of Arthur J. Gallagher & Company, the world's fourth largest insurance brokerage.
What are the specific insurance and risk management needs of nonprofits, and how is Charity First organized to respond to those needs? To find out, we'll talk with Cindy Hawley, area senior vice president, and marketing director Mike Komar. First let's explore the background of this specialty underwriting intermediary.
Established in 1985, Charity First is an outgrowth of Gallagher Heffernan Insurance Brokers, which since 1963 has specialized in arranging coverage for religious organizations throughout the western United States. In its startup year, Charity First wrote just $244,000 in commercial package premium with a staff of two underwriters and a handful of agents. Today more than 30 insurance professionals provide a full line of property and casualty insurance products for over 10,000 nonprofit institutions nationwide, operating through regional new business production offices located at Arthur J. Gallagher's facilities in San Francisco, Houston, Kansas City, and White Plains, New York.
A market in need
In the severe hard market of the mid-1980s, Mike Komar explains, many nonprofit entities began to experience difficulty purchasing adequate coverage at a reasonable cost. Underwriters, concerned about the loss potential for this class of business and unable to establish the correct premium for the exposures at hand, began to label nonprofits as high risk. "During that period, nonprofit organization business was mostly considered undesirable," Komar comments. Building on the strengths of its predecessor, Charity First prepared to focus its underwriting expertise on this challenging market segment.
Like any business, nonprofits need basic commercial lines coverages such as property, liability, auto, workers compensation, and inland marine. These entities also may require specialized forms of protection to address exposures such as sexual abuse and molestation, social service professional liability for counselors and therapists, and errors and omissions. At Charity First, these coverages can be combined into a package if the insured desires. A key underwriting concern, Komar notes, arises when a nonprofit provides custodial care, which presents a significant potential for liability claims. What's more, he adds, the sources that provide funding for nonprofits require that they carry coverage for volunteers.
"Our culture is to find solutions to problems. We take great pride in making it easy for agents to do business with us."
With the slogan "Insurance Dedicated to Nonprofit Groups," Komar says, "We believe we're the only national underwriting manager with our experience that focuses exclusively on nonprofit business. Others are in this market, but they don't specialize 100%. We serve this niche through dedication and focus, and we always plan to be only a nonprofit writer."
Target risks
Within its highly specialized niche, Charity First entertains a wide range of nonprofit entities, including but not limited to:
* Food banks
* Youth recreation programs/boys and girls clubs
* Thrift store operations
* Private elementary schools
* Vocational training schools
* Group homes
* Sheltered workshops
* Museums and art galleries
* Symphony/orchestra organizations
* Clubs: social/civic/service/fraternal
* Homes for the developmentally disabled
* Job training programs
* Religious institutions
* Foundation SPCAs
* Preschools/Head Start programs
* Residential care facilities
* Theatre groups
* Counseling centers
* Community centers
Of Charity First's 10,000 accounts nationwide, almost one third (31%) are community service entities, and 23% are volunteer and membership organizations. Other insureds are in the fields of education, arts, and training (17%); housing, mental health, and developmental disabilities (13%); neighborhood improvement and action (9%); and miscellaneous nonprofits (7%).
Strong markets offer stability
A managing underwriter's success in challenging specialty markets such as nonprofits depends to a significant extent on the strength and stability of the carriers whose products it offers. Charity First's primary package and workers compensation carrier is A+ rated Travelers Indemnity Company and its property/casualty affiliates. Through its home office and three regional offices, Charity First functions enjoys comprehensive underwriting and binding authority. "They're comfortable with our decision-making capabilities, and it's all seamless to our valued agents," Cindy Hawley declares. "When we consult with Travelers, it's done quickly and is transparent to the agent and ultimately the customer."
The insurer's trust in Charity First is well justified. Thanks to the strong underwriting background of its employees, the underwriting manager is able to maintain an exceptional loss ratio with Travelers. "We take a lot of pride in keeping the loss ratio admirable for this class of business and making this a win-win situation for our agents, employees, carriers, and ourselves," Hawley says.
Other top-tier carriers on Charity First's roster are Chubb Executive Risk and United States Liability Insurance Company (D&O); Gulf Insurance (ChamberPak Chamber of Commerce program and special events); AIG (accident and health); and HiH America (California workers compensation).
Focus on loss prevention
The routine operations of nonprofit entities expose them to a wide array of risks, some of which can have extremely high loss potential. Examples are hosting fundraisers and special events; administering employment practices; recruiting and supervising volunteers; transporting clients to and from services; working with vulnerable populations such as the elderly and youth; and collaborating with other organizations. Through a comprehensive loss control program, Charity First works with insureds to help them understand and reduce their exposures to loss.
The managing underwriter also offers its insureds a broad range of loss prevention resources. Charity First insureds have 24-hour online access to the Riskfacts library, a collection of informative briefs on liability, insurance, and risk management topics designed exclusively for nonprofit organizations and created by the Nonprofit Risk Management Center in Washington, D.C. New Risksfacts briefs are added to the Web site on a regular basis. Insureds also may borrow from Charity First's video loan library, which contains an array of videos on property, liability, and automobile risk management.
Another helpful resource is Charity First's online database of detailed safety handouts, programs, and checklists. Insureds can print them out and distribute them to employees, or customize them to their own safety needs and goals. Among the topics addressed are accident investigation, reporting, and prevention; back safety, boilers, committees, defensive driving, electrical, emergency plans, equipment safety, ergonomics, fall prevention and protection, fire prevention, fire extinguishers, fleet safety, forklifts, general safety rules, job hazard and safety analysis, ladders, machine guards, office safety, vehicle safety, and workplace hazards.
Mike Komar, director of marketing, says Charity First focuses on developing strong relationships with its 1,200 independent producers around the country.
Also available is a comprehensive online encyclopedia of insurance terms, Rough Notes' Insurance Words & Their Meanings, that insureds can use to help understand or clarify specific terms and concepts.
Committed to agents
As a specialty underwriter, Charity First knows that productive partnerships with retail producers are key to its success in the challenging nonprofit market. Although it is willing to work with generalists, Charity First's top producers specialize in writing nonprofit organizations. "The agent becomes a top performer by being a specialist," Hawley says. "If it's not the agent him or herself, then it's someone inside the agency who is the nonprofit specialist. These agencies become key producers for us, and we reward them and make sure everyone knows who they are."
Through its San Francisco home office and three regional offices, Charity First has relationships with some 1,200 independent agents and brokers nationwide. "Each office is staffed with dedicated underwriting professionals who can service retail agents," Komar explains. "Each has the ability to review, quote, rate, bind, and issue for Charity First for that region." All claims functions are performed by carriers, with Charity First acting as a resource to ensure that insureds receive timely and professional claims service.
Agents can apply for appointments online via the wholesaler's Web site; they also can download applications and communicate with underwriters and other staff members via e-mail. In the future, Charity First plans to expand its Web site to allow for online submission and review of applications.
As marketing director, Komar has concentrated on pursuing a disciplined approach to agency relationships that is proactive rather than merely reactive. "Through the development of an agency management and marketing plan, and the establishment of a strong Internet presence, we're no longer just reacting," he comments. "Each member of our staff is focused on building solid relationships with agents."
Reflecting on her typical day, Hawley says she devotes a significant amount of time to problem solving, with specific reference to agents and their clients. "I focus on what I can do to find solutions," she remarks. "This is our culture, and we do considerable training and development to give our staff the tools to be problem solvers as well. We take great pride in making it easy for agents to do business with us."
To acknowledge the value of its producer relationships, Charity First offers selected agents a level of compensation above that available from competitors. "Our attractive compensation arrangements are based on the relationship we've built over time with a particular producer," Komar says. "We take into account productivity, specialization, and profitability. Additional factors that might affect compensation are rollovers of business and other specific situations, Komar notes.
Here for the long haul
As every agent knows, many classes of business that look attractive to insurers when rates are low can rapidly lose their appeal as soon as the market begins to harden. In a tight market, "Others may discontinue writing certain segments," Komar observes. "If we ever stop writing nonprofits, we're gone." With this kind of focus and dedication, Charity First clearly is committed to being a stable force in this demanding niche market. *
For more information
Charity First
One Market, Spear Tower, Suite 200
San Francisco, CA 94105
Phone: (800) 352-2761
Web site: http://www.charityfirst.com