Coverage pioneered by father continues to offer good
niche opportunity for his son and daughter
By Dennis Pillsbury
Noelle A. Ruane, Esq., general counsel, Paige-Ruane, Inc., and R. Nite Ruane, president, continue to provide coverage pioneered by their father.
Joe reeled out of the New York City tavern in a good mood. His team had won. The celebration had gone on for some time after the game ended. It had been a great evening-- finally getting out of the house and getting together with his old pals. Unfortunately, none of those old pals had the sense to take Joe's keys away.
He slid behind the wheel of the leased automobile and his good mood heightened as the engine roared into life. It was his first new car. He finally had a job where he could afford a nice car. It still had some of that new car smell, even though he'd been driving it for a month. It had a kicking stereo system that he now cranked up to match his euphoria and, of course, it had power to spare.
He loved speed. That was obvious from the number of points he had accumulated since acquiring the car--enough points to boost his insurance rate to the level where he just decided to stop paying the bills. Almost enough points to cost him his license. But that did not stop him from once again peeling out and careening down the road at a speed that would be unsafe if he were sober. He didn't see the other car....
Joe's nightmare began when he woke up in jail with a splitting headache. It was to last for quite some time.
The leasing company's nightmare began a little earlier than that, although it was unaware of its actually beginning. It lasted longer than Joe's because the company was forced to deal with the lawsuits that flowed in its direction as the actual owner of the uninsured vehicle that had wreaked so much havoc. The leasing company did not have contingent coverage.
Filling a need
In 1978, Ronald Ruane, Sr., founded Paige-Ruane, Inc., in King of Prussia, Pennsylvania, to market a product that he had pioneered--Lessors Contingent Liability. The policies he developed continue to be used by the leading carriers in the field. His son, R. Nite Ruane, CVLE (aka Ronald Ruane, Jr.), joined him in 1982, after working as an auto-leasing representative for the direct sales department of the First Pennsylvania Bank of Fort Washington, Pennsylvania.
In 1993, the managing general agency headed for Florida where Ron, Sr., was already living. However, the employees didn't want to relocate and Ron made the decision to sell the contingent liability book to another company so that those employees could keep their jobs. Nite had to sign a non-compete agreement. He continued to broker business to that company from his Florida office until the non-compete ran out in 1995. In 1999, he relocated Paige-Ruane, Inc., to Scottsville, Virginia, where he resides today. Ronald Ruane, Sr., continues his oversight of the business from his nearby Charlottesville, Virginia, location as well as his winter location in Stuart, Florida.
"We owned the name and the reputation for producing profitable business," Nite says. "When we reopened our doors in Virginia, we had a book of about $3 million. Today, it exceeds $10 million."
The MGA's success in producing a book of business with consistently low ratios was dramatically confirmed on January 1 when the reinsurers of the product held the line on rates--an almost unheard of phenomenon in today's brutally hard market. "I sat down with our reinsurers at the NAII meeting last fall and demanded that they hold the line," Nite says. "We got that done by showing them our consistently good results. We've been able to produce highly profitable business since the '70s." On the primary side, Paige-Ruane uses Sirius America Insurance Co. and Westport Insurance Co.
Nite explains that lessors contingent liability provides coverage if a lessee fails to provide insurance or has insufficient coverage. "It kicks in when coverage is unavailable or the claim exceeds the limits of the lessee's coverage. Coverage up to $25 million is available."
He adds that "coverage is written on a blanket basis on vehicles under lease for 12 months or more. Policy format is written on a flat annual basis. The entire fleet is covered automatically."
In addition to autos, Paige-Ruane also provides coverage for lessors of trucks, mobile equipment and other types of equipment.
The key underwriting consideration is how carefully the lessor screens potential lessees. "All leasing companies use credit scoring," Nite points out, "and we look for those lessors that insist on clients having higher credit scores. It's simply a fact that the lessee who has something to lose is more likely to maintain primary coverage."
He continues that that does not mean Paige-Ruane will not consider leasing companies that do not precisely fit those criteria. "We will look at anything that comes through the door. But you have to realize that there may be difficulties placing an account that has problems with losses."
Experts in claims handling
Nite adds that Paige-Ruane will work with a leasing company to improve its losses. "Our specialty is mitigating liability losses. All our claims are handled by my sister, Noelle Ruane, Esq., who has specialized in the handling of contingent liability claims and contingent liability coverage issues since graduating with honors from Columbia University School of Law in 1990." Noelle is a member of the Florida, New Jersey, Pennsylvania and Virginia Bars. As part of her efforts to mitigate losses in this area, she has provided legal advice for use by prominent national vehicle lessor organizations on the issue of lessor liability and insurance coverage. She also has participated in legislative efforts to have liability laws amended in vicarious liability states.
Nite points out that, because of their expertise, "some competitors come to us for help."
Paige-Ruane provided coverage to more than 250 long-term leasing companies on a nationwide basis, including such well-known companies as Chase Manhattan Automotive, VW Credit Corp., World Omni Financial Corp., Volvo Credit Corp., PNC Credit Corp., Subaru of America and Chevy Chase Bank.
Paige-Ruane belongs to the National Vehicle Leasing Association and attends all of its conventions. Nite previously served on the board
of the association. *
For more information:
Paige-Ruane, Inc.
Phone: (888) 800-7670