Courtney C. Smith (left), president and chief executive officer of TIG Specialty, and Steve Haynes, TIG Specialty's director of K&K programs.
The swooping, swerving, stomach-churning rush of whitewater rafting ... the heart-pounding thrill of a fiercely fought World Series game ... the precise, measured grace of skilled gymnasts ... the swift, clean slice of skis on powdery snow ...
What do all of these activities have in common? The answer is simple: they're fun. For operators, participants and spectators alike, these experiences are intense, exciting, exhilarating--and, to a greater or lesser degree, risky. Who stands ready to offer the security and protection that are essential to the risky business of fun? In this article we'll talk with executives of TIG Specialty Insurance Solutions (TIG Specialty) and leading managing general underwriter K&K Insurance, a unit of Aon Corporation's alternative marketing operation, to learn how they work together to develop coverage for every kind of fun, from a family entertainment center to a pro football game. Sharing their insights and experience are Courtney Smith, president and chief executive officer of TIG Specialty; Steve Haynes, TIG Specialty's K&K program director; and on the K&K side, President and Chief Executive Officer Steve Lunsford, Chief Operating Officer Todd Bixler, and Chief Marketing Officer Tony Wittwer.
TIG Insurance Company last year was acquired by Fairfax Financial Holdings Limited, a financial services and insurance holding company based in Toronto, Canada. Now operating under the newly created brand of TIG Specialty Insurance Solutions, the insurer specializes in managing complex risks for a wide variety of businesses. All of its insurance products continue to be underwritten by TIG Insurance Company or one of its subsidiaries or affiliates. Best known for its program business, TIG Specialty also underwrites individual risks for its various lines of business. President and CEO Courtney Smith joined TIG Specialty last year, bringing a strong background in specialty underwriting and marketing from his years with Hartford, AIG and Coregis. Clearly enthusiastic about the challenges and rewards of being a niche player, Smith is well suited to provide inspired leadership to his team of highly trained specialists.
What are the key elements of TIG Specialty's business strategy, and how are they implemented? "We start with what we call a customer group focus," Smith responds. "We like to create solutions for targeted customer groups with multiple product and service capabilities. We're a risk taker, and we look at different distribution channels through which we can gain access to those customer groups." TIG Specialty's largest customer group is sports, leisure and entertainment (SLE), in which it partners with K&K Insurance. "This is a great example of how we target a very specific customer group and segments within it, work with a producer to deliver products and services on a very focused basis, and bring something different to the table," Smith explains.
Other TIG Specialty customer groups are transportation (nonstandard private passenger auto and preferred and nonstandard light commercial); construction and automotive enterprises (construction risks, new and used car dealerships, service stations); large risk management accounts (layered general liability and property); lawyers and accountants (professional liability); social services (E&O); physicians, allied health care providers and hospitals (malpractice); large managed care entities (workers compensation); and specialty accident and health.
In the same way it tailors its products and services to specific customer groups, TIG Specialty selects the distribution system it believes will be most responsive to a particular group's needs. "In some instances we work through general agents, who serve as intermediaries for retailers; in other cases we deal directly with retailers, such as in health care and malpractice for physicians and hospitals, where we believe we need to be closer to the customer," Smith explains. "In each case, we use the distribution channel that best suits the products we want to deliver and the way the customer wants to buy."
How does TIG Specialty try to distinguish itself in its chosen markets? "Depending on what we think will be profitable for us, we can deliver almost any kind of product to a customer group, all the way from personal lines through workers compensation, and we can do it on a highly customized basis," Smith replies. "Another advantage is that we work with carefully selected distribution partners who understand our customer groups and can help us create solutions for those groups. Third, we take a long-term view of our business. We've been involved in sports, leisure and entertainment for 20 years, and we're committed to serving that market, so we can offer our customers a strong base of experience and stability." Finally, Smith notes, TIG Specialty believes that to be flexible and responsive to ever-changing customer needs and market conditions, a flat organizational structure is a necessity. "We're organized so that our people and our production partners have access to the ultimate decision makers, so we can reach decisions quickly and put our plans into action," he explains.
TIG Specialty + K&K = SLE power
Add TIG Specialty's financial strength and underwriting expertise to the marketing savvy and distribution network of K&K Insurance, and what you get is a powerhouse in the complex business of insuring sports, leisure and entertainment (SLE) risks. Steve Haynes is director of programs for TIG Specialty's SLE business with K&K. Like Courtney Smith, he joined TIG Specialty from Coregis, where he served as director of public risk management for Texas and national coordinator for Coregis' field operations.
The TIG Specialty-K&K relationship, Haynes says, dates back to 1986. "K&K is our sole and exclusive producer for more than 100 separate programs in our SLE division, with day-to-day responsibility for program management," he explains. "It's a very cooperative relationship. We provide ease of doing business with responsive customer service and an aggressive appetite for new products." In its role as a managing general underwriter, K&K is a "one-stop shop" for TIG Specialty's SLE programs: "They handle sales, marketing, underwriting and claims," Haynes says. "They have a high level of underwriting and claims authority. TIG Specialty does exception underwriting on the largest accounts." TIG Specialty's SLE business generates about 29,000 claims a year, he notes. "K&K handles all of them initially, and about 2,000 of them come to TIG Specialty."
K&K places the majority of its SLE business direct through 4,000 retail independent agents, and some through major brokers like Willis and Marsh. With written premium of about $250 million, Haynes says, "TIG Specialty insures the vast majority of K&K's SLE business." He's extremely enthusiastic about his company's relationship with K&K, which has been in the sports, leisure and entertainment business for almost 50 years. "K&K keeps their pulse on the dynamics of the market, and they work with us to craft new programs to meet our customers' changing needs," he comments. "It's a strong partnership: they look out for us, and we support them in pursuing their growth goals."
In fact, Haynes says, "Our relationship with K&K is the model we use for our partnerships with other managing general underwriters. We trust K&K with our company's profitability. We do underwriting audits and other reviews, but we know they're acting in our best interests. We're in constant communication with them; we share information and do joint business and operational planning. It's an open relationship with a high degree of trust."
K&K: A "virtual insurer"
What factors motivated K&K to form a partnership with TIG Specialty, and why does the relationship work so well? "There were two reasons we decided to join forces back in 1986," says Todd Bixler, K&K's chief operating officer. "First, TIG Specialty was targeting niche program business, which has been K&K's focus from the beginning. Second, TIG Specialty was not involved in the programs we were offering. That allowed us to bring in a number of programs and to expand them on an exclusive basis with TIG Specialty that helped us grow together."
"K&K is what we call a full-function MGU," Bixler says. "Our responsibilities involve sales and marketing, rating and quoting, underwriting, policy issuance and service, premium collection, claims handling and investigation, and loss control." To illustrate the extent of K&K's mandate, he notes, "More than 400 K&K employees work on the business that goes into the TIG Specialty relationship. TIG Specialty provides supervision and oversight, and they have about 10 people assigned to the business. K&K contributes the manpower and the skill and expertise to put it all together."
Adds K&K's chief marketing officer, Tony Wittwer, "We operate within a broad letter of authority for both underwriting and claims, and consequently the great majority of the business is handled entirely within this building. The 10 or so people at TIG Specialty who serve in an oversight capacity enter the picture in those few instances when something is outside of that big box. Each night we download all premium and claims transactions to TIG Specialty, so they can see what's going on without having to touch the business."
Retailers are "lifeblood"
What role do independent agents play in the K&K-TIG Specialty relationship? "K&K works with over 4,000 independent agents, and they are our lifeblood," Wittwer responds. "We depend on the independent agency network and are always seeking to expand their use of K&K as a source of programs for the sports, leisure and entertainment world." Adds Steve Lunsford, K&K's president and chief executive officer, "With over 4,000 retailers, many of our relationships are for just one or two risks from an agent. Often there's no opportunity for a local agent to develop a book of SLE business or acquire expertise in this area, so they seek us out as their partner, as the resource for that one exotic risk in their local community."
Retailers also benefit from K&K's solid relationship with TIG Specialty and from the prominence of the K&K brand in the marketplace, Bixler remarks. "We've been with them since 1986, and that's a long relationship in the specialty arena," he points out. What's more, "K&K definitely has the name recognition that will bring in SLE clients. When a retailer calls on an SLE prospect, he or she can mention the names of K&K clients in that class of business, and that provides a comfort level for the prospect about the agent's access to experts in the market." Another benefit is convenience, Bixler adds. "With a single phone call, we offer the agent more than 100 filed programs, so he or she doesn't have to comb through marketplace directories to find coverage for a certain risk in the SLE industry."
A market in flux
Although sports, leisure and entertainment activities are designed to offer excitement and fun, providing coverage and service to SLE risks unquestionably is serious business. We asked the TIG Specialty executives to share their views on current conditions in the SLE market and how they plan to respond to emerging trends.
"The SLE market has been competitive and continues to be," Courtney Smith observes. "We do see changes in the marketplace, but it's taking place in specific areas where we're beginning to see some price firming and some changes in the major players that are having an impact on trends in the market."
Steve Haynes agrees with Smith's assessment. "There's an interesting dynamic in the market," he comments. "Some of our competitors are pulling back from certain SLE areas, but there are always new entrants to fill the vacuum. The larger non-specialist carriers are likely to reduce their SLE writings or pull out entirely, and that creates opportunities for us. An insurer must be in SLE on a long-term basis to make a profit. We understand the market dynamics, we enjoy the strong financial support of Fairfax Financial Holdings Limited, and we have the advantage of our long-standing relationship with K&K."
TIG Specialty stands committed to SLE lines and K&K, as affirmed by Courtney Smith. "We're dedicated to the long term, not only to the SLE market, but to our production partners as well. Our focus is on helping agents grow their business." *
For more information
TIG Specialty Insurance Solutions
5205 N. O'Connor Blvd.
Irving, TX 75039
(972) 831-5000
Web site: www.tigspecialty.com
K&K Insurance Group, Inc.
P.O. Box 2338
Fort Wayne, IN 46801-2338
(219) 459-5000 or (800) 637-4757
Web site: www.kandkinsurance.com