National Insurance Professionals Corporation executives include William J. Reese, president (seated foreground) and (left to right) Barry C. Clipsham, senior vice president; Sherri Norman, office manager; William L. Johnson, CPCU, executive vice president and chief financial officer; and Thomas C. Downs, chairman.
The great Northwest, known for its snow capped Cascade peaks, fabulous seafood, and just a bit of rainfall, is also known for a bit more if you include the insurance industry. Based in the Northwest, NIPC or the National Insurance Professionals Corporation, is a general agent based in a town called Poulsbo on a small peninsula across from Seattle.
Poulsbo is quiet and unassuming. Its name is derived from a Norwegian word meaning "Paul's place." Though we're not quite sure who Paul is, Norwegians settled here at the head of Liberty Bay in 1882. The town developed into a fishing village and farming community. The small burg is not the insurance center of commerce, standing in the shadow of nearby Safeco in Seattle, but it doesn't need to be. To get to Seattle, you take the highway east from Poulsbo, connect to Bainbridge Island by bridge, and finally to Seattle by ferry. Needless to say, the area is charismatic, charming and quite relaxing.
NIPC prides itself on being one of the first wholesalers to turn niche markets into programs administered exclusively by the wholesaler. With its 20 employees, it is small compared to some wholesalers. But whatever NIPC lacks in size, it makes up for in focus.
NIPC focuses on markets that include social service agencies, in-home businesses, architects and engineers, accountants, lawyers, bicycle tour operators, bicycle dealers, bicycle rental companies, bicycle manufacturers and distributors, and other public entities. Its biggest focus, though, is on social service agencies. NIPC currently writes 20 programs for this type of business.
William (Bill) Reese, president of NIPC, says that his company prides itself on a business philosophy based on expanding its programs, both unique and unusual in the standard and nonstandard areas. NIPC says in its mission statement that it believes the savings it offers carriers by promoting, advertising, quoting, conducting policy issuance and premium collection enables it to put forth a better product in any category at a lower price.
Thomas Downs says NIPC has achieved an overall loss ratio of 40% on all its programs.
Reese, who joined the company in 1986, is a long-time insurance professional who handles most of the company communication and oversees marketing and production. NIPC was a mere vision in the late 1960s when James Washington, who later became NIPC's first CEO, determined that mental health centers and workers had great difficulty getting professional liability coverage. At the time, Washington placed those risks with the Seattle-based insurance agency, Miller, Hansen and Torphy. In 1973, Washington persuaded Safeco Insurance Company to write a complete package program on an admitted basis. Safeco wrote it for two years. Then in 1976, Professional Insurance Company (PIC) was formed and a social services liability program was launched with the Glacier General Assurance Company of Missoula [Montana]. It was the only product PIC wrote until about 1979, when PIC started to add new programs to its arsenal.
In 1990, PIC changed its name to the current NIPC to better brand itself as a national program administrator. That year, Washington also retired and the business was sold to the five existing officers of the company. They included Harry Baker, who was president, and the four current principals, Thomas Downs, Reese, William Johnson and Barry Clipsham. Each owned 20% of the outstanding stock. In February 1996, Baker passed away and his interest was bought by the remaining four members. Downs became chairman, Reese became president, Johnson became chief financial officer and executive vice president and Clipsham became a senior vice president.
Reese had held positions with various insurance organizations as a personal and commercial underwriter, mass marketing coordinator and regional manager, much of the time working for The Travelers. In addition to his current marketing and production responsibilities, he oversees media communication and advertising and is legal liaison for NIPC. He is also the company's facilities manager.
Downs and Reese enjoy the lifestyle in Poulsbo and doing business there. "We don't call Poulsbo a suburb," Reese says in a light-hearted tone. "We're on a peninsula, somewhat isolated, yet fairly close to Seattle. We left Seattle in 1995 when our lease was expiring there. All of the partners lived on this side of the water and we said why are we making the commute? All we need is a telephone and a fax, and where we are located doesn't make a difference."
NIPC owns the two-story building it inhabits now, occupying the entire second floor. Its principals and employees enjoy a sometimes foggy, sometimes drizzly, sometimes sunny view of the Olympic mountain range between Puget Sound and the Pacific Ocean to the west.
In making NIPC work, both Reese and Downs speak highly of the efforts and success of Sherri Norman, their office manager. She exercises control over human resources, payroll, licenses and filings and some accounting functions. "No one else has made this kind of meteoric rise in the company," Reese says. "We have other employees who are important and make an impact. But, Sherri is an integral part of this organization and the single most important person to this organization in what she does."
Social services liability
Social services liability is currently NIPC's primary focus. "It is our largest book at this point," Downs says. "We fully expect public entities to take over that spot in maybe two to three years. It is already 25% of the social services program. Most of our social services book is not governmental, but rather nonprofit corporations that may rely on some governmental funding for operation. These types of entities are often challenged with obtaining property/casualty coverage through private carriers.
"Most of our exposures [risks] are with drug and alcohol abuse agencies--that typically deal with young people who have substance abuse problems--community mental health centers and adoption placement agencies," Downs continues. "If they have a genuine professional liability exposure, we can deal with it. We're not involved in agencies involved in primary physical medicine. We're mostly writing human services exposures, counseling, training, and the like."
"Most of our carriers are admitted now and we write in all 50 states," Downs adds. "Our largest single state is California, but our risk is pretty much spread around the country." Downs says NIPC prides itself on underwriting profit, and its success in working with its primary carriers and reinsurers is evidenced by an overall 40% loss ratio on all programs.
"We've maintained a steady, fair price and instilled good underwriting practices," Reese says. "We're not lost to undercuts. We stayed strong when things started to go sour for others in recent underwriting cycles."
Downs adds that currently, NIPC is having the biggest increase in social services liability policy growth that it has in many years. In addition to the 20 programs, two new ones are just emerging: a public entities program for entities with 100,000 or less population, and the Green Shield Program for a wide variety of risks within the horticultural market.
"It is all about putting together programs mostly for smaller market segments," Downs says. "You specialize and do a good job in helping out independent agents. Everything we do is through them. We try to make it an easier job for them to sell."
Poulsbo pedal power
Another interesting niche and viable line of business for NIPC is liability for the bicycle manufacturing industry, bicycle dealers and bicycle tour operators.
With this focus and being located near an island, one might wonder if NIPC employees bicycle their way to work every morning? After all it is located in the fresh green of the Northwest. Not all employees ride to work, though Johnson is actively designing a new style of reclined bicycle, as a hobby. NIPC went down the path of entering the bicycle market years ago, when a California producer had an idea for a bicycle program. He offered the idea to NIPC and for awhile the idea lay dormant. In about 1988-89, NIPC established a relationship with the property/casualty division of Cigna, which wrote the program for a short period.
Bill Reese sees a bright future in bicycles--insuring bicycle dealers, bicycle tour operators, rental companies, manufacturers and distributors. He is even designing a new style of reclined bicycle as a hobby.
"TIG, then Transamerica, got involved and enjoyed doing business with it for a while and finally left in amicable style. At the time there was about $3 million in business," Downs says.
"I think we've somewhat revolutionized the writing of this type of business," Reese added. "Ten years ago, there was no such thing as writing a tour operator. No one would do rental operators. All the exposures that were forbidden by the industry, possibly due to newness back then, were written by us."
Both Reese and Downs contend that bicycle exposures, if underwritten properly and priced appropriately, can be profitable. Bicycles today are extremely well built and highly technical. Some mountain bikes and top-end cruisers command a $6,000 retail price and, ultimately, replacement cost.
"We attend one bicycle convention per year that is usually in Las Vegas," Reese says. "We literally come back with suitcases full of applications. We've taken the time to learn the lingo and how to communicate with bicycle people. We've learned our stuff. We're into it very strongly."
From a liability exposure angle, NIPC's underwriters are concerned with who is assembling the bicycles, whether it be the manufacturer or the dealer. Some manufacturers and retailers pass on the high-tech bike to the consumer to assemble. These might be considered a bit higher in exposure. Rating structure is built on dollar sales volume and the per-unit cost is higher. The higher-end cyclists and avid enthusiasts are likely to be safer and take better care of their equipment.
As for the bicycle programs for dealers, manufacturers and tour operators, each features its own distinctive product and marketing angle in relation to target demographics. The bicycle manufacturers and distributors program, for example, is an occurrence-type policy. NIPC has a few risks that are written on a claims-made basis. NIPC covers the manufacturer's products (named insured) on a worldwide basis. In order to qualify, the company must be domiciled somewhere in the United States. The program is endorsed by and accessed through the National Bicycle Component Manufacturers Association. (NBCMA).
Coverage for the bicycle manufacturers and distributors program is broad and includes property, business income with extra expense, theft, personal property off premises, valuable papers and records, accounts receivable, general liability, products liability, non-owned and hired auto, and crime.
Within the last 25 years, bicycle tour operator businesses have developed throughout the United States. Scan the Internet and you'll find creative bicycle tours becoming more and more popular vacation destinations for fitness-minded Americans. Typically, these types of businesses lead groups of people on bicycling excursions through remote areas, national parks or on designated cross-terrain or country rides. Some tour operators have more than 1,200 scheduled trips throughout the year.
According to Downs and Reese, bicycle tour operators offer unique exposures and pricing concerns. There are tour operators in Hawaii that truck and trailer their customers to the tops of mountains and let them wind their way down the highway, meeting them at the bottom. There are others who host, feed, and set up camp and map out a trek from one part of Montana to the other, through Glacier National Park or wherever.
"Knocking on wood, losses are relatively few and we've had good [loss] experience," Downs says. "The rate is set based on the number of trips the operator hosts. We're concerned about individuals riding off a 2,000-foot high ledge. It also depends on the truck and trailer, where the company does business and where they travel. Several day trips are common for these operators. For some, they provide the bicycle; for others the customer brings his or her own and the rider is likely to be more experienced and in better shape."
The Internet has opened up additional opportunities for NIPC. It set up its Web site two years ago (www.nipc.com) and works to keep it up to date. "We keep ours simple, with not a lot of interactivity," Downs says. "Users can look at our programs, order brochures and find out what they want to know. We're averaging about six agent inquiries a week for information on our programs. Our hits are from people genuinely interested in our programs."
Downs thinks it is apparent
that it is more and more common to communicate in business by e-mail. In fact, data supports this. According to a study published in the September 2000 issue of Brills Content magazine, 80% of employees surveyed said that e-mail had replaced traditional mail for the majority of business correspondence.
In addition to its Web presence, NIPC maintains a 10,000-agent mailing list. About 2,000 to 2,500 of these actually have policies with NIPC currently. They also publish a quarterly newsletter called Newsline that is distributed to mailing list recipients. "We're moving to the point where we'll get applications through our Web site, but for now the business we do is too complicated to be done person-to-person through a Web site," Downs says. "These are not commodity products. They are industries with sophisticated exposures, and most insurers can't determine limits and needs without an agent's being in there to help it along." *
For more information
National Insurance Professionals Corporation
(800) ASK-NIPC
Fax: (360) 697-3688
E-mail: insurance@nipc.com
Web site: www.nipc.com