Wayne H. Carter III, CPCU, ARM, is the president and CEO of Target Capital Partners of Avon, Connecticut.
The perception that volunteer fire departments are more a part of American history and folklore than today's reality could not be further from the truth. The fact is that volunteer firefighting forces continue to dominate the landscape of the country's fire services. In a trend that shows no signs of abating, more than 22,000 of the approximately 30,000 fire departments in the United States are staffed entirely by volunteers while another 4,800 departments were made up mostly of volunteers, according to statistics from the National Fire Protection Association (NFPA.)
The result is an insurance market ripe for the enterprises of Target Capital. The Avon, Connecticut-based MGA has a specialty insurance program for volunteer fire departments among its numerous other specialty and professional liability programs.
Target, formed about six years ago as an MGA for more than 20 different insurance packages for professional and public entity liability, is a company of at least eight MGAs which currently manage some $75 million in annual premiums. It launched its ONTARGETSM program for volunteer firefighting organizations late last year.
Though Target functions as an MGA for some of its programs, it prefers to be known as a managing general underwriter (MGU) for insuring fire departments, says Steve Sims, executive vice president. Target has a solid foundation of underwriting talent to build on as its market presence in the volunteer firefighter market grows, according to Sims. "We have a well-balanced executive team that focuses on the unique kinds of exposures that volunteer firefighting organizations bring to us, and that's the most important role we play in that situation," he says.
Echoing that assessment is Wayne H. Carter III, CPCU, ARM, president and chief executive officer. "We want underwriting to be the recognized strength of the organization," he says. "Most of our key executives grew up on the underwriting side of the business and that's the direction we want to continue," says Carter. Volunteer fire insurance is a "strong and viable market," he says.
To bring about this precision in underwriting firefighting departments, Target has brought on Nicole Haggerty, RPLU, as vice president of underwriting. A 10-year veteran of underwriting, she had previously been manager of new products and program development at Chubb Executive Risk in Simsbury, Connecticut. At Target, she oversees underwriting for Target's start-up public entity program for municipalities and schools in addition to volunteer fire departments.
For fire departments, Target has partnered with the Philadelphia-based ACE USA Group of national, commercial lines insurance companies that recorded over $3 billion in gross premiums written for 2000. The ACE USA Companies have re-entered the market after about a five-year hiatus from insuring volunteer fire departments. But, INA, now one of ACE USA Group of Companies, traces its involvement with volunteer fire departments back to the 1790s, says Susan Woodward, senior vice president.
Underwriting expertise will not be the only thrust of Target's program. Target will be active in fire prevention education, and in a grassroots-style safety awareness effort, in which it wants its retail agents to get involved.
Wayne Carter and Doreen M. Schlicht, CPA, executive vice president-operations
Today's volunteer fire departments come in a variety of shapes and sizes, operating in diverse environments with differing insurance needs, Haggerty explains. The continuing sprawl of suburbs and white-collar counties ringing major cities has forced many previously much-smaller volunteer departments to grow and obtain new equipment and take on more personnel to keep up with the increasing demand for their services. Some even find themselves having to develop the capability to fight industrial and high-rise fires.
In some cases, the fire department may be largely tied in to the insurance program of the municipality it serves, or it may be part of a fire protection district that taxes its residents separately to fund its expenses, including payment of insurance premiums.
Elsewhere, the tiny one-truck firehouse volunteer department found in sparsely populated rural areas also still has its niche, she says. "The fire department there might have an antique pumper and though it's well maintained, the municipality might not insure it and the fire department might have to get its own coverage."
Or, "if you look at the municipality, you might find it doesn't have much exposure, maybe a town hall and a couple of vehicles. But when you look at the fire department it has a much bigger exposure: a pumper truck, equipment and workers comp programs, which makes volunteer fire departments unique from an underwriting standpoint," says Haggerty.
Volunteer firefighters also have risks that their counterparts in full-time departments don't normally face, Haggerty explains. A volunteer will usually drive his/her own car to the scene of an emergency. A full-time firefighter is usually on station. "Or a volunteer might take an ax from his/her own garage to fight a fire," she says. "A full-time firefighter wouldn't be faced with that."
Volunteers also can be confronted with a management risk not usually faced by the full-time services. In some jurisdictions, where residents must pay periodic fees for fire services, department commanders might have to make split-second decisions about whether to fight a fire or call in another department.
Of course, no fire department--volunteer or otherwise--could be expected not to try to rescue occupants of a burning building. But if the structure is unoccupied, and the owner has not paid the service fee, a decision would have to be made whether or not to fight the fire, she says.
General, or emergency services management liability might cover most of that risk but specialized underwriting is still needed, according to Haggerty.
The Target/ACE insurance program features the following types of coverages:
* Comprehensive liability protection for emergency medical technicians (EMTs), paramedics and volunteer firefighters
* Property coverage for portable and computerized equipment, personal property of the volunteers/employees or commandeered or impounded property
* Auto liability coverage for vehicles used on departmental business including those leased, commandeered or borrowed
* Emergency services management liability coverage for directors and officers, which combines errors and omissions and employment practices liability into one policy form
* Optional coverage for bodily injury to volunteers, or fellow employees, or fellow volunteers injured while engaged in firefighting, rescue or ambulance operations
Nicole Haggerty points out that volunteer firefighters have risks that their counterparts in full-time departments don't normally face.
Target also has a market for workers comp coverage, Carter says. Available limits include $1 million per occurrence and $3 million aggregate for general and emergency services management liability. Additional limits available include $1 million per occurrence for professional liability for emergency services organizations and $1 million combined single limit for commercial auto.
Underwriting expertise will not be the only thrust of Target's program. Target will be active in fire prevention education, and in a grassroots-style safety awareness effort, in which it wants its retail agents to get involved. Target wants its agents to forge close relationships with its insureds, according to Sims. "This market has been dominated by several players over the last 25 years, and we feel there's been an under-commitment between underwriters and carriers to work with the insured," Sims says.
INA developed "Totfinder," in 1969 and it was promoted among firefighting jurisdictions nationwide. Stickers with the Totfinder emblem are placed in homes where children reside so that firefighters can locate them more quickly in an emergency.
One of ACE USA's predecessor companies had also been involved in the formation of the Congressional Fire Services Institute, a program to educate federal lawmakers on the issues relevant to the fire services field.
Interaction between Target, ACE and participating agents will be continuous, says Sims. "If we pick up on jurisdictional issues or if we see aberrations in loss patterns, we're going to be committed to working with the ACE team to get that information down the grassroots chain to the agent and the insured," he says.
"One of Target's key advantages is our ability to communicate quickly and efficiently with our business partners," says Drake Manning, director of marketing at Target Capital. "We are committed to educating and informing our agents, brokers and policyholders about issues that may impact their operations."
Of its current field of some 12,000 affiliated agents and brokers, about 900 currently have volunteer fire department coverages in their agency portfolios, and another 200 to 300 are currently under consideration for authority to sell the program, Sims says.
On a corporate level, look for Target to continue as a "highly decentralized" organization of autonomous business units, Carter says. "We want people who can run business units without a lot of oversight. We don't have the infrastructure for centralization and we don't want to build it."
Still, Target is eyeing potential MGUs and MGAs for acquisition, particularly those with strong sales and marketing talent and books of business that can be rolled into existing operations, according to Carter. Target recently acquired a book of business from Chicago-based Edgewater Holdings, Ltd., an MGA specializing in general and employment practices liability. Southeast Underwriting Group, a specialty agency and underwriting management firm, was also recently acquired by Target. Southeast Underwriting specializes in professional liability programs.
Target Capital also handles insurance programs for tax preparation firms, nonprofit organizations, restaurants, public entities, staffing and recruitment organizations, office professionals, accountants, consultants, insurance agents, architects and engineers, title agents and abstractors, contractors, products liability, owners, landlords and tenants, home inspectors, employment practices and lawyers.
ACE USA, headquartered in Philadelphia, is the U.S.-based operating division of the ACE Group of Companies, headed by ACE Limited. ACE USA provides insurance products and services through the U.S. operating subsidiaries. The ACE Group of Companies provides insurance and reinsurance for a diverse group of clients around the world. *
The author
John Maes is a Chicago-area freelance writer.
For more information:
www.target-capital.com
www.ace-ina.com