Agents savor a diverse menu at the first
Rough Notes Specialty Lines Seminar
By Elisabeth Boone, CPCU
Larry G. France, vice president-editorial director of The Insurance Marketplace, welcomes participants to the first of four regional Specialty Lines Seminars, held in St. Louis in May.
Have you ever attended a "taste of" food festival? Popular in many large cities, these events draw enthusiastic crowds who pay a modest entry fee and get to sample a dazzling array of foods prepared by local restauranteurs. The keener your sense of adventure, the more fun you'll have trying everything from pickled eel to petits fours--and the more you'll learn about the rich culinary cultures of countries whose names you may have heard only on CNN.
If you're a retail agent, a visit to a specialty lines "tasting" might prove every bit as exciting--and show you how to be a hero to your clients while increasing your revenue stream. That's why The Rough Notes Company and The Insurance Marketplace (a sister publication of Rough Notes magazine) are offering a series of regional Specialty Lines Seminars in key cities around the country.
The kickoff seminar, held in St. Louis in May, was a lively and informative "smorgasbord" of specialty offerings to meet needs from the challenging to the exotic.
Keep on trucking
First up were Crystal Burns and Erin Miles, underwriters with United Brokers Insurance, a managing general agent and managing general underwriter based in New Albany, Indiana. Some 70% of UBI's business is trucking risks; the firm also offers programs in more than 50 other classes of property/casualty business, including restaurants, bars/taverns, day care centers, hotels/motels, contractors, builders risk, vacant buildings, professional liability, and liquor liability.
Especially in a hard market, Burns and Miles pointed out, becoming involved in program business gives the retail agent some important advantages: the ability to offer specific, unique coverages and to specialize in a particular product line; more time to focus on customer relationships; and the opportunity to differentiate oneself from competitors. The underwriters described four key steps to developing a lasting program: find a group of under-served customers; differentiate yourself by offering them a product they need and don't have; sell the need, not the price; and provide excellent service.
Erin Miles, underwriter with United Brokers Insurance (UBI), provides four keys to developing a lasting program. UBI's monthly trucking program, which is available in all states, offers physical damage, cargo, and non-trucking liability (bobtail); coverages can be written separately or together. The program is designed for owner operators, but any size fleet is welcome. Several limits are available; coverage is continuous until canceled; and agent involvement is minimal.
Stormy weather
If you can't prevent rain from drowning out a Jimmy Buffett concert or a blizzard from halting the filming of a Hollywood epic, the next best thing is definitely weather insurance. That's the specialty of Good Weather Insurance Agency, Inc., of Salem, Massachusetts, whose slogan is "Weatherproofing Business Profits." The original provider of weather insurance in the United States, Good Weather is a national underwriting manager for major U.S. carriers as well as a coverholder for certain underwriters at Lloyd's.
Laurie Tillman, owner and president of Good Weather Insurance Agency, Inc., discusses the importance of weather insurance for mainstream commercial clients.
"Almost every business is exposed to loss of income or extra expense because of weather, yet most have protection only for related property damage," said Laurie Tillman, owner and president of Good Weather. "We believe that weather insurance should be considered an integral part of the risk management process of every commercial account."
The most frequent purchaser of weather insurance is the entertainment industry (concerts, fairs, and festivals); other risks are sporting events, air shows, and advertising agencies and film production companies, Tillman said. She went on to identify factors that motivate more mainstream commercial clients to purchase weather insurance.
Cost containment. Businesses, municipalities, colleges, and condo associations use weather insurance to offset increased costs of snow removal from their properties' roads and parking lots. Increased fuel costs also can be offset.
Income stabilization. Many businesses need to stabilize cash flow against uncertain weather conditions. This coverage protects sponsors of fundraising events, as well as restaurants, car dealers, fuel oil dealers, golf courses, mall associations, car washes, and various other retailers that cannot afford the effects of adverse weather during key sales days, a prime season, or annually.
Increased sales. Weather insurance is used by businesses such as jewelers, auto dealers, furniture stores and furriers for creative sales promotions designed to stimulate business during a key season, specific holidays, or any time of year when business historically is flat or very competitive. All of these promotions are structured expressly around a measurable weather peril that varies by location and time of year.
Good Weather's premium rates vary widely, Tillman said, ranging from 1% to 40% of the policy limit depending on location, dates, hours, and peril. The minimum premium for any event is $500. The agreed value limit can include profit, expense, income, or any other factor. There is no coinsurance and no deductible. Insurable weather perils are of two types: specific (rain, snow, wind, hurricane, lightning, temperature, etc.) or general (severe adverse weather that causes the event to be canceled). The policy must be bound and paid for a minimum of seven days before the event so that the risk is pure rather than speculative. The designated weather monitor is the National Weather Service, an on-site or off-site independent weather observer, or a forensic meteorology firm.
Alice's restaurant
If there's one place you truly can "get anything you want" in the specialty marketplace, it's Aon Specialty Product Network (ASPN), which serves as a conduit between independent agents and brokers
and more than 30 Aon provider companies. The provider companies focus in three distinct areas, according to Terry Schuck, ASPN regional vice president in Dallas: wholesale brokerage with MGA facilities; MGAs and MGUs for niche cover; and specialty service companies.
Terry Schuck, regional vice president with Aon Specialty Product Network (ASPN), explains how ASPN serves as a conduit between independent agents and brokers and more than 30 Aon provider companies.
On the wholesale side, Aon owns Swett & Crawford, which serves as a brokerage for property, casualty, and financial services and offers MGA facilities in most states for transportation and property/casualty. The wholesaler also gives agents access to standard programs for transportation; nursing homes, assisted living, and hospice in most states; and luxury hotels and motels. In the MGA and MGU segment, provider companies focus on banking, health care, construction, sports, recreation, and leisure, E&O, EPLI, D&O, excess workers compensation, valuable collectibles, rent-a-captive and agency captive formation, commercial marine, cyberliability, associations, and affinity groups.
Through ASPN, agents also can access Aon's specialty service providers. Cannanwill Premium Financing Company provides premium funding products to the commercial property and casualty business. Cambridge Integrated Service Group provides claims management, managed care, and loss control services for workers compensation, auto liability, products liability, professional liability, property, group health and welfare, and managed care.
Also available to agents are Aon's in-house facilities in several areas. The Mergers and Acquisitions Division develops coverage for the risk associated with representations and warranties often extended by parties in a merger or acquisition. Aon Risk Management Services is a consulting group that supports business strategy and change management for financial institutions (for example, integrating bank-owned agencies or independent agencies partnering with financial instutitions). Aon Specialty Re is a nationwide reinsurance intermediary for all forms of property and casualty facultative and program reinsurance placements. Aon Consulting is a human resources consulting firm whose products and services include medical, prescription drug, dental, vision, life, disability, 401(k), key employee life, and elective benefits. Combined Select Programs offers student accident and sickness, employer stop loss, international medical insurance, dental and vision insurance, and high-limit disability.
Eyes on the prize
If your client list includes retail businesses and shopping malls, chances are they face an exposure you may not even know about. The fact is, anytime one of your retailer clients runs a sales promotion with a prize or giveaway, that client needs a way to indemnify the prize. The same is true for country clubs that offer a prize to a golfer who scores a hole in one ... and for casinos, nightclubs, racetracks, newspapers, radio and TV stations, and packaged goods companies.
Don Silberstein, senior vice president of SCA Promotions, Inc., talks about prize coverage for contests and promotions as well as surety and performance bonds for sweepstakes and promotions.
In a presentation titled "Prize Indemnification: Win-Win Strategies for Risk Management and Marketing Success," Donald Silberstein, senior vice president of SCA Promotions, Inc., identified three categories of risk faced by entities that offer prizes: lack of effectiveness, financial exposures, and process breakdown. "Because these aspects are highly interdependent, eliminating risk in one area may create additional risk in another," Silberstein said. "Therefore the objectives are to minimize unbudgeted financial risk, minimize the risk of process breakdown, and maximize the effectiveness of the promotion or guarantee."
SCA is the world's leader in prize coverage for contests and promotions including hole in one, sports, media, gaming, over-redemption, and athlete incentives. SCA Insurance Specialists provides surety and performance bonds for sweepstakes and promotions. Since 1986, SCA has guaranteed more than $12 billion in prizes and paid more than $79 million in claims.
SCA offers prize coverage services and solutions to eliminate risk in marketing programs. This includes guaranteed payment of prizes from $5,000 to $1 billion. SCA also covers risk in programs where skill, chance, or response affects promotional costs, such as excess redemption of coupons, or excess usage on prepaid long-distance time.
SCA operates in all states on an admitted basis and has relationships with A+ commercial reinsurers like AIG, Swiss Re, and Lloyd's of London.
Specialty supermarket
When you go to the supermarket, you expect each aisle to be clearly marked so you don't have to make a complete circuit of the store just to find a box of kashi or a bottle of extra-virgin olive oil. To many retail agents, however, the specialty lines marketplace sometimes looks more like a flea market than their local supermarket. To make specialty shopping simple, Gulf Insurance Group has created an easy-access system that allows retail producers to work directly with the decision makers for each of Gulf's 100-plus products and programs.
Instead of the typical branch office structure, said Larry Ray, senior vice president of marketing, Gulf concentrates experience into underwriting centers that work closely with claims and actuarial. Using the insurer's Web site or its quarterly GulfGRAM, a producer can find out quickly whom to contact for a particular product or program. The producer may be instructed to access Gulf directly through company underwriters or through general agents or wholesalers. Except for a few programs, Ray explained, Gulf has no package underwriters. "We're primarily a monoline company," he said.
Larry Ray, senior vice president/marketing of Gulf Insurance Group, describes Gulf's easy-access system to its 100-plus products and programs, which include environmental risks, professional liability and specialty sports.
Products offered by Gulf are designed for: environmental risks, entertainment, fidelity and crime, financial institutions, management liability, mergers and acquisitions, professional liability, specialty casualty, sports, surety, and umbrella and excess liability. On the program side, Ray says, Gulf is always ready to consider new programs. The insurer prefers a mature book with at least $2 million in written premium. Startup programs with unique elements and/or product differentiation, a solid business plan, and producer expertise also will be considered.
Program power
With a stable of A+ rated carriers and a firm focus on niche markets, Venture Programs, Inc., of West Chester, Pennsylvania, is a national program administrator that accepts business solely through licensed insurance agents and brokers. Bill Dalton, director of sales and marketing, described his company's programs and philosophy, which is expressed in its registered service mark: "The Right Partner Means Everything."
Bill Dalton, director of sales and marketing for Venture Programs, Inc., presents the various programs offered through Venture, such as workers comp for the hospitality industry, technology industry, 501(c) 3 organizations and life sciences industry (pharmaceutical- and biotech-related).
Venture Programs is the program insurance division of the Harvey Insurance Group. The firm acts as program administrator for a wide range of commercial insurance programs and also markets and distributes national programs that are marketed exclusively through independent producers:
* Preferred Club Program: Workers compensation, package, auto, umbrella, liquor, pollution, D&O, and AD&D for private, semi-private, and high-end daily fee golf clubs, and workers compensation for private social clubs
* Preferred Hospitality Program: Workers compensation for the hospitality industry (restaurants, casinos, hotels, resorts, stores, malls).
* Preferred Technology Program: Workers compensation for the technology industry (software and hardware companies, semiconductor manufacturers, "dot.com" and Internet companies).
* Preferred Social Service Program: Workers compensation for 501(c) 3 organizations including human services, social services, and youth and health care organizations.
* Preferred Life Sciences Program: Workers compensation, package, auto, umbrella, and E&O for the life sciences industry (pharmaceutical manufacturing, pharmaceutical research and development, biotechnology research and development, medical device and instrument manufacturers).
* VIP Cover: This new product protects the intellectual property interests of companies in the technology, life sciences, manufacturing, and service sectors of the economy.
VIP Cover was created in response to a challenge faced by its target markets: "Intellectual property and liability coverage is being cut from package policies," Dalton said. Likewise, he cited an emerging trend in the troubled workers compensation market: "Increasingly, we're seeing a move to monoline comp, especially in California," he commented, "and this trend is moving eastward." By keeping an eye on these and other market developments, Venture Programs is able to tailor products to meet the specific needs of independent producers and
their clients.
E&S detectives
On the home page of the Web site for Market Finders Insurance Corporation, there's an eye-catching cartoon of a detective, complete with Sherlock Holmes hat and magnifying glass. That's an appropriate image for a company that seems able to track down strong markets for a vast array of coverages: commercial and personal lines, aviation, medical liability, and special risks (short-term risks from animal shows to water shows, plus contest and prize indemnification and pollution liability).
Jim Flitt, assistant vice president of Market Finders, emphasizes the 24/7 personal service that this program administrator/
MGA/excess-surplus lines broker offers.
With headquarters in Louisville, Kentucky, Market Finders is a program administrator, managing general agent, and excess-surplus lines broker operating in Indiana, Kentucky, Ohio, South Carolina, Tennessee, and West Virginia on an admitted basis and in all states except Kansas and New York on a nonadmitted basis. Through Market Finders, retail producers can gain access to more than 50 domestic insurers, including all of the major aviation markets; the company also works with three of the top 10 London brokers.
The business philosophy of this diverse organization is simple, said Market Finders Assistant Vice President Jim Flitt. "First, your call is answered by a real human being, and our phones are answered 24 hours a day," he said. "Second, our employees are friendly. And third, we offer a broad range of products."
Commenting on current conditions in the property/casualty market, Flitt said: "I think we're in for a very interesting two or three years. Everyone I've talked to thinks so. It's a capacity issue and a loss issue. Reinsurers are paying out $1.47 in claims for each $1 of premium, so they must either raise prices or curtail capacity. I think they're going to do both."
No matter what's happening in the market, Flitt commented, there's one simple rule for retail producers who deal with specialty markets: "Submit complete applications. If your app is not complete, it goes to the bottom of the pile."
Tire tracks
Rounding out the seminar was a presentation about Bolton & Company, Louisville, Kentucky. This managing general agent administers the International Tire and Rubber Association's insurance program for its members who operate tire recapping and repair businesses. The endorsed program, available in most states on either an admitted or nonadmitted basis, provides coverage for general liability including products, property, umbrella/excess with limits to $25 million, workers compensation and employers liability, and long-term group disability.
What's next?
Additional Specialty Lines Seminars are scheduled for Denver on July 30; Seattle on Aug. 13; and Tampa, Florida, December 11. For more information, call Larry G. France at (800) 428-4384, or e-mail rnc@roughnotes.com.
The Insurance Marketplace--available free in print and online (www.insurancemarketplace.com)--is a directory of more than 640 excess, surplus, and specialty lines and insurance services. Included in the directory are regional, national and international sections. *