Lighthouse Underwriters offers programs only for markets that want them
By Dennis Pillsbury
Lighthouse Underwriters, LLC, Annandale, Virginia, began operations in 1995 with a program for elder care coverage that was endorsed by the Assisted Living Federation of America (ALFA). Since that time, the wholesale broker has branched into three additional areas, each one carrying the endorsement of an important trade association within the niche.
The concept of developing the relationship with the association before an insurance program was Arthur Seifert's idea. Art, CPCU, CIC, RPLU, who founded Lighthouse and serves as president and CEO, started in the insurance business in 1979, with Reliance as a large account underwriter. He later went to a retail insurance agency and then to a consulting firm, Professional Insurance Purchase, which he founded in 1990. At that company he worked with many associations on captive feasibility studies, among other things.
"I was asked to develop a program for one of my association clients," he says, and that's how Lighthouse came into being. "I set up the brokerage to work with and support the trade association's efforts to put together an insurance package for their members."
One of the results was the creation of the Eldercare program, which includes a range of products designed for those who provide services to the elderly, including nursing homes, assisted living and indepen-dent living facilities and home health care firms. Today, Lighthouse writes about $26 million in premium in this market.
"We do a lot of really tough risk selection in order to protect the companies we represent. We require insureds to adopt loss control programs through TAGWEB," Art points out. TAGWEB is a risk management firm hired by Lighthouse to provide services to its ALFA Business Insurance Program. He continues by noting that the loss ratio for this business "has consistently been under 20%. These results have helped us gain a significant trust level with our carriers," he adds. "They know that we have the expertise to underwrite this business profitably and, because of that, we are able to negotiate a better deal with them. At the same time, we're supporting the trade association and its membership. The trade association endorsement helps us achieve higher retention levels and, because of that, lower acquisition costs over a five-year period. Basically, it's a win for everybody."
More than lip service to loss control
As part of its commitment to loss control, Lighthouse also partnered with TAGWEB, Knit-Rite and Southern Assisted Living, Inc. (SALI), to test the effectiveness of an orthotic insert with a therapeutic gait-stabilizing shoe in reducing and preventing falls. The Knit-Rite orthotic was tested on 51 residents in four SALI communities for a three-month period. Thirty-seven of the residents were in full compliance throughout the program, seven were in partial compliance and seven were not in compliance.
While the results of the test are preliminary, they are very encouraging. All of the 37 residents who were compliant throughout the pilot felt the shoes enhanced their gait and stability, or the staff (for dementia patients) reported an improvement in gait and stability. Of those 37, 21 had a reduction in falls during the three-month period and 15 did not experience any falls. Two residents actually experienced more falls during the test period.
Lighthouse is working with its insureds to try and get them to utilize the orthotic shoes as a way to:
* Reduce lost days from residents who sustain a fall and are transferred from the community.
* Reduce employee-related injuries from assisting residents who have fallen.
* Reduce liability insurance claims as the community has demonstrated a proactive philosophy in improving residents' quality of life through fall reduction.
Lighthouse also provides:
(1) A market for the communication and entertainment industry, including AV equipment rental firms, satellite uplink companies and video and sound production/post production facilities. Lighthouse writes about $7 million in premium in this market. The program--TAKE 1--is endorsed by the International Communications Industries Association. The package utilizes a Web-based rating system for quick turnaround on quotes. Special features include a broad communications equipment rental floater and competitive workers comp and auto coverages.
(2) A market for the staffing industry, including PEOs, employee leasing, temp and permanent placement firms. Lighthouse writes about $6 million in premium in this market. The program--StaffPak--is endorsed by the National Association of Personnel Services and by Employers Services Assurance Corp. It provides staffing professional liability, third-party fidelity, and general liability. Also available is EPLI protection designed specifically for temp staffing firms and PEOs.
(3) A market for nonprofit D&O that is endorsed by the Washington Council of Agencies.
(4) A special umbrella product designed for nonprofit and for-profit organizations involved in health and education services. The Health & Education Liability Program (H.E.L.P.) offers a $20 million limit and a
$10 million sub-limit for D&O. The form does provide professional liability up to the full limits of the policy.
"We're also working on a rent-a-captive for a large national chain of skilled care and assisted living facilities," Art says.
"We're also working with a group on terrorism coverage," Art continues. "We're attempting to estimate potential losses due to terrorism and business interruption due to terrorism." The group with which Lighthouse is working includes three former employees of the CIA and Ph.D.s with game theory expertise.
Another effort involves collaborating with a bank or other facility to provide letters of credit and premium financing.
The broker has total writings in excess of $42 million with seven consecutive months of $1 million in new business production. Lighthouse expects to hit $50 million in 2003. Each area is headed by its own program director who works directly with the retail agents. "They're like presidents of their group," Art says. "They have a lot of autonomy within their own area. There are actually different LLCs for each program. Each program director has an opportunity to buy part of the business. The plan over time is to build each of these owners' interest in the company." The broker has a total of 24 employees. It operates strictly on an open brokerage concept, working only with agents. Non-agent visitors to the Lighthouse Web site are asked to "direct your agent to this site as we are a wholesaler and work directly with agents." *
For more information:
Lighthouse Underwriters
Web site: www.lighthouseunderwriters.com