"National companies often don't know the local laws or state regulatory requirements for writing new business in a particular territory. We can pave the way for the company's acceptance in the territory desired."
MacNeill Group executives see their services to insurers
as complementary to program creation
By Phil Zinkewicz
"National companies often don't know the local laws or state regulatory requirements for writing new business in a particular territory. We can pave the way for the company's acceptance in the territory desired."
--John Soutar
"We find that companies today are looking for partners in MGAs who have sufficient, credible experience, actuarial data and analysis, and the systems and operations to support the programs."
--Luis Valdes
One of the most daunting challenges for producers during a hard market such as the current one is finding out what company markets want in terms of new business. In today's hard market it's all too easy to determine what they don't want. They don't want any business where the words "medical malpractice," "asbestos," or "long tail liability" appear on the contract. They don't want to write coastal properties or homeowners insurance where there is a potential for mold damage.
But, what do they want?
Some producers--especially managing general agents--are of the opinion that program or "niche" business is becoming more appealing to insurers these days. If underwritten properly and managed with attention to detail, program business can be extremely profitable, they say.
MacNeill Group, Inc., CMGA, located in Sunrise, Florida, is an MGA that expanded its business model from that of a traditional MGA to one that offers a wide array of program management and administrative services.
MacNeill was founded in 1946 as a traditional managing general agent. Initially, its primary line of business was personal property. As the business grew, naturally the lines of businesses represented did as well, adding personal auto, flood and commercial lines on both an admitted and nonadmitted basis.
Luis C. Valdes, CIC, a vice president at MacNeill, along with Gus Fernandez, CPIA, and John Soutar, ACAS, MAAA, assistant vice president and actuary, respectively, discussed the concepts of program administration and program business with Rough Notes in a recent interview.
"Putting together a program for a specific market niche and providing program administration services are two different things, although sometimes they overlap." says Valdes. "The traditional view of program business is that an MGA or a company will take a commercial client in a certain type of industry--let's say fumigators--and design a program that will accommodate similar types of clients with similar exposures. Then, they fine-tune the program in terms of coverages offered, exclusions, pricing, control over loss experience and marketing, and so forth. Once the program is put together, then the MGA can approach various company markets or a company can approach various MGAs to implement the program. We do have those capabilities, but we have expanded them as well."
Fernandez says that MacNeill provides program administration services--services being the operative word--to insurers that already have a program in place, or in development that may need specific functions performed for them. For example, as a Florida MGA, "we have a better handle on the local market and what the state insurance department is looking for in terms of providing underwriting data and rate filings." Adds Soutar: "National companies often don't know the local laws or state regulatory requirements for writing new business in a particular territory. We can pave the way for the company's acceptance in the territory desired."
Valdes: "We can do everything a company asks us to do, and that includes such things as program development, filings, marketing, underwriting, policy issuance and claims handling."
Soutar continues: "We also have the capability to handle all the back-office functions that a carrier has to perform, i.e., data analysis, reserve analysis, ISO reporting, corporate accounting, etc."
Fernandez elaborates that MacNeill doesn't provide all services for all companies they represent, rather MacNeill provides the menu of services and works with the companies to implement those that make strategic sense. "Some companies just want us to handle the underwriting and administrative functions, while others want us to provide the full array of services, choosing to run the company under a virtual model."
Valdes says that the hard market has, indeed, increased corporate appetites for certain types of program business. Companies that have exited from particular classes of business are looking for new opportunities to replace the lost premium income. "Many companies have not had good experience in their program business, mostly because they were not well planned and monitored. We find that companies today are looking for partners in MGAs who have sufficient, credible experience, actuarial data and analysis, and the systems and operations to support the programs. When an MGA can demonstrate that a particular book of business with similar exposures is manageable and should result in a favorable loss experience--that's the kind of business that companies want." *
For more information:
MacNeill Group, Inc.
Web site: www.macneillgroup.com