Insuring day care centers

THOMCO is a leading market in this growing
and sometimes precarious business

By Phil Zinkewicz

THOMCO President Greg S. Thompson, CPCU, ARM, (foreground) visits Phoenix Associates, an independent agency in Marietta, Georgia, that is a THOMCO client. In the background (from left) are THOMCO’s Kelly L. Ellenburg, CIC, Production Underwriter; and Phoenix Associates’ Robert I. Marcus, CIC, and Donna Marcus, CIC.

During the decade of the 1980s, child day care centers around the country became prominent in the news because of a spate of allegations of physical and sexual abuse of children—allegations that often led to criminal prosecution. For example, there was the McMartin Preschool Center case in Manhattan Beach, California, in which a teacher was accused of sexually abusing a 2-year-old boy (1986); the Fells Acres Center case in Malden, Massachusetts, in which a 5-year-old boy told his father he had been sexually abused by a handyman on the center’s premises (1984); the Little Rascals Day Care Center case in Edenton, North Carolina, in which a married couple were accused of sexually abusing children in their care (1989); and a home day care center case in White Plains, New York, where the parents of a 3-year-old said the child was sexually abused by the married couple running the center (1987), to name just a few. If there was one common thread in these cases, it was that the allegations usually began with one child and then, over a period of time, finished with similar allegations from other children in the centers. Power of suggestion? Who knows? In some of these cases, there were convictions and severe jail sentences for the defendants. In other cases, there were acquittals. Nevertheless, the 1980s became a decade of panic among parents who became concerned about day care centers overall.

Greg Thompson, CPCU, ARM, president of the Atlanta-based THOMCO, a managing general agency that specializes in insuring child day care centers, remembers those days well. “During that period of time—the 1980s and the early 1990s—it was almost like the days of the Salem witch trials,” says Thompson. “Parents were caught up in panic and fear. Just the accusation of impropriety alone was enough to close a center down and lead to prosecution and/or litigation.”

The early 1980s was also the period when Greg Thompson’s agency was first moving into the child day care center insurance arena. “We first became involved in the child day care business on a nonadmitted basis with our E&S carrier until we struck a deal with Reliance in 1987 to write the business nationally. In 1990, we received the endorsement of the National Child Care Association. Today, we are the nation’s leading market for child care and we do about $45 million in premiums written in the child day care center area.”

Insuring day care centers is one of THOMCO’s specialties, representing about $45 million in written premiums.

THOMCO was established in 1977 by Roy Thompson, Greg’s father. Greg joined the firm two years later after a stint in New York with Marsh & McLennan. Today, Greg serves as president while Roy remains as THOMCO’s chairman. In the early years, THOMCO was a wholesale operation that pursued a broad range of excess and surplus lines business regionally. In the mid-1980s, Greg decided to refocus the company’s efforts into the niche programs area on a national basis. Today, THOMCO is a program-oriented MGA representing 4,000 independent agents nationwide and handling national target market programs. In fact, Greg is president-elect of the Target Markets Program Administrators Association. THOMCO’s programs typically involve small to medium-sized package accounts in a limited number of niche markets.

THOMCO’S Childcare Choice program consists of a comprehensive package of customized coverages and is designed for both profit and not-for-profit operations providing early childhood educations. The entire program is written on an admitted basis, according to Thompson. In addition, the agency’s In-Home Childcare program is written on an occurrence form with defense costs outside the limit. It includes general liability, sexual abuse protection and medical payments. The In-Home Childcare program has been selected by the National Association for the Education of Young Children and is recognized by the National Association for Family Child Care.

“While sexual abuse receives the most publicity in the child care center area, exposures vary,” says Thompson. “There are corporal punishment exposures in day care centers, on- and-off premises swimming exposures and the usual slip and fall exposures, which represent the most frequent claims. Then there are the odd cases where a day care center driver accidentally leaves a sleeping child in a van and the child suffers from heat exhaustion. There are claims resulting from baby bottles that are overheated and the nipple falls off, causing second- and third-degree burns to the child.”

Greg says that his agency also insures Head Start projects, a concept that came out of President Lyndon Johnson’s War on Poverty. “These are government grants to nonprofit organizations to provide care for indigent preschoolers,” says Thompson. “They teach children how to brush their teeth and wash themselves. They set up doctor appointments and take them to the appointments. They have frequent meetings with the parents. These are not really day care centers, but rather a form of social service.”

The THOMCO executive says that things have changed for the better in the child care arena. “For one thing, regulations have gotten tougher. And, there is not the panic that we saw 10 or 15 years ago. Therefore, claims have reduced. Also, we’re seeing some shifts in the marketplace. Because of the stiffer regulations, the mom and pop centers with 20 to 50 children are all but disappearing. The fastest growing area is where you have three to four day care centers with common owners—what I call small chains. And, of course, there are corporate child care centers that are provided by employers as an added benefit to employees.”

But programs for children are not the only niches pursued by THOMCO. The agency also provides coverage for the elderly—independent living and assisted living facilities and for CCRCs (Continuing Care Retirement Communities).

The THOMCO team includes (from left) John K. Clark, CIC, Special Lines Manager; Cheryl S. Griffin, National Childcare Manager; Gary C. Vaughn, Senior Vice President/Business Development; Greg Thompson; and Monica D. Clark, CIC, AU, National Social Service Manager.

“Independent living facilities represent community living for seniors,” Greg explains. “There are some special services provided, such as emergency buttons in bedrooms and bathrooms. But other than that, it’s just as if the seniors were living in a condo. Assisted living facilities house seniors who are in wheel chairs or on walkers. Here services include helping them to the bathroom, reminding them to take their medicine and all the other daily activities of living. CCRCs contain an assortment of living facilities all on one campus. There may be a building for skilled nursing care and another that’s a nursing home. Let’s say there’s a married couple and one needs nursing home care, while the other needs skilled health care. They can remain on the same campus and not be separated. This is a growing trend in elderly care.”

Other niche programs that THOMCO offers include:

• Mental Health Facilities. This program provides multiline coverage for substance abuse, residential care facilities, outpatient counseling and transitional living.

• Facilities for the Developmentally Disabled. This program provides multiline coverage for residential facilities, sheltered workshops, camps and transitional living.

• Pest Control Operators. The Pest Control program provides general liability/E&O coverage and can handle general spraying, lawn and ornamental, termite control and even structural fumigation. This is one of THOMCO’s fastest growing programs.

In addition, THOMCO recently acquired three programs from The American Agency in Overland Park, Kansas. These programs offer insurance coverages for ambulance services, para-transit operations and hospital fleets. Coverage is available in all states with the exception of Alaska, District of Columbia, Hawaii, Massachusetts, New Jersey and New York.

According to Greg, the backbone of his business is the independent insurance agents THOMCO’s represents. “In all our programs, the independent agents play a vital role in our growth.” *

For more information:
THOMCO
Web site: www.thomcoins.com