Marketing
It's evolutionary
Darwin Professional Underwriters expands its portfolio and reaches out to retail producers
By Elisabeth Boone, CPCU
If you’re a specialty underwriter named Darwin, one thing’s for sure: You’re never standing still. And if you’re Darwin Professional Underwriters, with a focus on tough professional liability risks, you’re constantly evolving to identify new markets, enhance your offerings to those you already serve, and expand your distribution network.
Established in 2003 by veteran specialty underwriter Stephen Sills (who also founded Executive Risk Indemnity, which is now part of the Chubb Group), Darwin Professional Underwriters writes business through Darwin National Assurance Company and Darwin Select Insurance Company, both of which carry a financial strength rating of A- from A.M. Best.
Based in Farmington, Connecticut, Darwin focuses on three market segments: non-medical E&O, for-profit and nonprofit D&O, and medical malpractice. (See “The Beagle Has Landed” in the March 2005 issue of Rough Notes.) Now as in 2005, Darwin pursues what it describes as mispriced and underserved business.
Never satisfied with the status quo, Sills and his team challenge themselves by examining their existing markets from a fresh perspective and then developing solutions to meet emerging needs.
“Since 2005, we’ve gone significantly deeper into the markets we serve, as well as slicing and dicing the business in a different way,” Sills says. “For example, we started out writing hospitals, and we still do. Now we’ve moved into related markets, such as surgical centers. We believed that most surgical centers were being treated like mini-hospitals, and we didn’t think the exposure was anywhere near that severe,” he explains. “So we redesigned the policy and created a new rating structure for this type of institution and ended up taking a nice piece of market share on that.”
For reasons of cost and convenience, ambulatory surgery centers are becoming increasingly popular with physicians, patients, and health insurers. “You might go in to get your knee scoped, for instance, and go home the same day,” Sills says. “Generally these patients are more fit, because if a patient is in precarious health, surgery will probably be done in a hospital. If you’re in good physical health and the operation isn’t life threatening, it’s cheaper and easier to do it in a surgery center. From an underwriting standpoint, we believe the surgery center is a better exposure meriting a lower rate than what it would be for a hospital,” Sills asserts. “So surgical centers have been one of the biggest areas for us in terms of new products.”
Another key growth area in the health care field is managed care. Darwin recently introduced a product for smaller managed care organizations that provides broader coverage on a simplified basis.
Amid growing concern about the vulnerability of personal data to theft and misuse, Darwin last year introduced a product to address the exposures associated with data privacy. (See “$2.4 Million in Postage” in the April 2007 issue of Rough Notes.)
With a broad definition of technology services, Darwin’s Tech//404® product provides coverage for three key exposures: technology E&O, cyber liability (data privacy/network security), and Internet liability (media/intellectual property). Darwin offers limits up to $15 million, and Tech//404 is available in all states and U.S. jurisdictions.
As the data privacy market continues to experience explosive growth and present increasingly complex challenges to underwriters, Sills sees an opportunity for his firm to craft responsive solutions.
In a departure from the traditional approach to underwriting data privacy risks, Darwin recently began to offer first-party coverage for these exposures. “What if somebody hacks into your computer system and crashes it, and the system is down so you’re unable to do business?” he asks. “That presents what is essentially a business interruption claim, but it’s not covered under typical business interruption insurance. We now provide coverage for that exposure.”
Streamlining the process
It wasn’t so long ago that challenging lines like professional liability were seen as too complex to be handled by automated systems. Not willing to accept that conventional wisdom, Darwin has devoted considerable resources to automating the process for its smaller accounts.
“In terms of the dynamics of our business,” Sills says, “in the 2005 article we talked about what we considered our ‘craft’ business and what we considered our ‘core’ business. Our craft business consists of highly complex risks that require intensive analysis and underwriting, like a Fortune 100 company. Our core business generally consists of smaller risks that for the most part insurers have over-handled,” Sills says. “They over-process it, they require more information than is needed, and they overspend to acquire the business. They have rooms full of people doing a very manual process.”
At Darwin, he explains, “We believe that, while some of the large carriers have spent money to automate their standard business, like BOPs, they haven’t spent the time, energy, or money to do the same in professional liability, and we saw an opportunity for us to do that. So we pushed ahead on what we call our (i-bind)® business, which is designed to handle errors and omissions, where we have over 300 classes of business, as well as D&O for privately held companies and not for profit organizations with less than $100 million in revenue. We also offer (i-bind) capabilities for employment practices liability and fiduciary liability on smaller accounts,” Sills says.
“We believe that if we can streamline the process, we can make it easier for brokers to get a quote, a binder, and a policy, and at the same time reduce our expenses and theirs,” he says. “With (i-bind), the broker can input nine data points and instantly get a bindable quote. The broker can then press a button and get a binder, and press another button and have the policy issued immediately. We believe this system puts us way ahead of the field in the professional liability world,” Sills declares. “We think this will give us a competitive advantage. It’s not only an evolutionary event for Darwin, but it’s also an evolutionary event for the insurance business.”
Welcoming retailers
As a specialty facility, Darwin Professional Underwriters does business almost exclusively through wholesalers. Earlier this year, Darwin entered into an alliance with Agency Specialty Product Network (ASPN), which is the marketing arm for nearly 30 specialty insurers. Through ASPN, retail independent agents and brokers can gain access to more than 450 specialty products via designated wholesalers.
Teaming up with ASPN, Sills comments, makes sense for Darwin in a number of ways. “ASPN is a great marketing organization,” he says. “We have some field underwriters, but we don’t have 50 branch offices around the country. ASPN has a nationwide network of sales representatives who continually travel their territories to develop new relationships with retailers, and they’re very good at it. They source a lot of opportunities for us on the retail side, and we’re able to send that business to our select group of wholesalers,” Sills says.
“Our relationship with ASPN expands our reach, but it doesn’t change the dynamics of our business,” he explains. “It allows us to source more business. So we’re happy because we’re able to see more business. Our wholesalers are happy because we’re paying for the service and we’re feeding them business. And retailers are happy because they now have access to our professional liability products and expertise.”
With an expanding product portfolio, a commitment to streamlining the professional liability underwriting process, and a new initiative to reach retail producers, Darwin Professional Underwriters continues to pursue a course that is, in a word, evolutionary. *
For more information:
Darwin Professional Underwriters, Inc.
Web site: www.darwinpro.com