Marketing

Driving the paratransit market

Leading social services MGA Irwin Siegel launches transport program on A paper

By By Elisabeth Boone, CPCU

From adult day care centers to youth self-help programs, the providers of social services have a common mission: to offer support and resources that help the recipients of these services live meaningful, productive lives. Meeting the complex insurance and risk management needs of social service providers requires the skill, experience and commitment of a seasoned specialist; and a leader in this challenging arena is Irwin Siegel Agency, Inc. (ISA), a managing general agency based in Rock Hill, New York.

Since it was established in 1960 by Irwin Siegel, the agency has focused on providing insurance products and services to the human service field through its nationwide network of retail producers. ISA now employs more than 70 staffers and operates under the management of Irwin’s son, Howard Siegel, chief executive officer.

Over the years, the agency has developed package policies for a wide range of facilities, including developmental disability, behavioral health care, addiction treatment, and community and social service organizations. ISA also collaborates with provider associations, universities, and government entities to advocate for social service providers and to improve the quality of outcomes for service recipients.

Persons with physical and/or mental disabilities, including recipients of various kinds of social services, may be unable to drive or to use fixed-route public transportation like buses, trains, and light rail. These individuals may be eligible to use paratransit services as specified in the 1990 Americans with Disabilities Act (ADA), which recognizes that people with disabilities have the same rights as other citizens to access services and facilities that are available to the public, including transportation. The ADA’s transportation requirements are enforced by the U.S. Department of Transportation.

In the context of transportation regulations, paratransit refers to complementary transportation service, comparable to public fixed-route transportation, which must be provided to persons with disabilities who meet ADA criteria. Paratransit service typically is provided door to door and must be arranged in advance. Providers may be for-profit or nonprofit operations. Because most true paratransit services are government subsidized, the cost to the rider is significantly lower than the expense of a private limousine or taxicab.

Filling the need

In line with its commitment to the social service field, Irwin Siegel Agency last year launched a comprehensive insurance program for paratransit providers. The program is available to private nonprofit and for-profit paratransit providers in 46 states; in the other four states, ISA offers coverage to private nonprofit rural transportation agencies. The coverage is written through Lexington Insurance Company, a member company of the recently developed AIU and rated A by A.M. Best.

To learn more about paratransit exposures and how the ISA program addresses them, we spoke with Sheila Shaw, vice president of underwriting, who has been with ISA for 16 years, and Shannan Broughan, paratransit underwriter, who joined ISA in 2006 and worked on the agency’s human services package before assuming responsibilities with the paratransit program.

“Transportation is a vital part of the human service world, so entering the paratransit market was a natural segue for us,” Broughan says. “We’ve been insuring risks that offer transportation to disabled individuals for a long time, so we’re not new to special needs transportation.

“About a year ago we expanded our human services program to include community action councils and rural transportation providers, so paratransit was a natural transition,” Broughan explains.

ISA had been underwriting community action council and rural transit provider coverages on behalf of AIG, Shaw says, “and a few months later they asked us to also take on the paratransit program.”

For people who live in large cities and suburbs, those clean white vans bearing the “Call-A-Ride” logo are the “face” of paratransit—but they are by no means the only transportation option available to persons with disabilities.

“Depending on the area and the ridership, a wide variety of vehicles are used for paratransit purposes,” Broughan explains. “You’ll see vans and buses that are modified for wheelchair and stretcher use, and you’ll even see regular sedans in areas where there’s a high percentage of ambulatory passengers.”

In rural areas, she says, paratransit service is more likely to be provided by an entity that also offers general public transportation. Programs provided in rural areas tend to be targeted specifically toward serving persons with defined special needs, whereas programs in metropolitan settings usually encompass a more diverse group of riders and therefore present greater underwriting challenges. ISA can insure both public and private rural paratransit providers.

The ISA paratransit package includes general liability, automobile liability and physical damage, and property coverages. Available enhancements and supplements are abuse and molestation; professional liability; directors and officers liability; umbrella; increased uninsured/underinsured motorist limits; garage liability; pollution liability; medical defense/HIPAA Protector; coverage for “All Autos/symbol 1”; employees as insureds endorsement; hired car physical damage up to $50,000; and blanket additional insured where required by written contract. ISA also can provide limited capacity for emergency service vehicles in conjunction with paratransit operations.

Safety challenges

For paratransit passengers, providers, and insurers, one expects the paramount concern to be safety. The U.S. Department of Transportation does not define paratransit vehicles as such, Broughan says, and state regulations with respect to vehicle safety and driver training vary widely.

“Here in New York, multiple bodies are involved in paratransit regulation and oversight, depending on where a provider is operating and the kind of people they’re transporting,” she explains. “In other states, there are few guidelines for drivers or insurance requirements. Sometimes it’s left up to the contractors.

“Some states let paratransit providers operate with just the minimum liability limits,” Broughan continues. “Many states don’t even have requirements for the financial strength of carriers. Even in instances where financial strength requirements do exist, they’re often not enforced. We see a lot of B-rated carriers in this class.”

Given this patchwork approach to safety and insurance regulation, underwriting paratransit risks presents some daunting challenges. ISA’s underwriters are strongly committed to ensuring that vehicles are safe and drivers are appropriately trained. No driver exclusions are permitted, and all drivers must meet underwriting guidelines.

“The major exposure is accidents, and the loss potential can be exacerbated by the particular situation of the people who are being transported,” Broughan says. “People who are in a more fragile condition or who have not been properly restrained are obviously at an increased risk of being injured, even in a low-impact situation.”

Another exposure arises in the loading and unloading of nonambulatory individuals from a vehicle. Here drivers are responsible for making sure that wheelchairs are loaded correctly and locked into position, and that both wheelchair-bound and ambulatory passengers can embark and disembark safely.

Driver safety is key

The safety of paratransit passengers is largely in the hands of the driver, Broughan points out. “We review the quality of the insured’s driving staff up front to make sure they meet our guidelines where there might not be state guidelines in place,” she says.

“We look at the provider’s hiring criteria for drivers and the length of time drivers have been with the agency,” Broughan continues. “We also look at the insured’s overall policies and procedures with respect to safety and make risk management recommendations where it’s appropriate.

“Experience and length of time in business are key underwriting criteria,” Broughan says. “We look carefully at the insured’s loss history, and we consider the age and condition of the fleet.”

ISA’s commitment to paratransit safety is multifaceted. “We have trainers on staff who are certified by the American Safety Council to provide driver training on site, and we’ll be making that training Web-based in the next few months,” Broughan says. “Among paratransit providers, we’re also seeing a significant compliance need with respect to substance abuse testing. Some states are requiring drivers to undergo drug and alcohol screening, which we think is a great move.”

A popular consumer technology that’s making its way into the paratransit field is GPS (Global Positioning Satellite) devices, Broughan remarks. “GPS navigation systems are extremely helpful in minimizing waste and have the ability to reduce fuel costs,” she explains. “The presence of the hardware for these systems reminds drivers that they are accountable and supervised at all times, which translates into better driving habits. Through a vendor partner, we’re able to help our insureds procure those systems at a lower cost.”

A comprehensive menu of online, print, and video risk management resources is available to ISA’s paratransit insureds. A variety of online driver training courses are available at no cost, as is a vehicle monitoring program that allows insureds to modify driver behavior and identify drivers who may be at higher risk of having a crash. Through a vendor partner, ISA offers a discount on fleet maintenance software that permits insureds to track the maintenance schedules of their vehicles.

Insureds also have access to an extensive video lending library; topics range from defensive driving and dealing with road rage to understanding people with special needs, driving in inclement weather, and emergency evacuation procedures.

Support for retailers

“Our paratransit program is open to all retail insurance brokers,” Broughan says. “We don’t have a minimum premium commitment. Our key brokers tend to focus on this line of business, or on the human service side, but we’re absolutely willing and able to work with a retailer who might have only one or a handful of risks.”

In fact, Shaw notes, “Where a broker has only one or two of these risks, I think we bring even more to the table because we have the background and the expertise to help the broker sell the coverage, and we have a range of risk management and loss control services that the broker can offer the insured.” For these reasons, Shaw says, “We tend to have very good relationships with brokers who have only one or two accounts.”

The most important thing for retailers, Broughan says, is “to find a carrier that writes both the auto and the general liability. Some carriers write both, but it’s common for the coverages to be placed with separate carriers. This can be a problem with loading or unloading claims, where it may not be clear which coverage should respond. If there’s any question as to whether it’s an auto or a GL claim, having one carrier means there won’t be any dispute over who pays the claim, so the claims process will be much smoother.”

Like other specialty intermediaries in today’s soft market, the Irwin Siegel Agency is encountering competition for social service and paratransit business from carriers that don’t usually operate in this niche. With its A rated program, backed by solid underwriting expertise and a strong commitment to meeting the needs of its insureds, ISA is sure to remain a leader in this challenging market.