SHOULD YOU BE A PROGRAM MANAGER?
His greatest pride and joy is the knowledge base and expertise he has built in his major industry, the XYZ industry. His family was in that industry for a few generations before him and he knows everything about it and (almost) every participant in it in the local geographic area (or in several states). As an active participant in the industry trade group, he serves on several boards and is asked frequently to lend his unique expertise in the insurance programs of many participating members.
Over the years he has written several million dollars of premium in industry accounts and, while the loss ratios have been quite good, he has had several, “Here we go again” moments when a new underwriter enters the game and is immediately resistant to the agent’s lead in writing these specialty accounts.
He has requested special forms and coverages from several carriers, but since the book of business is split into several companies (for diversification – didn’t want all his eggs in one basket), none of the companies has shown any interest in creating something special for our agent friend. He has asked his own carriers for help but for a variety of reasons local management is not keen on giving up a profitable book of business to its own program division.
The agent comes to us with a plea. “How do I get someone interested in this book of business as a Program? I have the expertise and have proven to be able to write many accounts at acceptable loss ratios, even at standard rates and forms and coverage that don’t quite fit the need. I can design the “better mousetrap” to give better protection without increasing loss exposure to protect even more industry participants than I do already. I know if I don’t do it soon, someone else will! The only thing I have going for me is that I already have the clients and contacts in the target industry. I just don’t know what companies to approach or how to do it and I’m fearful that the carriers I’m using will get wind of my efforts.”
Believe it or not, there are dozens or hundreds of hidden nascent programs in all sorts of industries waiting for someone to help them and to tell them what they need to do to get the ball rolling.
We recently met Andrew P. Burger, CPCU, Managing Member of Alliance Intermediaries, LLC, , a Specialty Reinsurance Intermediary, Program Underwriting and Binding Authority Intermediary. With 25 years of experience and pre-existing relationships with many carriers, Andrew is in a unique position of evaluating programs and making agents Program Managers and Program Administrators or opening up the program and becoming Wholesalers and MGA’s.
We asked Andrew to address our readers who either have or would like to create a program. We asked him a simple question:
HOW CAN AN INSURANCE PROFESSIONAL CREATE A PROGRAM AND GET THE SUPPORT FROM A STRONG CARRIER TO MARKET THE PROGRAM, DIRECT OR THROUGH OTHER AGENTS?
Here’s what Andrew told us.
1. Write down what the clients need that they can’t already get in the general insurance marketplace. No carrier wants to become #7 after six other programs in the same market with the same products.
2. Define what makes you the likely candidate to create and drive the program. BOAST! Write about your successes, both in building and retaining business in the program and the underwriting profit that has been driven.
3. BE SPECIFIC. What do you want as points of differentiation in your program. Don’t be afraid of someone taking your ideas and running with them. No program is dependent upon JUST a coverage or JUST a unique form. If you have nothing more than a good idea for a coverage or form, you don’t have enough to drive a program. You must also have the contacts, the clients, the industry knowledge and the relationships that can take those points of differentiation and turn them into an overwhelming success. Without both, don’t even start – you’ll just be giving away an idea to someone else who will make it successful.
4. Find a specialist who knows the carrier underwriters and can give you an honest and blunt opinion of whether the underwriters will find the program palatable.
5. Describe the typical Insured and their respective business operations, (within this market niche), that your firm currently places with an insurance company or group of companies.
6. List any risk exposures, coverage needs and policy limits for this market niche. Are they standard ISO policy forms or manuscript forms? Do you have a standard or specialty application for coverage? If there is a specialty application, please provide.
7. Highlight your firm’s successful history in writing this niche business and describe how long your firm has been writing this business. If possible, include historical premium and loss information on an annual calendar year basis.
8. Provide a synopsis of this local / region market niche. How many overall accounts are in this area and approximately how much premium do these accounts represent? Is there further growth for this local / regional market niche?
9. Prepare your firm’s current portfolio analysis. How many accounts does your firm currently / annually write and how much premium do these accounts generate? Does your firm have a strategic plan for growth of this market niche for the next few years? If so, please provide. Is this business located in a single or several States?
10. Who is your local carrier competition and how do they compare with your firm’s coverage product?
11. What is your firm’s competitive advantage? Do you have a trade association endorsement or key relationships to retain and grow this niche market business?
12. Mention some details as to your key underwriters, retail producers, your firm’s ownership, history, operation (information processing / technology capabilities), etc. Also, include your firm’s existing carrier relationships.
For further assistance, contact Andrew P. Burger, CPCU, Managing Member with Alliance Intermediaries, LLC, a Specialty Reinsurance Intermediary, Program Underwriting and Binding Authority Intermediary. Andrew has been involved in this market niche since 1988 and can be reached at ABurger@AllianceIntermed.com