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... x No Thanks Loading.. Finding Markets: The Specialty Program Consultant 4/30/2013 by Andrew Barile , CompleteMarkets Editor This content has not been rated yet. While a reinsurance intermediary operates between the ceding insurance company and the reinsurance company market, the specialty insurance program consultant operates between insurance agents and the insurance company. This document by Andrew Barile introduces you to this emerging type of consultant. Program brokers, marketing insurance consultants, and specialty insurance program consultants have all existed for a number of years. They perform a valuable service for an agent, and should be part of the agent's cadre of experts, together with lawyers and public accountants. Without a suitable insurance company market the agent can't exist. Insurance company market finders perform a unique service that agency staff members can't always perform on their own. The first question agency owners ask is Why should I pay a consultant for a service that I, the owner of the agency, should be able to perform myself? ' Certainly visiting with insurance company markets is an owner's function. However, agency owners should quantify their time spent on an hourly basis. How much time do they really want to spend developing new company markets? Some consultants have adapted a formal approach to representing insurance agencies by using an engagement agreement, ' or a consulting services agreement' which outlines the specific services that the consultant will perform, and the cost of these services. After providing agencies with this service for more than 25 years, I've noticed that each engagement agreement is different. Consultant's fees vary from a single flat fee to a specific ...

... x No Thanks Loading.. Cut-Through Endorsements 4/30/2013 by CompleteMarkets Editor , IIABA Virtual University Faculty IIABA Virtual University Faculty This content has not been rated yet. CUT-THROUGH ENDORSEMENTS &# 160 by the IIABA Virtual University Faculty &# 160 Sometimes when an insurer encounters financial problems, cut-through endorsements will be issued. Both the primary carrier and reinsurer usually attach a cut-through endorsement to the policy. The endorsement should specifically reference the policy by number and policy term. This document by the IIABA Faculty investigates what the endorsement actually represents. &# 160 &# 160 Our "Ask an Expert" service recently received this question: &# 160 "We have just received official notification of Best downgrading one of our companies (let's call them ABC Ins. Co.) from an A- to a B+ rating. Best reportedly has them under review with ‘negative implications. ABC's press release indicated that XYZ Ins. Co. will be providing a cut-through endorsement which, and I am quoting, ‘ .. means that ABC policies issued under the agreement are backed by the A++ rating of XYZ. &# 160 "Since the cut-through endorsement is between ABC and XYZ, the insured has no direct contract with XYZ should ABC go under. What problems will we — or our clients — experience if we have to look to XYZ for coverage under the ‘indirect' contractual relationship our clients would have with XYZ? What legal or regulatory support would we have to help us deal with XYZ? &# 160 "There is debate among our staff ...

...nior executives of insurers and reinsurers, as well as experience in dealing w...

... Losses in this line should be reasonably predictable, and the firm should be reasonably able to accept risk. Internal management discipline and a willingness to commit the appropriate resources are also required. The losses should have these characteristics: Reasonably predictable Not extremely volatile Not exposed to a catastrophic loss High frequency and low severity "High frequency and low severity" means that the number of losses should be at least several dozen per year, of which most are less than $50,000. As a case in point, a large hotel would probably experience many small Workers Compensation claims but relatively few, if any, large claims. A bank can also expect to have numerous low severity Comp claims. Alternative risk financing usually involves loss severity — the exposure to large losses — by purchasing excess insurance or reinsurance. INSURANCE LINES The other question asked most often is "What lines of insurance are best for alternative risk financing?" Casualty lines — Workers Compensation, General Liability (including Products), and Auto Liability — are the best candidates for alternative risk financing. Workers Comp and Liability claims tend to be paid over long time frames, one to five years or more. Insurers of these lines generate substantial investment income on their reserves until losses are fully paid. Mid-size companies using alternative risk financing can earn the investment income on reserves that was formerly earned by an insurance company. ALTERNATIVE RISK FINANCING OPTIONS Insurers have developed many colorful titles for what amounts to a handful of alternative risk financing techniques. Methods range from guaranteed cost (for risk-averse firms) to self-insurance and captive insurance (for firms ...

...y are the roots of the problem. Reinsurers have experienced the same losses th...is problem is the vulnerability of reinsurers. Ask your primary carriers about their reinsurers and monitor their Best ratings. ...

... Harriman This content has not been rated yet. The international insurance market offers a variety of benefits to independent agents and brokers. It provides a perfect tool for solidifying your Commercial Lines accounts and insulating them from inroads being made by alphabet house brokers. International insurance operations also offer an entree to new product lines and markets that will expand your facilities abroad. For example, U.S. agents can introduce their expertise in such lines as Auto, Medical, Surety, and Workers' Compensation to third-world countries that are privatizing these coverages. Canadian brokers can expand their expertise in out-of-country private Medical insurance and, potentially, Workers' Compensation. Doing business abroad can introduce agents and brokers to new international markets, both primary (with such carriers as AGF, Allianz, Generali, and Winterthur), and reinsurance/variable insurance programs (financial reinsurance, stop-loss reinsurance, catastrophe reinsurance, etc.) . The international market encompasses the national accounts division of major companies, offering creativity, capacity, and flexibility, enabling the agent or broker to approach accounts on a broad basis. Examples include Aetna, AIG, Chubb, Great American, The Hartford, and Reliance National. Agents and brokers can access the captive market either by establishing a captive for a corporate client or renting a captive to facilitate international exposures, self-insured retentions, and a potential profit center. The international market has captive facilities in such locations as Bermuda, Barbados, Ireland, Guernsey (the Channel Islands), and Luxembourg. BUILDING EXPERTISE AND INTERNATIONAL KNOWLEDGE AIG Chairman Hank Greenberg highlighted the success of operating internationally at the 1992 IMMS ...

... x No Thanks Loading.. Liability Risk Retention Act Of 1986 4/30/2013 by CompleteMarkets Editor This content has not been rated yet. LIABILITY RISK RETENTION ACT OF 1986 The following is the text of the Products Liability Risk Retention Act of 1981 as amended by the Risk Retention Amendments of 1986, creating the Liability Risk Retention Act of 1986. The amendments were passed by the Senate and The House of Representatives on October 6 and October 9, respectively. The legislation was signed into law by President Reagan on October 27, 1986. Short Title: SEC. 1. This Act may be cited as the Liability Risk Retention Act of 1986. Definitions: SEC 2. (a ) As used in this Act - (1 ) Insurance means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk, which is determine to be insurance under applicable State or Federal law; (2 ) liability' - (A ) means legal liability for damages (including costs of defense, legal costs and fees and other claims expenses) because of injuries to other persons, damage to their property, or other damage or loss to such other persons resulting from or arising out of - (i ) any business (whether profit or non-profit), trade, product, services (including professional services), premises, or operations; or (ii) any activity of any State or local government, or any agency or political subdivision thereof; and (B ) does not include personal risk liability and an employer's liability with respect to ...

... being made Information coming from branch inconsistent with information from home office Employee morale down and turnover among underwriters up Letter from company denying rumors (add extra point if you hadn't heard rumors) Change in agency contracts, especially termination or profit-sharing procedures Extensive changes in agency force (many appointments or terminations) Makes erratic changes in underwriting authority, either more or less Slowdown in paying claims Slowdown in processing return premium endorsements and audits Overall deterioration in service Much lower rates or higher commissions than similar companies Enters new lines of business or markets that other companies are avoiding Sudden withdrawal from a territory Concentrations of non-standard business in limited geographical area Wholesale mid-term cancellations or non-renewals by line of business Increased or decreased attention paid to collection of accounts current Increase in accounting differences (charging for policies they haven't issued) Change in reinsurance carriers, particularly if quality is questionable Unusual dividend payments Trouble with IRS or SEC Increase in consumer complaints to the state insurance department TOTAL POINTS. Companies with more than 10 total points and/or with a YES answer in Section I should be put on the Agency Watch List. More than 20 total points dictates the need for immediate action. There are a number of states in which markets have become scarce for some lines of business. As a result, agents have been forced to take on all willing participates. While it is not inconceivable that one of the older national carriers could get into trouble, your primary focus should be on newer companies. A.M. Best Co. has developed a list of the characteristics of companies that have become insolvent during the last several decades, and ...

... of MGA Agreements, and stay current on the financial condition of insurance companies. The board had to start an immediate search to find a replacement market for the MGA. The Owner of a wholesale agency was approached by its largest retail agent producer to start a Risk Retention Group (RRG) for the retail agent's insureds. The wholesaler had no experience in implementing, structuring, or capitalizing an RRG. The Wholesaler, by calling on its Strategic Advisory Board, was able to provide the consulting services to capitalize and organize the RRG. The Owner of an MGA wanted to organize an agent-owned offshore captive insurance company. The owner needed a captive Feasibility Study, which could be performed by the Agent's Strategic Advisory Board. Structuring and capitalizing an agent-owned captive insurance company might require a private placement memorandum, reinsurance negotiations, and access to "fronting" carriers. The owner of a retail agency was approached by his largest Workers Compensation client about forming a corporate owned captive. By contacting his Strategic Advisory Board, the owner was able to access the insurance talent needed to put together a sophisticated feasibility study for a Workers Compensation captive. The Owner of an MGA who waned to start his own domestic insurance company needed a Business Plan to raise capital and access to the sources of capital. The Strategic Advisory Board had been planning all along for this opportunity, and was able to provide the necessary input, discussing the cost and time frame of starting a domestic carrier in its quarterly meetings. Again, no surprises. The Owner of a large wholesaler wanted to look into new technology for policy issuance, ...

... and frustrating experience. 2. Buying power. Even if you can approach a market on a direct basis, you still may prefer to utilize a wholesaler to take advantage of its leverage and marketplace clout. Because brokers normally do large volumes of business with some markets, they may be in a much better position to be more effective, efficient, and profitable. They literally deal with these markets on a daily basis and, as a result, know how to position an account with an underwriter in order to obtain a favorable outcome. 3. Knowledge of marketplace. Because wholesalers are in the E&S market on a daily basis, they are aware of the types, classes, or risks that various carriers and individual underwriters prefer. They also are aware of potential changes in the reinsurance and London markets that can affect the placement of your accounts. 4. Market access. Sometimes the only way to access a particular market is through a wholesaler. Also, when dealing with nonadmitted markets, you must have a special Surplus Lines license to conduct business and make the appropriate state filings. 5. Specialization. Many wholesalers are moving away from the jack of all trades' philosophy and are hiring specialists in niche areas of the marketplace. Once it was quite common to deal with the same E&S broker on Aviation, Marine, and Products Liability accounts. In today's marketplace, you generally find people who specialize in such narrow segments of the industry as Environmental Impairment, Public Officials Errors & Omissions, Motor Truck Cargo, and Railroad Protective. These people are considered experts ...