Minimize Risk with Insurance Specialists

By: Eileen Lesberg
Date: 7/1/2007

Market conditions today may not be the same as tomorrow. For the staffing industry, specialized broker services can help save time, money, and cover those difficult risks.

It's long been known that a "soft market" equals lower prices and better choices for insurance buyers. A soft market is characterized by decreasing insurance prices - as insurance carriers reap higher profits from investments than from the policies written. Often during these soft markets, carriers are willing to take on risks they would not normally consider in a "hard market." As with so much in life and in business, the insurance marketplace is cyclical in nature. Eventually, that bargain you found last year becomes extremely expensive as things change - and, things always change.

The expertise of your insurance representative can protect you from these changes. If your representative doesn't specialize in your industry, you could be missing out on some key coverage options he or she may not know about or understand.

Who are the industry specialists?
Specialists within the insurance industry can come in many different flavors. Program Administrators (PAs) and Managing General Agents (MGAs) represent insurance carriers for programs that are designed and written for specific risks or industries. They may specialize in one type of policy, or different policies for one industry. This specialization allows a PA or an MGA to help you construct an insurance package that addresses the specific and unique risks of your industry and company. Their experience may be gauged by a number of different factors, including: the number of years they have been offering their program or products; the selection of products they offer, and the number of clients they service. When seeking a specialist, recommendations from associations such as ASA and from other staffing firms can make finding the right fit for your firm easier.

Often what differentiates PAs and MGAs that serve a similar customer base is the level of customer service and the speed at which that service is given - whether it is for certificates of insurance, response time on coverage questions, explanations, endorsements, claim issues, loss runs or assistance in the handling of a claim. An inexpensive insurance policy sold to you by a representative who can't get your certificates of insurance out fast enough is going to cost you money in the long run. Since it is possible to deal directly with some of these PAs and MGAs, you can save yourself time and money if you have a risk manager on staff - or, an employee whose dedicated function is dealing with your insurance matters.

Similarly, if your business presents a unique set of risks for which your broker has had difficulty providing coverage, or if you use more than one broker to complete your insurance program, you might be able to save time, frustration and money by utilizing the services of a PA or MGA. They will be intimately familiar with the coverage offered by the policies they provide. They can usually provide rapid and accurate policy interpretations, and they can work with the insurance carrier to provide policy terms and conditions individually suited to your business. Additionally, they are also most likely to know exactly what the insurance market has to offer you and how that can impact your business. While the insurance generalist might be familiar with general marketplace conditions and how those conditions impact the standard risk, the market may be "soft" for some businesses with coverage readily available, and yet much "harder" for others.

Brokers with a concentration of business in your industry might be considered specialists. Typically, they are aware of the different programs available to your industry and the differences between the programs from a coverage and a servicing perspective. They can help you locate the product that suits your specific needs, and might have access to alternative markets for particularly difficult risk exposures. So, when working with a broker, ask a few questions to determine their level of experience within your industry. How many similar clients do they have? How long have they worked with your industry? What markets do they work with and why do they place different accounts with different carriers? How quickly can they procure the coverage for you and how quickly can they respond to your needs?

Insurance specialists know how to react and adapt to changing market conditions. For example, when working with a PA or MGA, underwriting authority is often negotiated with the carrier, and can speed-up your application process. Traditional agents may work well when your risks are common to the business world. However, your staffing firm is bound to be anything but common. Without a specialist helping you find coverage for your unique risk exposures, just how covered are you?

Eileen Lesberg is the Chairman of World Wide Specialty Programs. She can be contacted at 516.248.5000, or visit www.worldwidespecialtyprograms.com.