Controlling our own destiny the creation of an insurance agents professional liability program
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Controlling Our Own Destiny: The Creation of an Insurance Agents’ Professional Liability Program. Prepared for the PIA Annual Conference Presented by the PIA Services, Inc. Captive Taskforce. Why Form a Captive?. In a word . . . Stability. Other reasons to form a captive:

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Controlling Our Own Destiny: The Creation of an Insurance Agents’ Professional Liability Program

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Controlling Our Own Destiny: The Creation of an Insurance Agents’ Professional Liability Program

Prepared for the PIA Annual Conference

Presented by the PIA Services, Inc. Captive Taskforce


Why Form a Captive?

  • In a word . . . Stability.

  • Other reasons to form a captive:

    • To “control our own destiny” – an ability to offer comprehensive coverages to our members as we deem appropriate

    • An ability to increase capacity and independence over time by building surplus

    • An ability to accumulate investment income

    • Higher limits at a low costs through worldwide reinsurance markets

    • An ability to manage member risks through risk management activities

    • A solid investment opportunity for PIA members and affiliates


Why Form a Captive?

Final, an opportunity to keep costs down . . . with cost savings going back to members


What Have We Done?

● Recruited a Well-Regarded and Well-Connected Task Force

Includes: Tom Adderhold, Andy Harris, Dan Henery, Stanley Logan, Michael Moore, Fred Thomas and Larry Willis

● Thoroughly Examined the Insurance Agent E & O Marketplace, Resulting in Two Draft Policy Forms (Standard & Enhanced), Underwriting Guidelines and an E & O Application

● Based upon Affiliate Feedback, Selected Initial States of Operation, to include Virginia / DC, California, Arizona, New Mexico, Nevada, Montana and Maine

● Selected a State of Domicile : Montana


What Have We Done?

● Explored Reinsurance Interest in our Program and Developed Several Viable Fronting Possibilities to Ensure High Quality Paper

● Selected an advisor to guide us in captive formation: ALPS

ALPS is highly-respected in developing professional liability programs, having built a $40M company to protect lawyers against errors and omissions

● Developed Proposed Enabling Document

● Developed a Surplus Acquisition Plan to Secure the Necessary Capital to Launch

● Crafted a Timeline and Action Plan We Have Met Every Step of the Way


What Are We Doing Now?

● Conducting Rate Setting through an Actuary for the Initial States of Operation

● Seeking Capital to Fund the Captive

● Preparing to File an Application to Create the Insurance Company


What Can You ExpectLooking Ahead?

  • ● If all goes as anticipated, we will file to form an captive insurance company in November 2009, with an expected approval date of January 1, 2010

  • ● Based on regulatory approval, we expect to issue our first policy effective April 1, 2010,

  • just about six months from today . . .


Questions We’ve Heard . . .

  • ● If my state is not within the initial states of operation, will we be able to join latter?

  • Yes. Right now, we expect to start with between 6-10 states / affiliates, and will provide other affiliates opportunities to join us as we pick up steam.

  • ● Are there opportunities for a PIA member or PIA affiliate to help capitalize the captive?

  • Yes. Individual agents, PIA affiliates and other intested parties, will have opportunities to be participate in the capitalization in different ways depending on individual circumstances.


Questions We’ve Heard . . .

  • ●Will the Captive be Financial Strong?

  • Yes. Policies written by this captive will be on (A-) or better A.M. Best Rated Paper, with strong backing from the worldwide reinsurance markets. We project our reinsurance model will resemble the following:


The NAME GAME! We need your suggestions

  • The PIA Services, Inc. Captive Taskforce is currently seeking suggestions for what to name the new insurance agents’ professional liability company.

  • Help us out . . . We need your creativity . . . What name describes who we are, what we do, what we stand for and / or is easily recognizable from a branding perspective?

  • A drop box is set up for your suggestions. Yes, the winner will receive a special PIA gift package!


Questions?

Larry Willis

Chair

PIA Services, Inc. Captive Taskforce

aw3@bellsouth.net

(305) 625-2403

Len Brevik

Executive Vice President and CEO

National Association of Professional Insurance Agents

lenbr@pianet.org

703.518.1340


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