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

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

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


Controlling our own destiny the creation of an insurance agents professional liability program

Why Form a Captive?

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


What have we done

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 done1

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

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 expect looking ahead

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

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 heard1

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 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

Questions?

Larry Willis

Chair

PIA Services, Inc. Captive Taskforce

[email protected]

(305) 625-2403

Len Brevik

Executive Vice President and CEO

National Association of Professional Insurance Agents

[email protected]

703.518.1340


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