the next frontier multi line state funds
DESCRIPTION
The Next Frontier Multi Line State Funds. Presented by. Don Collins Chief Marketing Officer & Vice President, Communications. Glen Kuball CPCU,CIC,ARM,APA Vice President, Underwriting. AASCIF 2010 POLICYHOLDER SERVICES WORKSHOP, AUSTIN, TX 10/19/10. - PowerPoint PPT PresentationTRANSCRIPT
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The Next FrontierMulti Line State Funds
Presented by
AASCIF 2010 POLICYHOLDER SERVICES WORKSHOP, AUSTIN, TX 10/19/10
Glen Kuball CPCU,CIC,ARM,APAVice President, Underwriting
Don CollinsChief Marketing Officer &
Vice President, Communications
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The Next FrontierMulti-Line State Funds
“Irrational Exuberance?” (…To drink the Kool-Aid, or not?)
October 19th, 2010
Richard J. Foster – Managing Director, Guy Carpenter
Jason Denechaud – Director of Accident, Health & Workers Compensation Underwriting, Catlin US
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3Guy Carpenter
The Next FrontierMulti-Line State Funds
Establish the Perspective
“If you have seen one State Fund… you have seen one State Fund”
Organizational structure– State Agency / Private Public Mutual / Quasi-Governmental etc..
Legislative “Charter” Mission Political environment Tax position Product distribution channel(s) Other… (economic, geographic, etc..)
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4Guy Carpenter
The Next FrontierMulti-Line State Funds
Establish the Perspective
Your perspective depends upon your (unique) position and view-point..
Do you see the young, or old lady?
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5Guy Carpenter
The Next FrontierMulti-Line State Funds
Establish the Perspective
Your perspective depends upon your (unique) position and view-point..
Is this a goal – or wasn’t it?.......
Not that I’m bitter!
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6Guy Carpenter
The Next FrontierMulti-Line State Funds - Why consider offering other lines of insurance?
“Well, let’s see...So far, I’ve got rhythm and I’ve got music.
Actually, who could ask for anything more?”
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7Guy Carpenter
The Next FrontierMulti-Line State Funds
Why consider offering other lines of insurance?
Increasing product line offerings / Diversification– Value added to:
Insureds Agents
– Accretive to portfolio balance Account retention & new business generation tool
– Competition (Package writers)– “One-stop” point of coverage delivery– Differentiator from competition on core WC offerings
Additional revenue / expense mitigation– Underwriting income– Cash flow– Fee / commission income
Utilization of capital
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8Guy Carpenter
The Next FrontierMulti-Line State Funds
Why consider offering other lines of insurance?
Complimentary enhancements & benefits to core (WC) writings
– Management / exposure data etc.– Claims litigation / denial rates– Harmonization with Loss Control / Safety program
Creation of bespoke programs– Associations etc.
Political– Local market dislocations– Enhancement of “mission”
Evolution Capitalizing on corporate success and imaging Growth
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9Guy Carpenter
The Next FrontierMulti-Line State Funds - What are some of the considerations?
To his horror, Irving suddenly realized he had failed to check his own boots before putting them on just minutes
ago.
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10Guy Carpenter
The Next FrontierMulti-Line State Funds
What are some of the considerations?
What product lines would we consider offering? On what basis would we consider offering other product
lines?– Direct (on “our” paper / against our capital base)– Indirect (as a reinsurance of another carrier)– Passive (as a conduit for coverage / other lines)
Need to establish a vehicle (agency)– Admitted / Non-admitted
What expertise is required?– Currently present– Acquired– Provided by a third party
What risk, if any, do we want to assume?
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11Guy Carpenter
The Next FrontierMulti-Line State Funds
What are some of the considerations?
What are the motivations?– Long-term commitment
Own / Third parties– Soft market “play”
What are the risks?– Financial (underwriting)– Reputational– Divergence from core area of competency– Political
Tax-exemption Alien Governmental control statutes Department of Insurance Policyholders Agents Rating Agency reactions
– Credit risk
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12Guy Carpenter
The Next FrontierMulti-Line State Funds
What are some of the considerations?
Cost– Hard & Soft
Systems / IT Staffing Distraction from core (WC) & mission Reputational Legal
- Changes to legislation - Establishment of agency- Licensing etc
“Opening Pandora’s box”– Political pressure to cover “distressed” market segments
Target market segments– Small / medium / large accounts
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13Guy Carpenter
The Next FrontierMulti-Line State Funds - Potential Lines of Insurance
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14Guy Carpenter
The Next FrontierMulti-Line State Funds
Potential Lines of Insurance
Lines that have been entered into / discussed include, but are not limited to:
Employment Practices Liability Insurance (EPLI) General Liability Commercial Auto Property Equipment Breakdown Crime Inland Marine Liquor law liability Professional Liability (Public Officials E&O / Police Professional
etc.)
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15Guy Carpenter
The Next FrontierMulti-Line State Funds
Potential Lines of Insurance
Lines that have been entered into / discussed include, but are not limited to:
“Cyber-Risk” Surety Group Medical Group Life Accident & Health
– AD&D– Group Business Travel Accident– Disability (LTD/STD)
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16Guy Carpenter
The Next FrontierMulti-Line State Funds – Markets in this “space”
Hey! Look at me everybody! I’m a cowboy!…Howdy, Howdy, Howdy
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17Guy Carpenter
The Next FrontierMulti-Line State Funds
Markets in this “space”
Include, but are not limited to: Lloyd’s of London & London Companies
– Various Syndicates Beazley*, Brit, Amlin, ARK, Omega, Atrium, Catlin
Hartford Steam Boiler General Re AIG / Chartis / Lexington Argo (Alteris) Beazley Insurance Company* Catlin Various life insurers & reinsurers
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18Guy Carpenter
Accidental, Death & Dismemberment (AD&D) Product Pairing:“A Perfect Fit”
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19Guy Carpenter
Why Offering PA Products to Casualty (WC) Clients is a “Perfect Fit”
Offers differentiator in highly competitive casualty (WC) market
Simple, low cost & customized package 24 Hour Coverage Benefits paid in addition to any other group or individual
coverage Highly Underinsured Employee Population Improved Client Retention Goodwill enhancement for Workers Comp settlement options Correlation with any workplace safety programs in place High perceived value of benefit features
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20Guy Carpenter
Typical Plan Design
AD&D: Varying benefit levels based on client need and price point considerations
Range: $25,000 - $75,000 Key Riders:
Escalator (5% for 5 years) Emergency Room Visit Special Education Benefit (Spouse and/or dependents) Child Care Center Benefit Home Alteration/Vehicle Modification
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21Guy Carpenter
Typical Plan Design (cont.)
Key Riders (cont.): Hospital Stay Seatbelt/Airbag Burial/Cremation Common Carrier Felonious Assault Bulletproof Vest (police/security groups) Infectious Disease (hospital/medical groups)
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22Guy Carpenter
Implementation Analysis of the WC database Headcount by industry classification Demographic determination of relevant riders, benefit levels
and premium tolerance Creation of composite rate for whole group or buckets by
industry groupings Agree to final plan design: Consider value of one simple
offering or Plan A or B option
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23Guy Carpenter
Implementation (cont.)
Creation of marketing plan: Branding Product marketing name Collateral (agent and consumer) Email blasts Website/dedicated URL Messaging: tie-in with workplace safety themes and
restating of value proposition Administration:
100% Employer Pay vs. Voluntary Coordinate with WC renewal notices Match WC billing frequency Administer in-house if capabilities present or defer to
writing carrier
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24Guy Carpenter
Post Implementation
Regular monitoring of premium flow and characteristics of submitted business and match against initial expectations
Adapt product offering as needed based on client/agent input and sales trends
Annual audit to evaluate demographics, loss experience, persistency, take-up rates, sales practices, etc.
Consider offering of additional supplemental products as needed:
Life Short Term Disability Limited Medical Critical Illness/Cancer Hospital Cash
One carrier for all products is optimal
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