New partnership offers first-of-its kind admitted market model
The relationship and transparency a Lloyd’s coverholder receives from their London market partners are difficult to replicate. When it comes to admitted markets, the status quo seems to be that the carrier enjoys underwriting profits without sharing additional commissions.
But when profit commissions aren’t paid, the coverholder or MGA can become, well, frustrated. And with no claims process participation, no access to loss ratios, no insight on how to improve underwriting results and, ultimately, no profit commission, this frustration leads to discontent. It’s these circumstances that leave many coverholders left to focus solely on their binder facilities and let the admitted market operate as historically allowed.
Comparatively, admitted programs carry substantial differences versus their non-admitted counterparts. Product development and filing processes can be labor-intensive. For example, identifying an admitted market that can take a non-admitted program and convert it to an admitted one where allowed, may be similar to the likes of Tesla disrupting the auto dealership market. Filings that are compliant with state regulators take time and effort. However, with the right admitted market partner, an MGA can get a program rolled out within 120 days.
The evolution of the admitted market stems from non-admitted products eventually reaching saturation, thus requiring admitted expertise. Take, for example, professional liability risks. Up until competition intensified and rates softened, most of these products were sold on a non-admitted basis. Eventually the best risks moved to admitted markets and left surplus lines to underwrite the non-preferred risk. Even with this shift, many products are still best left to surplus lines paper. However, like the professional liability class, most products eventually reach saturation and ultimately require a move to admitted capacity.
So, what’s a coverholder to do when they need an admitted program?
The current options are one, wholesale the business; two, work with a fronting company and reinsure 100 percent to domestic or Lloyd’s markets; or three, move the program to a domestic carrier without potential reinsurance support or profit commission.
But what if the coverholder has a fourth option?
A new solution being offered by Fortegra allows coverholders and MGAs to roll out an admitted program with 75-to-80 percent reinsurance support from their current London subscription market. That same transparency and underwriting involvement found with a binding facility is now available with a Fortegra admitted program.
To illustrate, take a look at the success of Standard Lines Brokerage Insurance Group (SLB) in Tamarack, Florida.
They opened their doors in 2000, but just recently began looking into providing an admitted insurance product to retail agents who didn’t have ready access to premier markets due to agency size, coastal location, company volume restrictions, and other factors. While SLB is a Lloyd’s coverholder, they needed a partner with admitted paper to bridge the gap. SLB was working with three non-admitted markets, one of which was Lloyd’s.
In partnership with SLB, Fortegra assisted with pricing and product development on an admitted product, much like the existing, non-admitted one. Fortegra assumed 20 percent of the admitted program risk while SLB’s current Lloyd’s binder and quota share markets took on the remaining 80 percent. In the end, seven syndicates supported the 80 percent quota share slip, five of which are CHART members.
The ability to offer an admitted product and still have flexibility and communication with our carrier partner, as we do with our Lloyd’s markets, was extremely attractive to us at SLB. As the insurance agents’ professional liability arena softened, we felt that it was necessary to partner with Fortegra to offer our product on an admitted basis. This will not only help separate us from the rest of the market segment we target, but also solidify us in the industry. It provides us with a market and product alike that has the admitted qualities that state associations and professional groups prefer, and the transparency we are accustomed to on our current products.
– Dan Ginden, SLB Managing Director
But what if you’re an MGA with an admitted professional liability program but need to move the program due to distribution channel conflicts, state availability, economics, and so on? You could take advantage of the aforementioned options, or you could move it from one admitted market to another, while continuing to work with the same subscription market that supports you today. By transitioning your admitted program to Fortegra, your London subscription partners can enjoy new premiums via a quota share with Fortegra.
The entire Fortegra program model allows coverholders and MGAs to sell an admitted product, and it provides them with active involvement in underwriting development and revision, influence over loss control practices, claims committee attendance, reinsurance marketing, and much more.
The London market is a place like no other on earth. MGAs enjoy the relationship and transparency they receive from their syndicate partners thanks to advantages like an aligned approach to rate making, strong underwriting performance, and claims collaboration, just to name a few. Now, CHART’s newest vendor partner—Fortegra—can help you do the same and simplify your path to success.
I have always thought the Lloyd’s underwriters and the coverholders would welcome this type of arrangement. We are extremely pleased to have received such strong support from our partners, and we look forward to many more successes.
– Mark E. Rattner, Fortegra EVP, Chief Underwriter & Product Management
|In Business Since the '70s||$1 Billion in Gross Annual Sales|
|Over 10 Million Consumers Protected||Over 7500 Reseller Partners|
|Jacksonville, FL | Novi, MI | Palm Springs, CA||Products and Obligor Services Across 50 States|
|Seven In-house Insurance Companies||A.M. Best Financial Strength Rating: A-|
|A Tiptree Inc. Company (NASDAQ: TIPT)|
Fortegra ® is the marketing name for the insurance, warranty solutions and specialty underwriting operations of Fortegra Financial Corporation and its subsidiaries, including its admitted insurance companies. Fortegra Financial Corporation (a Tiptree Inc. company) and its subsidiaries comprise a single-source insurance services provider that offers a range of consumer protection options including warranty solutions, credit insurance, and specialty underwriting inclusive of admitted market partnerships. Delivering multifaceted coverage with an unmatched service experience for both partners and their customers across the globe, Fortegra solves immediate, everyday needs, empowering consumers to worry less and Experience More.