Target Capital targets volunteer fire departments

Rough Notes, Apr 2001 by Maes, John

Connecticut-based firm launches ONTARGET Volunteer Firefighters Insurance as part of its public entity programs

The perception that volunteer fire departments are more a part of American history and folklore than today's reality could not be further from the truth. The fact is that volunteer firefighting forces continue to dominate the landscape of the country's fire services. In a trend that shows no signs of abating, more than 22,000 of the approximately 30,000 fire departments in the United States are staffed entirely by volunteers while another 4,800 departments were made up mostly of volunteers, according to statistics from the National Fire Protection Association (NFPA.)

The result is an insurance market ripe for the enterprises of Target Capital. The Avon, Connecticut-based MGA has a specialty insurance program for volunteer fire departments among its numerous other specialty and professional liability programs. Target, formed about six years ago as an MGA for more than 20 different insurance packages for professional and public entity liability, is a company of at least eight MGAs which currently manage some $75 million in annual premiums. It launched its ONTARGETSM program for volunteer firefighting organizations late last year.

Though Target functions as an MGA for some of its programs, it prefers to be known as a managing general underwriter (MGU) for insuring fire departments, says Steve Sims, executive vice president. Target has a solid foundation of underwriting talent to build on as its market presence in the volunteer firefighter market grows, according to Sims. "We have a well-balanced executive team that focuses on the unique kinds of exposures that volunteer firefighting organizations bring to us, and that's the most important role we play in that situation," he says.

Echoing that assessment is Wayne H. Carter III, CPCU, ARM, president and chief executive officer. "We want underwriting to be the recognized strength of the organization," he says. "Most of our key executives grew up on the underwriting side of the business and that's the direction we want to continue," says Carter. Volunteer fire insurance is a "strong and viable market," he says.

To bring about this precision in underwriting firefighting departments, Target has brought on Nicole Haggerty, RPLU, as vice president of underwriting. A 10-year veteran of underwriting, she had previously been manager of new products and program development at Chubb Executive Risk in Simsbury, Connecticut. At Target, she oversees underwriting for Target's start-up public entity program for municipalities and schools in addition to volunteer fire departments.

For fire departments, Target has partnered with the Philadelphiabased ACE USA Group of national, commercial lines insurance companies that recorded over

$3 billion in gross premiums written for 2000. The ACE USA Companies have re-entered the market after about a five-year hiatus from insuring volunteer fire departments. But, INA, now one of ACE USA Group of Companies, traces its involvement with volunteer fire departments back to the 1790s, says Susan Woodward, senior vice president.

Today's volunteer fire departments come in a variety of shapes and sizes, operating in diverse environments with differing insurance needs, Haggerty explains. The continuing sprawl of suburbs and white-collar counties ringing major cities has forced many previously much-smaller volunteer departments to grow and obtain new equipment and take on more personnel to keep up with the increasing demand for their services. Some even find themselves having to develop the capability to fight industrial and high-rise fires.

In some cases, the fire department may be largely tied in to the insurance program of the municipality it serves, or it may be part of a fire protection district that taxes its residents separately to fund its expenses, including payment of insurance premiums.

Elsewhere, the tiny one-truck firehouse volunteer department found in sparsely populated rural areas also still has its niche, she says. "The fire department there might have an antique pumper and though it's well maintained, the municipality might not insure it and the fire department might have to get its own coverage."

Or, "if you look at the municipality, you might find it doesn't have much exposure, maybe a town hall and a couple of vehicles. But when you look at the fire department it has a much bigger exposure: a pumper truck, equipment and workers comp programs, which makes volunteer fire departments unique from an underwriting standpoint," says Haggerty.

Volunteer firefighters also have risks that their counterparts in full-time departments don't normally face, Haggerty explains. A volunteer will usually drive his/her own car to the scene of an emergency. A full-time firefighter is usually on station. "Or a volunteer might take an ax from his/her own garage to fight a fire," she says. "A full-time firefighter wouldn't be faced with that."

Volunteers also can be confronted with a management risk not usually faced by the full-time services. In some jurisdictions, where residents must pay periodic fees for fire services, department commanders might have to make split-second decisions about whether to fight a fire or call in another department.