Specialty market smorgasbord

Rough Notes, Jul 2002 by Boone, Elisabeth

Agents savor a diverse menu at the first Rough Notes Specialty Lines Seminar

Have you ever attended a "taste of" food festival? Popular in many large cities, these events draw enthusiastic crowds who pay a modest entry fee and get to sample a dazzling array of foods prepared by local restauranteurs. The keener your sense of adventure, the more fun you'll have trying everything from pickled eel to petits fours-and the more you'll learn about the rich culinary cultures of countries whose names you may have heard only on CNN.

If you're a retail agent, a visit to a specialty lines "tasting" might prove every bit as exciting-and show you how to be a hero to your clients while increasing your revenue stream. That's why The Rough Notes Company and The Insurance Marketplace (a sister publication of Rough Notes magazine) are offering a series of regional Specialty Lines Seminars in key cities around the country.

The kickoff seminar, held in St. Louis in May, was a lively and informative "smorgasbord" of specialty offerings to meet needs from the challenging to the exotic.

Keep on trucking

First up were Crystal Burns and Erin Miles, underwriters with United Brokers Insurance, a managing general agent and managing general underwriter based in New Albany, Indiana. Some 70% of UBI's business is trucking risks; the firm also offers programs in more than 50 other classes of property/casualty business, including restaurants, bars/taverns, day care centers, hotels/motels, contractors, builders risk, vacant buildings, professional liability, and liquor liability.

Especially in a hard market, Burns and Miles pointed out, becoming involved in program business gives the retail agent some important advantages: the ability to offer specific, unique coverages and to specialize in a particular product line; more time to focus on customer relationships; and the opportunity to differentiate oneself from competitors. The underwriters described four key steps to developing a lasting program: find a group of under-served customers; differentiate yourself by offering them a product they need and don't have; sell the need, not the price; and provide excellent service.

UBI's monthly trucking program, which is available in all states, offers physical damage, cargo, and non-- trucking liability (bobtail); coverages can be written separately or together. The program is designed for owner operators, but any size fleet is welcome. Several limits are available; coverage is continuous until canceled; and agent involvement is minimal.

Stormy weather

If you can't prevent rain from drowning out a Jimmy Buffett concert or a blizzard from halting the filming of a Hollywood epic, the next best thing is definitely weather insurance. That's the specialty of Good Weather Insurance Agency, Inc., of Salem, Massachusetts, whose slogan is "Weatherproofing Business Profits." The original provider of weather insurance in the United States, Good Weather is a national underwriting manager for major U.S. carriers as well as a coverholder for certain underwriters at Lloyd's.

"Almost every business is exposed to loss of income or extra expense because of weather, yet most have protection only for related property damage," said Laurie Tillman, owner and president of Good Weather. "We believe that weather insurance should be considered an integral part of the risk management process of every commercial account."

The most frequent purchaser of weather insurance is the entertainment industry (concerts, fairs, and festivals); other risks are sporting events, air shows, and advertising agencies and film production companies, Tillman said. She went on to identify factors that motivate more mainstream commercial clients to purchase weather insurance.

Cost containment. Businesses, municipalities, colleges, and condo associations use weather insurance to offset increased costs of snow removal from their properties' roads and parking lots. Increased fuel costs also can be offset.

Income stabilization. Many businesses need to stabilize cash flow against uncertain weather conditions. This coverage protects sponsors of fundraising events, as well as restaurants, car dealers, fuel oil dealers, golf courses, mall associations, car washes, and various other retailers that cannot afford the effects of adverse weather during key sales days, a prime season, or annually.

Increased sales. Weather insurance is used by businesses such as jewelers, auto dealers, furniture stores and furriers for creative sales promotions designed to stimulate business during a key season, specific holidays, or any time of year when business historically is flat or very competitive. All of these promotions are structured expressly around a measurable weather peril that varies by location and time of year.

Good Weather's premium rates vary widely, Tillman said, ranging from 1% to 40% of the policy limit depending on location, dates, hours, and peril. The minimum premium for any event is $500. The agreed value limit can include profit, expense, income, or any other factor. There is no coinsurance and no deductible. Insurable weather perils are of two types: specific (rain, snow, wind, hurricane, lightning, temperature, etc.) or general (severe adverse weather that causes the event to be canceled). The policy must be bound and paid for a minimum of seven days before the event so that the risk is pure rather than speculative. The designated weather monitor is the National Weather Service, an on-site or off-site independent weather observer, or a forensic meteorology firm.