COVERAGE AND FORM DESIGN - SPECIAL PROGRAMS

Satori Associates, Inc. has designed a number of specialty insurance programs on behalf of agents and insurance carriers. Niche, or specialty, business is considered highly desirable by many persons within the insurance industry, but few parties have the knowledge and experience to undertake the formidable task of creating the program in its entirety, including rates, application forms, coverage and endorsement forms, as well as preparing proper filings with regulatory bodies. The development of such a form or program requires a great deal of coordination between agents or brokers, carriers, rating organizations, regulators, and of course, attorneys for the various entities.  Satori Associates. Inc. can be of great value in facilitating the process. Since each insurance program or product is unique, there is no set formula to follow, but essentially there must be a public need for the program that makes all this work worthwhile, and that one or more insurance carriers be willing to invest their time and effort towards the ultimate prospect of earning a profit on the operations. At times there is a real dichotomy here in that many programs are expected to be sold on the basis that that particular program, be it a single new type of policy, or some format of packaged policies, will be less expensive than the alternatives, however the carrier, in venturing into an unknown arena, may well want a higher than actuarial premium to compensate for the perceived increase in risk. Since most program business is written with higher than normal commission rates, the carrier's net retained premium is again under pressure to increase above the norm for a similar mature coverage. If low rates are needed for agents and brokers to sell the program, and if the carriers approached to underwrite the program "need" to "cushion" their rates, there must be a great deal of negotiation to find a sustainable level for a long enough period to obtain creditable loss data. Once this is accomplished, rates trend downward still allowing for a reasonable carrier profit level, and we then find that as premiums decrease, participation in the program grows enormously. An outside consultant, such as Satori Associates, Inc. can not only help develop the program itself, but can continue to monitor all the various parameters towards the goal of maintaining a stable, profitable, venture.

Revision Date: November 25, 2009