Filed Under:Markets, E&S/Specialty

Educational Article Series: Program Business—From Submission to Finish Line

Part 4: Taking the Approved Insurance Program 'Live'

Timothy J. Harkins, vice president of business development at Meadowbrook
Timothy J. Harkins, vice president of business development at Meadowbrook

Bringing a new insurance program to market is an exciting time for the program’s agency and staff, as well as their carrier partner. 

Policyholders will benefit from the financial strength and broad range of resources that a new carrier brings to the agency’s book of valued business.  The potential exists to expand this book of business to new accounts, while also substantially improving loss ratios and, thereby, profitability.

The first three articles of this educational series on dedicated insurance programs reviewed, in detail, assembly of the program submission, identification of a carrier partner, due diligence by the carrier, financial modeling and negotiations.

With a signed deal in place, it is now time to begin the implementation of the program based upon the executed proposal.  Program implementation has its own set of challenges and important areas that must be addressed, which will be covered in this article.


Program implementation is a complex process.  Fortunately, many of its parameters will have already been determined, or started on, during the program submission, due diligence, financial modeling and negotiation phases.  Like any other business process, the implementation will go smoother when necessary care and thoroughness has taken place during the development stages.  A strong foundation leads to a better success rate for revenue growth and profitability, including in the program’s early stages.

Several factors help the program get off on the right foot.  The first is when the program carrier has staff, including a key contact person, dedicated to the implementation process.  This model is better than asking staff to juggle bringing on a new program while actively managing other programs.  Proper implementation is time consuming and very detail oriented, so having a dedicated team in place is a distinct advantage.

Next, the implementation matrix can be quite complex, with actions taking place simultaneously or with one step dependent on completion or approval of another.  As we have emphasized through this series, regular, open communication between carrier and agency is one of the hallmarks of a successful program.  Don’t take anything for granted.  In particular, agencies, even sophisticated, experienced ones, should not hesitate to ask questions to make sure all parties are “on the same page.”

Every program is unique, requiring specific resources. Thus, no two implementations are alike.  Regardless, there is a standard implementation process (or checklist) that should be followed, which we now discuss.


Under this heading falls required contracts, which will include an agency agreement between agency and carrier and any negotiated profit sharing, reinsurance, trust/collateral and/or claims service contract, the last being needed if a third party administrator (TPA) is being used to manage/adjust the claims.

The carrier must complete an agency appointment process, which officially allows the agency to solicit business in a given state on behalf of the carrier for the lines of business appointed.  The carrier will also have the agency provide additional information, such as copies of agency/agent resident and non-resident licenses (as required by the states in which the program will be marketed), a W-9 form and a copy of its Errors & Omissions policy.

Next, the agency and carrier will develop underwriting guidelines for the given program.  These underwriting guidelines define the parameters of risks being underwritten, as they will be submitted for quotation. They include: lines of business; classes of eligibility for a given state; pricing parameters; and coverage forms.  Both parties should sign off on the final language and forms of these essential documents. 

Additionally, the carrier will provide an underwriting authority letter, if the agency is granted underwriting authority and is assuming those responsibilities.  This letter will detail such items as lines of business, available coverage, policy limits, premium thresholds, classes of business, states of operation, and types of scheduled credits and debits allowed for a given risk.

Typically, the underwriting guidelines and underwriting authority letter are reviewed annually.

“Workings” of the program

  A program’s forms can include specific policy language to address unique exposures that are contemplated by that program.  There are various insurance organizations (i.e.: ISO, AAIS, NCCI) that carriers may subscribe to for use of standardized coverage forms to address more common exposures. While these standard forms might not handle the unique risks of every program, they are a good foundation as a starting point, along with additional tailoring through the use of manuscript endorsements.  Similarly, these organizations provide baseline pricing across states, with adjustments being made from there based on the individual carrier loss experience and expense structure.

As elsewhere in program development and implementation, forms and pricing are areas where the agency is consulted due to their level of expertise and experience in the class of business.  Astute carriers will respect and rely on agency input in this area, another example where communication, mutual respect and a genuine sense of partnership are paramount.

Next, it is necessary to make required rate and forms filings with the appropriate state departments of insurance.  Clearly, this is a key implementation step, as it will govern when a program can become active in any given state.  Each state has its own regulatory requirements.  Some states are “file and use,” while others are “prior approval” when reviewing and approving carrier filings.  In any case, with complex, multi-state programs, it is advised to pursue a filing strategy that prioritizes the states based on the program marketing plan.

Depending on the state requirements, a single-line, conventional program (i.e. workers’ compensation or a property line) might be approved in 30 days, while the approval process for more complex programs could take several months.  Both agency and carrier should be prepared to provide timely responses to any requests for further clarification of policy language and rates.

In many cases, the carrier’s in-house staff will be responsible for claims handling.  Some programs will utilize the services of a TPA to handle claims.  In these cases, the agency and carrier will conduct appropriate due diligence and complete a claims service contract with the TPA.  This contract will detail such important areas as fees, authority levels, maximum claims payout by line of coverage, reserving and how the TPA will interface with the carrier’s reporting systems.   Financial modeling conducted earlier would have accounted for claims handling charges (carrier or TPA fees) when arriving at the program’s anticipated loss and expense ratios.

Similarly, the agency and carrier will outline the program’s billing responsibilities, authorities, fees and reporting systems.  Generally, the agency agreement will identify these billing requirements.

Loss control and risk management

Along with underwriting guidelines, loss control and risk management activities go a long ways towards controlling a program’s claim experience and profitability.  Working together, the agency and carrier will establish a loss control service plan appropriate to the class of insureds and its range of potential exposures.  Furthermore, this is an area where the agency can make great use of the carrier’s in-house and field underwriting and loss prevention specialists.

Infrastructure—technological and functional

If the agency has an agency management system and will be providing rating and policy issuance functions for their program, it might seem to go without saying that the agency and carrier information technology systems must be compatible.  Investments in needed technology can be a major step for any agency taking on a dedicated program.  Processing systems certainly must be more than an afterthought, but, rather discussed and budgeted for early on in the proposal and negotiation stages.

With the necessary technology in place, common systems will include the rate, quote and issue (bind) system; programs that track performance parameters like premium growth, claims and claims paid; and regular reporting that will be used to direct the overall management of the program.  With today’s technology, most of these reports can be generated automatically on a “real time” basis.


This stage of the implementation process brings us nearly full circle.  The advantages and special features of a book of business brought its maturation into a formal program proposal, identification of a carrier partner, and, finally, a negotiated program.  Now, along with market intelligence and other insights acquired during the development process, it is time to “sell” the program to existing and new clients.

Most carriers will have an experienced corporate communications team that will be a valuable resource for the agency.  Marketing methods may include brochures, flyers, a program-specific web site, e-mail blasts and social media strategies.  The carrier can also help with presentations to prospective client groups and attendance at trade conventions.

The “finish line” is only the beginning

With everything in place, we find that a detailed final implementation sign-off checklist pays dividends in making sure nothing is missed before a program goes “live.”

It is important to carefully present the change in carrier to a program’s existing clients, including items like any changes in A.M. Best rating, coverage enhancements, payment terms or and claims reporting procedures.  The carrier’s corporate communications department can help draft a cover letter that conveys the advantages of the new relationship.  This communication is usually initiated at the time of policy issuance.           It’s been a complex process developing the program, establishing contracts and underwriting guidelines, gaining needed regulatory approvals, setting up all necessary infrastructures and establishing processing and reporting systems.  The care taken during implementation, buoyed by a growing rapport between agency and carrier, will be rewarded in the marketplace with a program that serves all parties, including insureds, in the ways intended.

Timothy J. Harkins is vice president of business development for Southfield, Michigan-based Meadowbrook Insurance Group, Inc., and can be reached at or (248) 204-8170.

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