Dedicated insurance programs are an excellent way for independent agents and agencies to set themselves apart from their competitors and help grow a specialized, renewable and, potentially, profitable book of business. In addition to conventional commissions on premiums, with some underwriters, there may be opportunities to take an equity position in the program.
In this article, we will provide an overview of program development steps.
The actuarial assessment
Once a program passes the SWOT assessment, the carrier will perform a detailed actuarial analysis. This analysis will be organized under the broad areas of program parameters, including items such as average account size and rates; program experience, including total written premiums, hit ratio and renewal retention ratios; premium history, loss ratios and future projections; and claims-handling history, including loss runs by lines of business (LOB).
The agency’s program submission will normally include a detailed compensation request, which helps the carrier understand program expectations from the agency’s view.