Hard Market Hikes Friction With Fronts

As the insurance market hardens, captives and the carriers that sometimes “front” for them are increasingly at odds, experts on the front lines say.

Not only are captives being socked with rising fronting fees (see National Underwriter, July 2, page 23), they also are reeling from the deletion of coverages and even non-renewal of their policies, according to Brian C. Donovan, president of Steel Tank Insurance Company, a captive insurer with offices in Chicago and Burlington, Vt.

As pointed out by Michael R. Mead, president of M.R. Mead & Company, LLC, and chairman of the Minneapolis-based Captive Insurance Companies Association, “risk-sharing is a commodity like anything else.” M.R. Mead is a Chicago-based intermediary that forms and manages captives, principally offshore.

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