ARCH Announces Captive Agent Unit

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Arch Insurance Group, a division of Arch Capital Group Ltd.announced the formation of a captive agents unit, which willspecialize in addressing the professional liability exposures ofcompany-sponsored life and property-casualty insurance agents.

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Frank Frieri will serve as vice president of the new unit, whichwill be based in Arch's New York City headquarters.

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Mr. Frieri told National Underwriter that the program,which has limits up to $3 million per claim, coverscompany-sponsored agency field forces.

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The underwriting factors that Arch considers in placing thecoverage include “compliance and supervisory procedures, training,education and controls over their agents as well as the type ofproducts their agents are selling,” he said. Mr. Frieri said thatArch also looks at the type of historic loss experience that hasbeen coming in on behalf of the agents as part of its undewritingprocess.

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“We underwrite to the particular [insurance] company to providecoverage to their agency field force,” he said. “We call themcaptive to try to define the fact that these are agents of aparticular company that we're writing.”

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Arch focuses on the relationship between the sponsoringinsurance company and the agent, he said.

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Although agents pay for the coverage, typically the riskmanagement and general counsel's office of an insurance companynegotiate to buy the coverage on the agent's behalf,” he said. “Thecompany is the holder of the policy and certificates are issued toeach individual agent.”

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The policy covers agents for their sale and servicing ofinsurance and investment products, he said.

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The coverage also responds to vicarious liability that thesponsoring company can face from the alleged wrongful acts of acaptive agent, the company said.

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Policy exclusions, which number about 25, vary. “Exclusions dealwith the agent and the types of activities that the agent shouldn'tbe engaging in,” Mr. Frieri said. “We're not covering otheroccupation activities, if they are an accountant or an attorney ora real estate agent.” Also not covered are bodily injuryclaims.

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Professional liability arising from products the agents sell forother companies are covered, he added, though “the bulk of whatthey do should be on behalf of the [sponsoring] company. We'll makea decision during the underwriting process whether it's the type ofcompany profile that fits our criteria.”

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An agent interested in the coverage would contact his or hercompany, which would administer the plan along with its broker, hesaid.


Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, August 4, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.


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