ARCH Announces Captive Agent Unit

ARCH Announces Captive Agent Unit

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

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

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

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

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

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

Although agents pay for the coverage, typically the risk management and general counsel's office of an insurance company negotiate to buy the coverage on the agent's behalf,” he said. “The company is the holder of the policy and certificates are issued to each individual agent.”

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

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

Policy exclusions, which number about 25, vary. “Exclusions deal with the agent and the types of activities that the agent shouldn't be engaging in,” Mr. Frieri said. “We're not covering other occupation activities, if they are an accountant or an attorney or a real estate agent.” Also not covered are bodily injury claims.

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

An agent interested in the coverage would contact his or her company, which would administer the plan along with its broker, he said.

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