C&B's Captives Drive Trucking Clients' Savings

Cottingham & Butler's philosophy is to sit on the same side of the desk as the client–even if that means getting into the driver's seat for a trucking company.

When Chris Patrick, senior vice president for the truck insurance group, joined C&B in the early 1990s, the typical trucking program provided traditional coverage and not much else. “[Brokers] were not adding a lot of value or solving their problems,” he said. “Trucking companies were looking for more help to drive down their costs.”

C&B came in with a few nontraditional ideas, including a third-party administrator and loss control service with the hiring of two safety representatives. Then, in 1993, C&B launched a trucking captive, which “looked to be a good alternative to the traditional marketplace for those willing to bear some risk,” according to Mr. Patrick.

He said the idea of a captive “resonated” with truck owners partly because they could see a return on their insurance dollars if they performed well on loss control, rather than losing all the premium money to the carrier. They liked the idea of controlling claims management and the entire safety process. The power of purchasing coverage as a group was also appealing, he said.

The captive opened an avenue for C&B to develop a niche expertise through its relationship with truckers and their associations, culminating with Traffic Insurance Ltd.–now in its 14th year. In 2005, the captive posted $48 million in gross premiums written with 57 members, making it among the largest such captive programs in the United States.

Today, C&B boasts three trucking captives that include 110 companies and $80 million in premium, noted Mr. Patrick.

One key to success for C&B is taking ideas that work in one area and introducing the concept into other industries and accounts. That's what the agency did to grow its risk management operations, with solutions tailored to each client's needs, noted David Becker, president and chief operating officer.

“Our answers tend to be a combination of great loss control capability, understanding the risk management side of [our client's] business and bringing alternative risk-transfer solutions to the party,” he explained. “We open a broader area for solutions. Clients want to bet on themselves that they are going to get better at managing risk, and we help them do that.”

He noted that only 10-to-15 percent of the firm's clients qualify for a captive program. They have to be committed to the financing of the facility and to a strong safety program aimed at achieving improvements in their loss profile.

The key, he added, is in understanding “what a good risk is–as opposed to one that is not ready to be in a captive.”