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The CHART Incubator

In the United States, insurance companies sometimes delegate underwriting authorities to insurance agencies through a PA (Program Administrator) Agreement. Entities possessing these authorities are referred to as Managing General Agencies (MGAs) or Managing General Underwriters (MGUs). Similar arrangements can be made through the London market, but the terminology is different. Agents given the power to bind business on behalf of Lloyd’s are called Coverholders.

To become a Coverholder, an agency must first find a sponsoring broker and managing agent willing to support the application. A Managing Agent is a company set up to manage one or more Syndicates on behalf of the members. These firms have the responsibility for employing staff, overseeing results, and supervising day-to-day operations.

Writing business through Lloyd’s is usually done with the assistance of a Broker. This entity becomes the main point of contact for an agency interested in securing underwriting authorities from London. One of the duties of the Broker is to find a managing agent willing to support the application.

One of the most important elements of an agency submission to London is a business plan. Components should include:

  • Overview of the prospect universe. Talk about the preferred risk characteristics of this target audience. How many of them are there? Are there any points of aggregation (associations, organizations, regulatory/oversight agencies, etc.) that you can access to improve your reach? What is the level of competition in the marketplace?
  • Marketing strategies. Demonstrate your expertise by articulating how you intend to solicit business. Provide mock-ups of promotional materials if possible.
  • Model policy wording and underwriting guidelines. No one knows the potential exposures and coverage “hot buttons” of this niche market better than you. Outline the product features and pricing structure needed to make the program successful.
  • Administrative strategies. Explain how you envision handling incoming submissions. Tout the internal controls and workflows that have been implemented within the agency. Now would also be a good time to talk about any systems enhancements you plan on incorporating to make processing more efficient.
  • Projections. Estimate production growth over the next five years. Also include forecasts regarding claim activities.

There’s an old saying that goes “too many cooks spoil the broth”. But when it comes to writing a London submission, our advice is take advantage of all available help. Use industry experts to resolve any deficiencies in the plan.

The CHART Exchange has a network of specialists from a diverse array of disciplines to help agencies in this regard. Services offered through our Vendor Partners include actuarial, claims administration, marketing, systems, legal, and more.

Be prepared to invest a significant amount of time and effort in the process process. In reviewing the application Lloyd’s will pay particular attention to the following areas:

  • Suitability and experience of the individuals
  • Applicant financials
  • Soundness/feasibility of the submitted business plan
  • Licensure (authority to operate in the states/territories targeted)
  • Operations (systems, workflows, adequacy of quality assurance procedures, etc.)

During our time working on CHART, we have met a fair share of specialist clients who have expressed concerns over the length of time it takes to secure Delegated Underwriting Authorities from London. While they understand the need for due diligence, there is a frustration over the delays in getting a potentially great new program idea to market.

CHART can provide a solution to this problem via the Incubation initiative. Under this facility, we can team the new client with a firm already possessing the necessary Underwriting Authorities, state licenses, back-office administrative capabilities, etc. to transact business on behalf of the Lloyd’s. Agreements made between the two parties prior to launch govern such issues as contract duration, duty segregation, revenue sharing, and expiration ownership. This solution inures to everyone’s benefit.

CHART’S Third Annual Event: Baltimore, Md October 8-11 2017

The 2017 Event will be held October 8-11 at the Four Seasons Hotel in Baltimore MD. This elegant venue serves to reinforce the notion that we are an exclusive organization.

Our meeting agenda will provide a number of workshops and forums that address issues of interest for the attendees. These breakout sessions will be moderated by recognized leaders in the topic to be discussed.

The 2017 meeting will also feature the Risk Taker lounge – an event feature that provides a forum through which insurance agents can submit new program ideas to London Syndicates. The schedule for this facility will be controlled to minimize conflict with the workshops and other networking activities.

The hotel’s Cobalt Ballroom will house the Vendor Exhibit Hall. Spectacular views of Baltimore’s Inner-Harbor are available from almost every vantage point. The Ballroom will also serve as the venue for the Event’s nightly cocktail receptions and networking functions.

The first three CHART Exchange events have been held in October. This will change beginning in 2018, when the annual meeting moves to April. This rescheduling – prompted by feedback from the group membership – reduces the possibility of conflicting with religious holidays or other industry events.

A.M. Best TV interviewed attendees of the CHART 2016 Constitutional Convention in Baltimore

CHART’s Clark: Today’s Big Idea Is Tomorrow’s Bigger Agency
Glenn Clark, president, Rockwood Programs, and founder, CHART-Exchange, said meaningful insurance agency growth comes from new risk products and programs, not simply from agencies buying one another. Clark spoke with A.M. BestTV at the annual CHART-Exchange conference, held in Baltimore.

U.S. Distributors, London Underwriters Negotiate New Programs, Risks
Brokers and underwriters at the CHART-Exchange conference in Baltimore court one another with the goal of placing coverages–including some that traditionally have remained within North American markets–with the London Market.

Alliance Program’s Fahy: Agents Need to Offset Auto Business
Bill Fahy, president, Alliance Program Services, said smaller independent insurance agents should expand their product offerings in order to offset tightening commissions for auto business. Fahy spoke with A.M. BestTV at the annual CHART-Exchange conference, held in Baltimore.

Beyond’s Addis: Emphasize Consultative and Diagnostic, Not Price
Scott Addis, CEO, Beyond Insurance, said agents and brokers must move beyond bidding for business and focus on consulting with insureds and diagnosing their risk needs. Addis spoke with A.M. BestTV at the annual CHART-Exchange conference, held in Baltimore.

Brit’s Bowers: Sometimes the Best Collaboration Is Internal
Andrew Bowers, divisional director, Brit Global Specialty, said the organization has seen growth by cross-selling and packaging together individual offerings for its existing base. Bowers spoke with A.M. BestTV at the annual CHART-Exchange conference, held in Baltimore.

Brit’s Mudd: Lloyd’s Aims to Streamline Coverholder Audits
Jonathan Mudd, divisional director, Brit Global Specialty, said Lloyd’s is attempting to consolidate audits to lessen the burden on coverholders working with multiple syndicates. Mudd spoke with A.M. BestTV at the annual CHART-Exchange conference, held in Baltimore.

Dale Underwriting CEO: There’s Room at Lloyd’s for Young Syndicates
Duncan Dale, CEO, Dale Underwriting Partners, said his syndicate, which started three years ago, has broadened its operations and is actively penetrating the broker market. Dale spoke with A.M. BestTV at the annual CHART-Exchange conference, held in Baltimore.

Hilb CEO: London Market Opening Up to Smaller Placements
Robert Hilb, CEO, Hilb Group, said the London market formerly was dominated by large brokers and companies but is growing more hospitable to smaller specialized placements. Hilb spoke with A.M. BestTV at the annual CHART-Exchange conference, held in Baltimore.

NewCastle’s Foster: Weak Organic Growth Drives Broker M&A
Calvin Foster, managing director, NewCastle Risk Management Consulting, said larger brokerages must continue to pursue acquisitions or experience a growth slowdown, which would risk disappointing shareholders. Foster spoke with A.M. BestTV at the annual CHART-Exchange conference, held in Baltimore.

Siegel’s Shaw: Foster Care, Social Services Need Specialized Markets
Sheila Shaw, senior vice president, Irwin Siegel Agency, said medical clinics, behavioral health and a host of other services are hard to place in standard markets, which means looking further afield for coverage. Shaw spoke with A.M. BestTV at the annual CHART-Exchange conference, held in Baltimore.

Strong Tower’s Burkett: Insurance Can Help Protect Religious Beliefs
Earl Burkett, president, Strong Tower Insurance, hopes to create insurance coverage for those who must defend themselves in court because their religious beliefs contradict laws or regulations. Burkett spoke with A.M. BestTV at the annual CHART-Exchange conference, held in Baltimore.