Last month’s edition of The CHART Exchange Magazine saw the beginning of a series of articles highlighting the key benefits our organization brings to its membership. The initial piece focused on the Market Finder Facility. As you’ll recall, this exclusive feature is designed to match new product/program ideas submitted by insurance agents with those Lloyd’s Syndicates possessing the most compatible risk appetites.
In this issue of the magazine, we will turn our attention to the Incubator Initiative. A number of domestic insurance agencies are attracted to CHART because of the access it provides to the London marketplace. Many of these firms already possess the business strategies, technical expertise, distribution channels, etc. needed to launch a successful program. Unfortunately, they lack the most important ingredient: the delegated underwriting authorities provided by Lloyd’s of London.
That’s why we launched the Incubator Initiative. Several London Coverholders (firms with existing underwriting authorities) have expressed a willingness to partner with our new members as a way of expediting the launch of a new program to market.
The Incubator Initiative provides yet another practical demonstration of the concept of Exchange in action. The Coverholder contributes something of value – underwriting authorities, licensing status, backoffice capacities, etc. – in order to participate in the success generated from the new endeavor.
We ask that prospective client agencies first meet with one of the CHART team members. Peter Foley, (an experienced Coverholder, agency owner, M&A expert, five star general for CHART and Early adopter) has agreed to lead our incubator and mentoring program. Peter articulates the rationale behind the CHART approach. “We operate on a basic philosophy that compatibility (‘chemistry’) between the prospective client and mentoring agency is of paramount importance.
From my experience, it is extremely rare to have any type of partnership succeed unless it is established with complete candor and openness. Very simply, it is not worthwhile for either party to expend the time and energy to effectively try to cram ‘a square peg in a round hole’. Early on the alignment of interests between the prospective client and mentoring agency is developed”.
The initial interview gives our team the opportunity to assess both the business opportunity and level of support the mentoring Coverholder or market is being asked to provide. Is the expected distribution to be local, regional, or national in scope (licensing and compliance)? Does the prospective client have the underwriting resources necessary to handle the anticipated workload? Are there any capitalization issues that need to be addressed? Is the opportunity a fit for London or is there a more efficient mechanism to get the deal done (ART, RPG’s, etc)?
Once the evaluation process has been accomplished, our team will provide an outlined recommended plan of action. This document will identify the strategies and Coverholder(s) or markets best suited to assist the agency in bringing the new program to market. The assessment will also suggest CHART vendor partners who may be able to help address specific areas of need – actuarial, claims administration, marketing, legal, licensing, systems development, etc.
Our involvement in the process leads to match making between the specialist and the mentor coverholder (or market) that can help them to grow their specialty. Parties are free to negotiate and structure an arrangement that maximizes return for all involved. Please note that CHART’s initial involvement in facilitating the Incubator Initiative is provided at no charge to member agencies. Formal business plans and vendor partner services can be contracted at reduced fees.
The benefit to be highlighted in our next edition of The CHART Exchange Magazine: Cross-Sell Opportunities.
Glenn W. Clark, CPCU
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