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Controlling Our Own Destiny: The Creation of an Insurance Agents’ Professional Liability Program

Controlling Our Own Destiny: The Creation of an Insurance Agents’ Professional Liability Program. Prepared for the PIA Annual Conference Presented by the PIA Services, Inc. Captive Taskforce. Why Form a Captive?. In a word . . . Stability. Other reasons to form a captive:

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Controlling Our Own Destiny: The Creation of an Insurance Agents’ Professional Liability Program

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  1. Controlling Our Own Destiny: The Creation of an Insurance Agents’ Professional Liability Program Prepared for the PIA Annual Conference Presented by the PIA Services, Inc. Captive Taskforce

  2. Why Form a Captive? • In a word . . . Stability. • Other reasons to form a captive: • To “control our own destiny” – an ability to offer comprehensive coverages to our members as we deem appropriate • An ability to increase capacity and independence over time by building surplus • An ability to accumulate investment income • Higher limits at a low costs through worldwide reinsurance markets • An ability to manage member risks through risk management activities • A solid investment opportunity for PIA members and affiliates

  3. Why Form a Captive? Final, an opportunity to keep costs down . . . with cost savings going back to members

  4. What Have We Done? ● Recruited a Well-Regarded and Well-Connected Task Force Includes: Tom Adderhold, Andy Harris, Dan Henery, Stanley Logan, Michael Moore, Fred Thomas and Larry Willis ● Thoroughly Examined the Insurance Agent E & O Marketplace, Resulting in Two Draft Policy Forms (Standard & Enhanced), Underwriting Guidelines and an E & O Application ● Based upon Affiliate Feedback, Selected Initial States of Operation, to include Virginia / DC, California, Arizona, New Mexico, Nevada, Montana and Maine ● Selected a State of Domicile : Montana

  5. What Have We Done? ● Explored Reinsurance Interest in our Program and Developed Several Viable Fronting Possibilities to Ensure High Quality Paper ● Selected an advisor to guide us in captive formation: ALPS ALPS is highly-respected in developing professional liability programs, having built a $40M company to protect lawyers against errors and omissions ● Developed Proposed Enabling Document ● Developed a Surplus Acquisition Plan to Secure the Necessary Capital to Launch ● Crafted a Timeline and Action Plan We Have Met Every Step of the Way

  6. What Are We Doing Now? ● Conducting Rate Setting through an Actuary for the Initial States of Operation ● Seeking Capital to Fund the Captive ● Preparing to File an Application to Create the Insurance Company

  7. What Can You ExpectLooking Ahead? • ● If all goes as anticipated, we will file to form an captive insurance company in November 2009, with an expected approval date of January 1, 2010 • ● Based on regulatory approval, we expect to issue our first policy effective April 1, 2010, • just about six months from today . . .

  8. Questions We’ve Heard . . . • ● If my state is not within the initial states of operation, will we be able to join latter? • Yes. Right now, we expect to start with between 6-10 states / affiliates, and will provide other affiliates opportunities to join us as we pick up steam. • ● Are there opportunities for a PIA member or PIA affiliate to help capitalize the captive? • Yes. Individual agents, PIA affiliates and other intested parties, will have opportunities to be participate in the capitalization in different ways depending on individual circumstances.

  9. Questions We’ve Heard . . . • ●Will the Captive be Financial Strong? • Yes. Policies written by this captive will be on (A-) or better A.M. Best Rated Paper, with strong backing from the worldwide reinsurance markets. We project our reinsurance model will resemble the following:

  10. The NAME GAME! We need your suggestions • The PIA Services, Inc. Captive Taskforce is currently seeking suggestions for what to name the new insurance agents’ professional liability company. • Help us out . . . We need your creativity . . . What name describes who we are, what we do, what we stand for and / or is easily recognizable from a branding perspective? • A drop box is set up for your suggestions. Yes, the winner will receive a special PIA gift package!

  11. Questions? Larry Willis Chair PIA Services, Inc. Captive Taskforce aw3@bellsouth.net (305) 625-2403 Len Brevik Executive Vice President and CEO National Association of Professional Insurance Agents lenbr@pianet.org 703.518.1340

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