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Columbia Casualty Co.'s holistic approach to underwriting has enabled the excess and surplus lines subsidiary of Chicago-based CNA Financial Corp. to take advantage of tightness occurring in certain standard lines as it crops up.
When a risk is presented, it is examined to determine whether it can be written in the standard market or the E&S market, by itself or as part of a program, on admitted or nonadmitted paper.
"When the standard lines marketplace decides that they want to go after the surplus lines marketplace, they generally do it on price. We have to be light enough on our feet to opportunistically look to where we should stay and where we should go," said Jeff Segall, vp of E&S at CNA in Chicago.
For example, Columbia Casualty can take a risk that was in the E&S market one year because of poor loss experience and either help it get back into the standard market by providing CNA's risk control and claims management services or create a program for that risk by aggregating it with other, similar risks, Mr. Segall said.
In other cases, the insurer may assist commercial policyholders in forming captives so they can "participate in the underwriting results and the investment income associated with being their own insurance company," he added.
In fact, by using this holistic approach to addressing the coverage needs of its policyholders, the insurer grew 3.8% during 2005, making it the No. 5 surplus lines insurer in Business Insurance's 2006 ranking.
Columbia Casualty generated $819.1 million in nonadmitted premiums in 2005 compared with $788.8 million in 2004.
In particular, Columbia Casualty took on "a lot more habitational-type risks, more in the auto area from taxis and limousines on up to long-haul truckers," Mr. Segall said.
"I think the reason we, personally, are seeing that growth is because we have some loyal distribution partners, and they know that they can come to us and get an A-rated carrier that's been around for a long time that offers a stable platform and the level of services that are on par with any other standard insurance market that would not be willing to take that risk," he said. "Whether it's on an admitted or nonadmitted basis, they get that same level of service."
Last year the insurer also added a risk mitigation credit to its architects and engineers policy, coverage it has written since 1957, for policyholders that follow its list of best practices, which include such things as having written service agreements.
The insurer also regularly develops combined property/casualty coverage programs for certain casualty risks that run into tight spots in the standard market when seeking property coverage.
For example, several years ago Columbia Casualty expanded its nonadmitted professional liability program for public officials and police professionals to also provide property coverage for buildings, streets and roads, parks and playgrounds.
While in some cases Columbia Casualty markets its products via CNA-appointed agents with surplus lines licenses, the insurer distributes mainly through managing general agents.
MGAs "can bring to us the expertise that's necessary to do the programs the way they ought to be done, or look at individual risks on a surplus lines or wholesale basis," Mr. Segall said.
In addition, because there is less time available for underwriting in the E&S market since most risks land there only after a broker has failed to place them in the standard market, the insurer prefers working with a select group of intermediaries--about 20 or so--so "we can develop relationships and rapport and be able to answer their questions quickly," Mr. Segall added.