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Middle-market insurance buyers are achieving savings in productivity by integrating multiple lines of insurance coverage under one insurer, and most would rather have their coverage handled by one multiline underwriting team than separate teams for each line of coverage, a survey has found.
Eighty percent of the 200 financial executives surveyed recently by Wausau Insurance Cos. have integrated multiple lines of insurance with one commercial insurer, up from 70% in late 2005 when Wausau conducted its previous Multiline Productivity Poll.
And of the 72% who said their company has achieved "significant" productivity savings as a result of multiline integration, 92% said they have seen at least a 4% to 6% savings in their overall risk management program.
The lines of insurance integrated most often are either workers compensation and general liability, or property and general liability, according to the survey.
At the same time, nearly three-quarters of the respondents said they would rather have coverage underwritten by one multiline underwriting team than separate underwriting teams for each line, the survey found. Such an approach is more likely to ensure a fairer price, broader expertise and better knowledge of their business, with which a majority of respondents at least "somewhat agreed."
Through an independent firm that conducted the Web research, Wausau surveyed 200 commercial policyholders to gauge productivity trends across major lines of commercial insurance. Not all those surveyed were Wausau clients.
Financial executives also were queried about the importance of total cost of risk vs. direct cost as well as the ratio of direct and indirect costs for workers comp, general liability, commercial auto and property claims.
Mark Fiebrink, president and chief operating officer of the Wausau, Wis.-based insurer, surmises the multiline integration trend is due not only to potential productivity savings but also to "ongoing interest on the part of policyholders and risk managers to look for, over time, a relationship they can count on," especially when it comes to potential catastrophes.
Sixty-four percent of the respondents said it would be an advantage to have at least two lines of insurance with one insurer if their company experienced a loss due to a natural disaster or terrorist attack. This is up from 52% who responded similarly in the 2005 survey.
Mr. Fiebrink noted that agents and brokers also may be driving the trend as they have expressed their desires to work with one underwriting person or team for multiple lines so they can gain a better knowledge of the account they are underwriting and provide better loss control services.
Indeed, 66% of the respondents to Wausau's survey said their agent or broker usually or always encourages them to place multiple lines of property/casualty coverage with one insurer, up from 58% in 2005.
While more midsize insurance buyers may be looking to bundle their coverages under one underwriter, it may not be the best solution for risk managers with larger, more complex insurance accounts.
"I am a strong believer in competition. Therefore, having one underwriter handling multiple lines does not create much competition," said Lance J. Ewing, vp-risk management for Harrah's Entertainment Inc. in Memphis, Tenn. "How many Fortune 500 company boards would feel comfortable with an underwriter who handles D&O also writing pollution coverage?" He likened it to having a podiatrist perform heart surgery. "There are distinct specialties for larger accounts and that expertise had better be there in both underwriting and in claims for me to get a comfort level."
"It is my goal to get the best pricing and terms for NCR regardless of whether or not it comes from a single underwriter or multiple specialty underwriters," said Jeff Hoke, director of risk management for NCR Corp. in Dayton, Ohio. "My experience has been that insurance companies are still segmented, and there is little benefit generated from having different coverage types placed with the same carrier."
"I have experienced that the best deliverable is a result of identifying and partnering with a company based on each company's 'sweet spot,"' Mr. Hoke said. "These are coverages that each company is aggressively pursing and providing broad terms. For some larger carriers, this can mean that we will have more than one line of business placed with a single carrier. Even when this is true, I find that you are always dealing with different underwriters for each coverage type."
John Phelps, director of risk management for Blue Cross & Blue Shield of Florida Inc. in Jacksonville, Fla., said he doesn't have an opinion "one way or another" on multiline integration.
"We just look for competitive coverage with financially strong companies. I do, however, emphasize long-term relationships with brokers and carriers. If they have performed well in the past, I will need a very good reason to leave them in the future," Mr. Phelps said.
Wausau's Multiline Productivity Poll is at www.wausau.com/poll.