A large, privately held manufacturer has grown into one of the largest producers of its product in the country, becoming a major supplier to big box retailers over the past 60 years.
The insured had been with their current carrier for 10+ years. This relationship began during a growth period for the insured, during which they were also experiencing volatility in their claims experience, requiring them to move to a loss-sensitive program. As customary, when an insured moves from a guaranteed cost program to a loss-sensitive program, the insured is advised to purchase the lowest retentions they can afford when the program is bound.
Since then, the program, structure, and carrier have run on autopilot, renewing year over year without much change. Renewal discussions are typically centered around current market conditions and rates. During that period, the insured’s business continued to expand and adopt stronger safety policies and procedures.
After reviewing their account, it became clear we could improve the efficiency of their insurance program. Our goal was to provide them with a stable, long-term program that lowered their fixed costs and significantly improved their total cost of risk.
We particularly focused on the workers’ compensation policy, where we could see that the bulk of their premium was driven by the $500k loss layer. Since the broker had limited experience with the program we were offering, extra time was spent with both the broker and the customer, explaining the nuances and answering their questions.
The insured and broker worked with us to identify a program structure that would be appropriate for their financial strength and loss experience. We were able to provide options with fixed cost reductions of 43%, provide cost certainty with a sustainable, stable rate environment, lower their total cost of risk, and provide a creative solution for collateral, all while they wind down collateral with their existing carrier.
