The Challenge

A large, well-known, long-standing insurance company had recently ceased issuing new policies and entered into run-off, having experienced significant deterioration in its operating results and policyholders’ surplus. As a result of the company’s highly publicized downfall and distressed status, its insurance costs, particularly for Executive and Professional Liability coverages, were extremely high. The company turned to Equity Risk Partners for assistance in (i) evaluating its insurance program, (ii) identifying areas for possible cost reduction and program structure enhancement, and (iii) effectively marketing the company’s next insurance renewals. If a lower cost solution could not be obtained, the company and its directors and officers would likely have had to accept less than desired coverage limits.

Our Solution

Working alongside company management and leveraging our unique understanding of insurance company run-offs, Equity Risk Partners led a comprehensive renewal marketing process. Equity Risk Partners and management met in person with multiple carriers to educate them on the true mechanics of an insurance run-off, and dispel the misconception that an insurer in run-off was more likely to experience Executive and Professional Liability claims than any other insurer. The opposite was, in fact, true. Equity Risk Partners and management also conceived of a much more attractive program structure, separating previously combined coverages and utilizing one of the company’s own, solvent subsidiaries as part of the Directors’ & Officers’ Liability program. The result was a premium savings of almost 75% in a program with equal or higher coverage limits, lower retentions for most lines, and the ability to preserve additional capital if loss experience was favorable.