Posted on 15 Oct 2012 by Annie George
In 2011, the California State Compensation Insurance Fund (State Fund) as part of its cost-saving efforts and an on-going fiscal restructuring plan begun two years ago, analyzed its book of business, their mix of agents and premium volume, and the requirements needed to gain direct access to place business with them. As a result, new requirements were established for an agent to have a direct contract with the State Fund. This resulted in the termination of 3,200 agents (out of approximately 5,000), as the new threshold requirement stipulated a minimum of $100,000 in premium volume. The brokers were notified in November 2011 of the new thresholds.
The State Fund also remodeled their distribution for those whose books of business were $100,000 in premium or less with the launch of Access State Fund. Two authorized broker Access Partners were exclusively selected under the new model, including StateFund First, a wholly owned subsidiary of Arthur J Gallagher & Co. Insurance Brokers of California, Inc.
We spoke with Riley Binford, who is heading StateFund First, to find out the process involved and the upside for agents. Riley has been in the insurance industry since 1979, and for more than 20 years has been significantly involved with non-profit social service agencies and the development of insurance programs for them.
Annie George (AG): What is the process involved for existing brokers who lost their contracts to choose to access the State Fund through you?
Riley Binford (RB): "For January 2013 renewals, agents had up until the beginning of October to decide between one of the two State Fund Access Partners. It is a very simple process. All an agent had to do was complete and sign a one-page selection form and submit it to the State Fund. Those agents, who have yet to make an Access Partner selection, must now file an individual broker of record letter and submit a plan to the State Fund on how they will replace their renewal business for each of their accounts."
Riley also explained that agency commissions for first- and second-year renewals are the same from both Access Partners, set by the State Fund, at 10% and 6% respectively. After the second year, the Access Partners will determine the agency commission structure.
AG: The State Fund will be saving money by streamlining its distribution model and only working with two production firms as opposed to many different agents. What are the benefits to the agents, and why go with StateFund First?
RB: "Agents will be working with one entity and won't have to worry about premium requirements. Additionally, the State Fund has committed a dedicated underwriting unit to its Access Partners. This was not in place previously, and should improve the service provided to the agents. What's more, throughout 2013 we'll be working with the State Fund to provide instant premium indications and bindable quotes on-line. We hope to implement this sometime next year, which would be a significant change with some obvious substantial benefits."
"In terms of StateFund First, agents gain the benefit of Gallagher's experience and industry leadership. They will have access to the Gallagher family of companies and programs, including one of the largest wholesalers in the country (RPS), and our commitment to the retail agency's needs. In addition, we've developed a system that allows agents to make submissions online - they can either fill out an app or upload Acord forms from their agency management systems. Our goal is to provide them with ease of doing business, and a way to accelerate the entire quote process."
Working with StateFund First is not only for existing agents that have lost their appointments with State Fund, but it's also available to new agents looking for appointments, out-of-state agents needing access to the State Fund, and wholesalers. "The appointment process is easy, and is done online," said Riley.
Agents who are not eligible for a direct contract any longer and want to continue to access State Fund through the StateFund First can contact Riley Binford at (415) 536-8438 or via email at firstname.lastname@example.org; or contact Debby Butler at (415) 536-4026 or via email at email@example.com. Or, visit: http://www.statefundfirst.com/#register.