This week in Backstory we're featuring our Storefront, Tennant Risk Services, a national wholesale insurance broker and underwriting manager that specializes in placing professional liability and specialty coverage. We spoke with Bob Sargent, president and CEO of Tennant Risk Services, about the company's expertise and experience, strong market access, ability to customize coverages, and trends they're seeing in the professional liability segment.
Bob founded Tennant Risk Services, based in West Hartford, Connecticut, in 1987 after working as an actuary, underwriter and on the insurance brokerage side. He is a past president of NAPSLO (the National Association of Professional Surplus Lines Organizations), and currently serves on its Executive Committee. Bob is also the Managing Partner of Tennant Capital Partners, a venture investment fund focused on insurance. He serves on several boards including a carrier's advisory board. He is also the author of the Specialty Insurance Blog, which provides news and commentary on specialty insurance, and has contributed to other publications. Bob is a member of the Professional Liability Underwriting Society (PLUS), and was a founder and former Board member of the National Risk Retention Association (NRRA).
The company's breadth and depth of knowledge and experience in Professional Liability is evident by their commitment, longevity and success in the segment. "Our focus is solely on Professional Liability, with a staff whose expertise in this area is unparalleled," said Bob. "We've been doing this for a long time and pride ourselves on our communication, service, and longstanding relationships with our agency partners. They rely on our industry knowledge, our access to markets and customized programs, and the timeliness in which we can get things done for them.
"Additionally, we have significant experience within the various segments of Professional Liability, allowing us to deliver the markets necessary to not only provide applicable insurance coverages but to also address the specific needs of each profession and each type of operation within that sector. For example, the carriers writing Insurance Agents E&O are not necessarily the same market for Real Estate Professionals E&O. Moreover, even within the same segmentation there are carriers that will write certain size accounts or only within specific geographic areas. Because of our specialization we can serve the needs of each segment and find the right market for an account within the segment. This provides tremendous value to our agency clients."
Within the Professional Liability segment, Tennant Risk Services provides Errors & Omissions, Directors & Officers (D&O), Employment Practices Liability (EPL) and Cyber Risk Insurance for any type and size account, including in the public, private, and nonprofits sectors. "We will write anything from a simple nonprofit to hard-to-place account," said Bob. "We also customize coverages to the match the operation of the business. Recently, for example, we had a Technology E&O account that specializes in financial services. They needed coverage for the financial services segment but the Technology E&O program was too focused. We tailored the program to address their additional exposures."
In addition, within Errors & Omissions, Tennant Risk Services provides a broad portfolio of products for:
- Architects & Engineers
- Insurance Agents & Brokers, including MGAs, wholesalers, reinsurance brokers, service providers (TPAs), Program Administrators, etc.
- Medical & Healthcare
- Miscellaneous Professional Liability
- Real Estate Professionals
- Title/Escrow Agents, Title Abstractors
Addressing the Marketing, Trends
When discussing trends that Bob and his staff are seeing in the market, we first looked at Cyber insurance and the growth in this area as well as the challenges involved. "We're writing a lot of Cyber Risk now," explained Bob, "as more companies become increasingly aware of the tremendous risks they face. As Attorney General Eric Holder said, ‘there are only two categories of companies affected by trade-secret theft - those that know they've been compromised and those that don't know yet it.'
"It's very rare that we see a company that doesn't need cyber coverage. Virtually everyone needs to secure coverage whether to protect detailed records on employees and customers, credit card transactions, or other confidential or personally identifiable information. Yet there are still small- to mid-sized businesses not purchasing insurance for this exposure, even though trends show that these businesses are increasingly becoming the targets of hackers. Hackers can make good money from selling the information they steal and, because security in many cases is less sophisticated at smaller companies, it's easier to obtain. It's a matter of continuing to educate companies on the risks and the need for the coverage, no matter what their size.
"What's more, although there are a number of cyber products available, there is an inconsistency in terms of the coverages they provide and, depending on the policy, it may not match the operation and exposures of an insured. It's very important to have a thorough understanding of the products available and the ability to tailor them to the exposures of the business. That's what we do. Furthermore, there are exclusions in some policies that don't exist in others, which can cause problems. You have to know where to look for those.
"We spend a great deal of time working with our agency clients to help them explain the type of cyber exposures that exist in a customer's operation, what type of coverage they need, and how much it costs. Although most businesses have a general understanding of a cyber exposure, when you get into the nuts and bolts it can be very complex, particularly in the underwriting process and the type of information needed. Some carriers, for example, have applications that are 15 pages long and require an IT person to complete. We have simplified the process internally to help our agency clients when initially explaining and selling the coverage to their insureds."
The Real Estate E&O segment has also seen changes. "Real estate was hit very hard as a result of the economic downturn," said Bob. "You've had shrinking revenues coupled with an escalation in claims, many of which came out of the foreclosure process and are stilling continuing. Because of this, underwriting is fairly tight and pricing has firmed. We write a lot of this business and once again work hard to synch the coverage with the type of operation. And because of our experience and access to a wide range of markets we're well positioned to continue to serve this segment."
Architects & Engineers (A&E) as well as real estate attorneys were also hit by the economic downturn and housing fallout. "The E&O market is tough for them, with carriers reducing the limits they offer. As a result we're writing a lot of excess coverage," said Bob.
Within the Insurance Agent E&O segment, competition is strong, according to Bob, yet they are also seeing tighter underwriting, with carriers being more careful and wanting additional information. "We're seeing some coverage tightening and working to make sure that the appropriate program is secured for the operation within this segment," said Bob. "Recently, we were writing a specialty retail agent that focuses on the automobile segment. In addition to the insurance program they provide to the auto sector, they also offer services that include training, risk management and compliance. In reviewing their existing policy, we saw that they weren't covered for those services. When writing their new policy we made sure these services were covered so they would be properly protected."
EPL is another great example of tighter underwriting and firmer pricing. "Individuals have been talking about claims frequency and severity in EPL for a number of years, but from my perspective it's within the last six to 12 months that you're seeing the entire market change, with carriers increasing pricing, limiting their appetite, etc.," explained Bob. "And, of course, EPL is embedded in D&O for private companies and nonprofits, which is driving tighter underwriting and pricing in those two lines. You need the specialization and broad market relationships to be able to address these challenges and secure the right coverage. At Tennant Risk Services, we have both."
The programs and coverages available through Tennant Risk Services are open access to agents (with a producer agreement) and on a national basis. "Our focus is Professional Liability, and we write everything in this niche. Our mission is to support our clients - retail agents and brokers-and help them with any type and size account."