Is Some Senario's Always Going to Be Under Excess and Surplus Risk?

[UpstateNYAgent]

Ok so Ive been an independent P&C agent for two to three years now and I generally find commercial insurance to be more intresting. Ive had several opportunities for some things and when I talk to people in my office im generally always referred to excess and surplus lines for these items.

Im always concerned that while im going the excess and surplus route im getting beat by someone else who has the a standard market for it.

The company I work for is great and has many great carrier's. Im really glad I work for them.

However im always wonder if trying to go through a wholesale brokerage house im shooting myself in the foot.

Here's a good example. I get the chance to quote a nightclub (more like a bar but since it has security and a dance floor its rated as such). I quote it out and just the liquor liability is 4000. The GL and Property is around 1600. The building itself isnt in great condition at all and valued at around 150K. It was built around 1920 and is frame construction. I estimate the liquor liability GR at around 100K in reciepts, 50K in food.

Im doing everything the legal and right way. So my quote through surplus is 5600. The owner really wants to use me as an agent as Im a freind of his but a competitor quotes him at 3200 for the whole package.

Would there be a standard market because of the age of the building and that its considered more of a night club then a bar?

I think the competition is somehow doing something different then me just to get the business. Either somehow changing the GR because its a new tavern or classifying it as a bar when it actually fits the description as a night club. It seems to me sometimes that I try to do things the right way but I get my ass handed to me by people looking to just get it written.

Any insight would be appreciated.

 

[djs]

I estimate the liquor liability GR at around 100K in reciepts, 50K in food.

First, you probably need to re-estimate these numbers. They seem very low, as in, they would be out of business if this is what they are bringing in.

I don't know New York markets, but usually you can find out what carrier the other guy quoted. Figure out if it's something you want to pursue, get appointed with that carrier.

My guess is the other guy knew how to get some mods put on the premium, and may be low-balling to get the business. I personally avoid bars/nightclubs, so I can't help with the coverage or really even knowing where to place it.

My recommendation for anyone pursuing commercial is to pick a few niche markets and really target those. I know a guy who focuses on bowling alleys. He does very well. He has joined several bowling alley associations and knows his stuff. Lots of commerical guys focus on restaurants and know how to write this. I do a fair amount of office space, it's simple, inexpensive, in and out type of stuff, very low risk.

I've found with commerical its always a matter of getting beat the first few times in a market, but learning quickly and getting to know that market much better, and know what underwriters want to see (and how to get some breaks on some mods).

Dan

 

[UpstateNYAgent]

The GR are actually correct, its about what the last guy did and for the area it was very successful. Cost of living is very very inexpensive around here.

I just seems like Im quoting it for what it really is, assuming all the right risks and not ignoring any risks. While the competition is quoting it as basic as possible ignoring some of the obvious exposures.

 

[warnerins]

An excess and surplus lines proposal will never (and I hate using that word) be competitive against a standard quote.

In this case (in NM) a bar or nightclub will only be written by the E&S market.

So, you were probably going head to head with another agent in the right market. The classification between a bar and a night club is obviously different based on the SIC code for liability purposes.

At this point you are being slaughtered by 2400 a year or 200 a month. This is huge if the receipts are correct. If the owner is a "friend", I would sit down and ask him/her to compare these proposals side by side. Hell, swallow your pride and tell your "friend" that your just got your ass handed to you and want to find out why.

Here are your goals when comparing these two proposals:

If it is truly and apples to apples comparison, find out which carrier just killed yours and how you go about representing them (for future indevures).

If it is not an apples to apples comparison, then it is your obligation to point these out to your friend and let him/her decide if they are willing to take the risk on a policy that may or may not be there when they need it.

My guess is that it was run as a restaurant that serves alcohol (in which case the standard market applies). In this scenario is security and the dance floor covered? Either way, commission on this policy is probably around 10% of the net premium and worth forgoing for the education of what your competition is out there peddling.

Remember that each case is an opportunity to increase your knowledge. If you are going to lose the client, do it gracefully and learn as much as you can. Don't back out of this thing without seeing the proposal from your competitor.

Last thing - I would also ask your "friend" for his/her permission to get a look at the policy when received. Then x-date the hell out of this case and get back in the game in 10 months. Create the future opportunity (job security).

 

[UpstateNYAgent]

Yeah he is a friend of mine. Also the quote he received was a quote based on the previous owners coverage. He currently doesn't have a copy of the policy from the original owner, he doesn't have the paper quote either from the previous place either.

Im assuming what is going on is that the other quote is based on that its written as a bar, plain and simple with no dance floor, no live entertainment, and no security.

Im writing it as a night club because technically the fact that it does have a dance floor qualifies it as such. Im also quoting the fact that their will be security guards there as well.

The new owner should really consider these factors because the previous owner has a lawsuit against him in which someone was hurt by a bouncer at the bar.

I really want to get the policy (obviously) but it makes it difficult to do when some other agency is probably quoting it wrong just to get the business. I don't really want to give him the high price and I know their are standard markets around here for bars, however im pretty sure that none of these standard markets would take the risk when its considered a night club with security.

It can be quite aggravating knowing that while your trying to do the right thing for him, your getting beat by someone who is probably writting it wrong just to get the business.

I will not try and hide the facts that there are these risks because if something happens and chances are it will. I don't want a lawsuit against me or my brokerage agency.