This article was produced in partnership with SUM Insurance.
Desmond Devoy, of Insurance Business Canada, sat down with SUM Insurance’s Kevin Armstrong, vice president and umbrella and excess practice leader, and SUM’s managing director, Jeff Somerville, to discuss umbrella and excess insurance, its challenges and where it is headed.
Umbrella insurance – the insurance you know your client likely needs, but which may be a hard sell.
It is additional liability insurance limits, sitting on top of your clients’ primary policies, including CGL, automobile or a host of other insuring agreements. SUM Insurance has a 13-year track record of getting the extra mile for your clients with this highly valuable coverage.
“We have broad in-house authority, and what we do not do in-house we can place in London. Lloyd’s acts as a source of additional capacity as well on our largest placements,” said Kevin Armstrong (pictured left), vice president and umbrella and excess practice leader, at SUM Insurance, during a recent interview. “We don’t have multiple layers of referrals like some of our competitors do in this arena…we provide solutions in real time.”
Jeff Somerville (pictured right), SUM’s managing director, agreed that SUM has “one of the broadest underwriting authorities in-house. We often enjoy more in-house authority and capacity than many insurance companies themselves, enabling us to turn these opportunities over rapidly, in real time, which is the only time that matters to our broker customers,” he said.
“Excess and umbrella business is, from soup to nuts, our appetite,” he added.
Because for SUM, its excess, or umbrella book of business does not cater just to non-standard, substandard, or hard-to-place clients, but also standard market segments - from Main Street Canada to the Fortune 500, from small risks to the largest placement and everything in between.
Armstrong said that he sees the desire, and need, for umbrella coverage growing, especially with a more litigious way of doing business and what he calls “nuclear” verdicts which are making clients more aware of the need for coverage beyond their regular policies to protect themselves.
Indeed, more clients are being required to take on additional insurance as part of the contracts they are entering into.
“We’ll see, suddenly, someone needs $10 million (in coverage) because their new client they’re dealing with says they need $10 million - so they have to go to the market and buy umbrella,” said Armstrong. “We see a lot of those requests now.”
Somerville added that government RFPs (requests for proposals) are also a driver of this increased demand by way of third-party liability limits.
A broker may have a contract with one of the big carriers, but if they need extra capacity they can come to SUM. In fact, the umbrella office, over the past several years, has grown its share of business within the company.
While the need is there, the coverage can sometimes be a hard sell. Armstrong said he still gets very senior brokers asking him why excess insurance costs what it does, when there is little exposure to typical sized losses suffered by most insureds.
“While we do not anticipate involvement in a $10,000 slip-and-fall claim, we do have exposure to and suffer $10 million claims in a predictable pattern. That takes a lot of pooling of money to pay for this one giant claim, earned over time through disciplined pricing, so we can sustain these so called ‘shock losses’,” said Armstrong. “There’s no free money,” he added, and “these large losses are becoming more frequent in our changing environment”.
Armstrong noted that, as an MGA, SUM is able to build a pool or subscription approach, spreading risk between several carriers- thereby offering each subscriber a good spread of risk while keeping their limit as short and finite as possible through the pool mechanism. For SUM’s customers, this creates continuity– a robust, consistent source of capacity for the long-term.
While SUM has been in the umbrella market for about 13 years, its in-office staff bring decades of underwriting and claims handling experience. SUM offers coverage including:
SUM has a minimum attachment of $1 million with limits of $15 million in-house, and couples best of class service with competitive pricing and commission.
For more on SUM Insurance’s umbrella and excess practice, visit SUM online by clicking here.
