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05/01/2004
NATE Insurance Program
Managing the NATE Insurance Program Profitably
We at Arthur J.Gallagher & Co. have managed the NATE Insurance Program since shortly after NATE was formed. Arthur J. Gallagher & Co. and AIG work with NATE to offer insurance to members, which provides the proper coverage necessary to work in the tower industry.
Keeping our focus on the "Three C’s", Coverage, Continuity and Costs, we continually strive to furnish high risk insurance that is affordable. However, other insurance companies and state funds may have cheaper rates than we can provide in certain areas. In times of economic uncertainty some members choose to purchase insurance with price as the only factor, and therefore we sometimes lose business to state funds and regional carriers. And with any business decision, there are consequences short term and over the long haul. But, unlike many other carriers who have come and gone with the changes in economic climate, Arthur J. Gallagher and AIG have proven to be in this market for the long haul with a growing commitment to NATE.
Managing a successful insurance program for the NATE membership is a challenge. A challenge we gladly accepted since 1996. In accepting the responsibility we made some definitive commitments to the quality and consideration of a successful program. Key ingredients for our success include the following commitments:
• Strict underwriting guidelines;
• Solid understanding of industry risks;
• Experienced depth in the tower erection market;
• Respectable loss history;
• Dedication to rating disciplines;
• Financially sound insurer; and
• Focus on the Three C’s.
Managing an insurance program also costs money. We have sponsorship or underwriting considerations, advertising costs, direct mail expenses, and trade shows costs, all of which have historically exceeded $300,000. Our annual expenses in managing the program alone exceed $100,000 (not including salaries and overhead). Over the past several years we have made the further commitment to NATE and its members to provide advice, expertise and assistance on many issues related to the day-to-day activities of the tower contractor. We have contributed time to the trade show committee for six years and volunteered in many other areas of need.
The challenges of this program, as in many others, are in the delicate balance of need for premium growth and profitability each year and reinvestment in our affiliation. We must have enough premiums to withstand the catastrophic losses that are expected in this type of program. Losses by NATE members over the history of the program have exceeded $20,000,000. A few individual losses by members have exceeded $2,000,000. We are proud of the fact that we have incurred these dramatic and costly losses and maintained the profitability required by AIG each year. This could not have been done if we had strayed from our management disciplines. We have continually reinvested in this program each year and we will continue to do so.
The 2004-year is shaping up to be a year of transition from the tough years of 2002 and 2003 to hopefully a fruitful 2005 and beyond. We are quoting many new accounts and are renewing many of our loyal members. We do know that you have a choice with whom to renew, and that there are "deals" out there that are quoted cheaper than ours. For those who choose to leave the program, we understand that price is an important factor in your business. For those that understand the benefits of an expansive program with all the coverage inclusions required and needed for tower work which may cost more than what is out there, we appreciate your continued loyalty.
Remember the three "C"s -- Coverage, Continuity, and Cost, but, I’ll add three more --"Commitment, Cognizance, and Compassion". All must be present in a good insurance program. We at Arthur J. Gallagher & Co. and AIG remain committed and are looking forward to continued success with the NATE Insur-ance Program.
Creating an avenue for NATE members to obtain competitive insurance coverage is an important concern for the Association. NATE has formed an alliance with Arthur J. Gallagher & Co., in conjunction with AIG, to serve as the brokerage firm for the NATE Insurance Program. The insurance program is tailored to meet the unique needs of individual NATE member companies. Members have the option of using their current insurance agent or purchasing their insurance directly from Arthur J. Gallagher & Co.
Patrick Shea is an Account Executive for Arthur J. Gallagher & Co. He can be reached at Arthur J. Gallagher’s office at 4201 Bee Caves Road, Ste. A-101, Austin, Texas 78746. Tel: 800-637-1016; Fax: 512-306-8808; E-mail: patrick_ shea@ajg.com
Patrick Shea
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