Evaluating Ideas An idea isn’t a good idea until it’s survived the gauntlet of challenges.


Probably the best test is that it’s diffi cult to place. If you’re a retail broker and you cannot place coverage for a particular class of business, that’s also a very good test.


Richard Augustyn, NIP Group


Determining whether an idea is strong enough to support a profi table insurance program is more than relying on a fl ash of insight. The next step is to relentlessly examine the idea across a host of challenges. Richard Augustyn cites several areas to focus on in testing ideas, including:


•


• • •


• •


Whether intended insureds will consider the coverage to be affordable;


Size of the overall market; Size of individual potential customers;


How to best customize the program to unique needs of the targeted segment;


What risk management services are appropriate; and How to handle claims management.


Solid ideas for insurance programs often stem from producers’ frustrations. Richard Augustyn cites his own experience in developing an insurance program for operators of professional tree services. “That came to us because a client came into our retail operation, asked us to place insurance for their tree service and we could not fi nd a company to write the policy,” Augustyn said. “Once we found one company to underwrite the coverage we were referred several other tree service companies.” Another test is to review ideas against reasons insurance programs fail, including:


• The market opportunity is too small;


• •


Another program administrator already has a strong position in the segment; or


An insurer may have a strong position in the segment.


Given the choice between competing against a program administrator and an insurer, Augustyn would choose facing a carrier. Insurers are often slower-moving and rigid in their approach to market segments. “Program administrators are very nimble and they will fi nd ways to adjust to market changes,” Augustyn said.


Copyright © 2010 by A.M. Best Company, Inc. All rights reserved. No part of this report may be reproduced, stored in a retrieval system or transmitted in any form or by any means; electronic, mechanical, photocopying, recording or otherwise.


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