Working With Carriers The relationship between a program administrator and a carrier is long-term, close and critical.
As a company you’re really entrusting your capital and your reputation to that program administrator because they’re underwriting the business on your behalf.
Vincent Pugliese, Lexington Insurance Company
The relationship between insurance program administrators and carriers often requires a very close business working relationship. “It’s a relationship of utmost good faith in which there needs to be trust and transparency between the carrier and Program Administrator,” Vincent Pugliese said. A Program Administrator is entrusted with critical responsibilities including:
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Selecting risks; Pricing business; Servicing the business; Administration of policies; and Dealing with client issues.
“Not every program is profi table every year. So as a carrier, you have to have a long-term view,” Pugliese said. “To have a long- term view, you need a program administrator on the other end that collaborates and has linkage in terms of the direction that they see that program going relative to growing it or shrinking it.”
Glenn Clark cautions that the program administrator-carrier relationship is not always a static one. “One of the diffi cult things on the PA [program administrator] side is that we’ll outlive four or fi ve different managements in the same company,” Clark said.
Some program administrators initially chose an inappropriate carrier, one that may not have suffi cient expertise or lacked long-term commitment, Richard Augustyn said.
“We are charged and paid by the carrier to make them an underwriting profi t. That’s what’s very critical as a program manager,” Geoffrey McKernan said. “If we don’t make them an underwriting profi t then we’re not doing our job.”
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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