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Group Purchasing Case Study

This large religious denomination began working with our firm in 2002.  They understood the concepts of group purchasing, but lacked the underwriting data and ability to organize a complete program for all their member churches.  Their situation required a specialist with the ability to handle the complexities and challenges of data aggregation.  It was also necessary to find a carrier that could handle their specific risk characteristics in a post 9/11 marketplace when increasing rates and more stringent underwriting requirements were the norm. 

During the program's existence this group has weathered two 100-year storms, several total loss fires, hardening insurance markets and carrier competition.  Despite these challenges, we have leveraged our market knowledge and the power of group purchasing to achieve very favorable outcomes.  Since 2002, the program has increased property values by 131%, paid nearly $20M in claims, and yet total premiums remain similar to those established in the first program year.   

Flat

Historic Premiums

131%

Increase in Property Values

58%

Rate Decrease Since 2002

Problems Identified
  • Data Aggregation: lack of centralized underwriting data data for entire group. Need to develop underwriting basis in a time-sensitive manner that took into account the entire group.
  • Catastrophic Risk Exposure: risk is located in high-risk catastrophic weather region. Potential for significant windstorm deductibles and insurability issues.
  • High Property Claim Retention: established group carried a significant property retention that was unnecessary long-term.
  • Record Program Losses: most recent years have resulted in historically high loss ratios due to catastrophic events, fire and storms.
Solutions Provided
  • Developed Credible Rating Basis: team developed rating basis through personal inspection of all insureds locations. Sovereign was only agent to provide total solution with accurate underwriting data.
  • Negotiated Non-Prohibitive Windstorm Deductible: worked with carrier to develop windstorm deductibles in line with overall losses and non-percentage based deductibles.
  • Standard Property Deductible: replaced outdated high property retention with market based standard property deductible solution.
  • Carrier Selection Search: post two difficult claims years in 2011 & 2012 Sovereign conducted carrier selection searches in effort to provide competition on program. We were able to negotiate a flat renewal with 2 year rate guarantee.