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By DAN REYNOLDS, senior editor of Risk & Insurance®

There are times when you're talking to a group of executives from one company and you wonder whether they ever speak to one another, their message and manner of dialoguing are so disjointed. That wasn't the impression we got during a May 7 phone call with members of the program administration and small business division at AIU Holdings Inc.

Here are a few excerpts from that discussion, which focused on the growth of the program administration business and AIU Holdings' role in it.

Mahanna: It certainly is a growing field from both the program administration standpoint and from a carrier standpoint. Over the last few years that growth can be recognized in the Target Markets organization, which is an organization dedicated to the unique challenges of program administrators, the business itself. They have seen tremendous growth from the program administrator membership as well as the carrier membership. ...

The industry itself meaning the distribution side and the carrier side both see this as an opportunity, as a way to build focus. The other thing you may have noticed is that attendance continues to grow and at other conferences they are not seeing that, so everybody has their eyes open to them.

The way programs in theory should work is, No. 1, you should have a program administrator who has some knowledge about that industry and every industry has some unique aspect to it. So rather than get into a generic policy from a national or regional carrier, a program will build into its products specific coverages that will hopefully address the unique needs of that industry.

Boris: I think that, as the world gets more and more complicated and more detailed, we are getting more and more expertise in certain areas. Where before with a tool manufacturer we might have had one policy to service all types of tools, now there may be an association for hammer producers and manufacturers as opposed to scissors as opposed to sledge hammers ... that is what we're seeing.

From my perspective, being in small business, this is perfect because these niche groups that start up, they are not a large group, but they are going to have specific insurance needs and I think we can accommodate that.

Belthoff: I think individual customers are realizing that there are strengths too in partnering with businesses of like kind that face similar challenges and form, if you will, a working group among them. The advantage that presents to them is that the program administrator is an expert in that field as well from a risk management standpoint and is able to work with that buying group and say, "What unique coverages or unique considerations do you need to help mitigate and remediate risk that you may face in your particular industry?"

And then you loop us in on the insurance company side, and we can approach that as an affinity opportunity and contemplate the buying group and say, "What unique terms and conditions can we offer that build strength in the program and ultimately benefits the insured?"

Mahanna: With regards to initiatives, every one of our programs goes through an analysis at minimum on a yearly basis where we review the product being offered and determine, "Working with our program administrator partner, is that now the best product out there? Do we need to improve that product?"

And so we try and innovate. More importantly, is there a way that we can add a new product or expand what's being offered? That's what we do every year in meetings with our program administrators. So, in terms of initiatives, I want to say that there is one such initiative, and in all honesty it is all ongoing.

Belthoff: I think the constant emphasis as individual business leaders, whether it is Mark (Mahanna) within his organization or we here at small business or excess casualty and the like, is to continuously look at: How do we better partner all of our strengths among each other to approach the marketplace to solve the customer's needs?

Now, day to day, each of us is focusing on our respective niche whether it is middle market or larger, from Mark's standpoint or more boutique or small business from our standpoint. But that doesn't preclude our ability to use the strength of the AIU Holdings product capability.

And if there is a way to partner all of those capabilities together in a program distribution, the challenge we face is getting out into the market and finding those opportunities and bringing those to the forefront. So it's individual efforts, yes, but partnering as well going out into the marketplace.

August 1, 2009

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