Kenton Kaplan, executive vice president of risk retention group Claims Professionals Liability Insurance Company talks about cyber coverage, drones and quota-sharing.
Captive Review (CR): What is the background to CPLIC?
Kenton Kaplan (KK): Claim Professionals Liability Insurance Company (CPLIC) is a risk retention group founded in 2004 in response to the hardening of the insurance marketplace. The rising prices and increasingly stricter coverage available in the market led a group of independent adjusting firms to band together and form their own insurance company, under the theory that they could insure themselves with broader coverage and better prices than found anywhere else. It proved to be a good theory. Since those initial days, CPLIC has grown its membership to over 500 insurance service firms nationwide, writing individual operators to regional and national market leaders.
In addition to independent adjusters, CPLIC caters to third-party administrators, appraisers, umpires, consultants, engineers, forensic scientists and other experts who derive 60% of their revenue from the insured or self-insured claim process. The risk retention group (RRG) concept has been a fantastic vehicle for the independent adjusting industry, as it allows for subject matter expertise and flexibility within a specific line of business.
CR: What lines do you currently cover in your RRG?
KK: CPLIC provides errors and omissions insurance and general liability insurance on a direct to consumer basis. Both of these coverages are offered on a claims‐made basis. Although our main product offering is and always will be the E&O coverage, we strive to achieve consistent member growth and ongoing member satisfaction by offering as many additional products as possible to assist our members in securing all of the coverage they need to operate their business.
Although we are somewhat limited by the Liability Risk Retention Act of 1986 (which allows an RRG to write liability exposures only), we have been successful in adding to our suite of coverages through outside agency and carrier partnerships. Two of those coverages include employment practices liability insurance (EPLI) and digital risk coverage (cyber liability). The cyber liability coverage has been a favourite as of late, as we see more and more members electing that coverage. In 2019, we also began writing liability coverage for unmanned aerial vehicles (aka “drones”) as a supplement to our general liability. We’ll continue to listen to our membership to provide a ‘one-stop shopping’ experience to support our primary E&O product.
CR: Quota sharing seems to be getting more popular in the industry. How does it work in CPLIC? Any advice for RRGs looking at quota sharing?
KK: The quota share reinsurance treaty has been instrumental in the success of CPLIC. Particularly in the early days, it helped us to grow sufficient capital to support the business as it stands today. We layered our reinsurance treaties, in a combination of varying quota share percentages for each one million liability limit offered. We then added facultative reinsurance for the significantly higher limits that we make available to our members on an as needed basis. For our product and exposures, we found the best strategy was a quota share arrangement that started at dollar one. That has kept us balanced and consistent over the years. This stability in our accepted risk has allowed us to meet our primary purpose of consistent pricing and coverage to the niche industry for which we serve.
The key for us, and what I would recommend to anyone looking for a quota share reinsurance arrangement, is to establish and maintain a strong working relationship with the reinsurance partner. While it may seem as though it is merely a financial transaction at the end of the day, a good reinsurance partner that is involved and engaged will help in more ways than one. The quota share arrangement keeps you in the driver’s seat, but it is nice to have a front seat passenger along for the ride.
CR: What is your biggest focus right now in CPLIC?
KK: Our biggest focus is on increasing market share. We already know we have a great product that works. We have a strong base of insurance service firms that has been with us from the beginning, and our retention rate is very high among all insureds. In short, once people know about us, they tend to like us. So our focus is simply on getting our name out there and growing our company in a sustainable way. Part of growing the insured membership and retaining those insureds, is about providing value. While insurance is sometimes treated like a simple commodity that is easily traded and interchanged from one company to the next, those of us in the business know it is not that simple. In addition to our first name basis customer service, we strive to continue providing new member benefits, new policy offerings and robust risk management services to help our insureds grow and find success in their own business. We feel as though our role in the process is a critical one for the insurance service industry and we want to continue to do our part. The better the industry performs, the more opportunity there is for CPLIC and its membership as well.
