Explaining the insurance world’s often-confusing cast of characters
by Scott Carroll, EVP & Program Director, Take 1 Insurance
Insurance has something in common with Agatha Christie and John Grisham novels: an intriguing and often inscrutable cast of players. You’re likely familiar with your insurance agent, but he or she is just part of a highly specialized group, each of whom makes the hidden engine behind the insurance policy work.
The insurance agent is the person who represents the insured — i.e., you and your business. The agent is supposed to be intimately familiar with the ins and outs of both your business and to some extent the market sector it’s in. What they’re really there to do, though, is to articulate your unique story to the insurance carrier, so that they can evaluate your specific needs and get the right combination over coverages.
The person your agent may be talking to is the broker, who represents the insurance carrier. An agent doesn’t have immediate access to every possible insurance company in a market but a few brokers can allow access to wider assortment of carriers. Thus, the relationships between agents and brokers are critical: between them they can find the right insurance companies and products that best your particular business and markets.
The broker will at some point be talking to the underwriter, an employee of an insurance company who is responsible for analyzing the insured’s (again, that’s you) business. He or she will be looking at things like revenue and inventory values, but they’ll also want to know how you deal with the risks that come with your territory, such as whether or not your subcontractors, like riggers and lighting technicians, are properly certified through training. The underwriter depends on the information your broker supplies to make accurate evaluations; the broker will have chosen the underwriter’s insurance company expressly because it’s likely a good fit for you, but the underwriter nonetheless will be someone who has to vet a wide range of businesses and sectors — they’re number crunchers and they’re good at it, but they’re not experts in your field. (That’s why the agents and brokers are so important.)
Finally, there are the managing general agents (MGUs) or managing general underwriters (MGUs) and program administrators (PAs). Legally, they are defined as “an individual or business entity appointed by an insurer to solicit applications from agents for insurance contracts or to negotiate insurance contracts on behalf of an insurer and, if authorized to do so by an insurer, to effectuate and countersign insurance contracts.” Practically speaking, they are an insurance carrier’s front line, handling chores such as sub-contracting with independent agents for placement of business, negotiating commissions, handling claims, issuing policies, processing endorsements, collecting policy premiums or being responsible for completion of regulatory reports for state or federal agencies. For instance, Take 1 is a program administrator for an insurance carriers that focus on the live-event industry. We have the authority to evaluate and manage policy requests for this carrier.
MGAs/MGUs/ PAs are expected to be experts in the categories they cover, and we are. But everyone in the chain we outlined here are experts to varying degrees when it comes to insurance and live-event production. Now you know what each of them does, and when they do it together, everyone wins.