Filling the gap
One year at Citadel down - being a broker slash program manager has been great. It’s a place where I can stretch my creativity in the boring world of insurance. Keep reading, I promise this isn’t a diary entry.
A year is a good marker to reflect and plan for the next year - most of us do this individually and together as a business organization. So using the tools I have at Citadel and learning from some trials in the past year, what gets me excited and what can I do more of in 2024? It’s what I will call, filling the gap.
When I was at Bunker, this was the main problem we tried to solve. There’s this independent contractor or freelancer - they have a contract requiring coverage - and there’s a gap between what they need and what they have (maybe nothing). We would procure the insurance to fill the gap and get them compliant with their contract.
Sometimes it’s not that easy, though. For instance - an independent business owner has a commercial auto policy with a 300k CSL auto liability limit. Another company [let’s call them Big O’ Logistics] comes along and wants to hire them to do some work as an independent contractor, not full-time, but just every-once-and-awhile. They are excited about the extra revenue and eagerly sign the contract. But wait - they require $1M of auto liability. They go to their insurance agent and it’s going to cost an extra $10,000-$15,000 a year to raise the liability limit (yeah commercial auto SUCKS). Now they’re in a position where if Big O Logistics doesn’t give enough jobs, they are going to lose money because of insurance. Big O’ Logistics hears this problem all the time, but what can they do about it? They aren’t able to scale as fast as they want to because they can’t bring on drivers fast enough, the insurance requirement is limiting the amount of drivers they can onboard.
This happens in lots of industries. Maybe you’re a gig economy company and the gap is all your independent contractors on your platform have zero coverage. Maybe you’re a general contractor and your insurance company requires all your subs to carry liability limits as high as you - $5m? $10M? Maybe your legal team has set this high bar of insurance for your vendors to get, and they literally cannot find the insurance to be compliant.
My goal here is to give companies like Big O’ Logistics a tool to use - a way to give incremental insurance to their drivers to meet their requirements. You insurance nerds out there may see this as a usage-based, per-project excess policy that is ‘passed down’ from the top of the relationship chain to those contracting with them to meet requirements.
This problem fascinates me and I’m out to solve it in 2024. Using carrier partners, risk purchasing groups, and my experience with reporting policies this can be done. If you’re an agent, broker, or business that comes across this issue - reach out to me and we’ll brainstorm solutions!
