Insurance Journal Forums

Can anyone shed some light on National Contractors Insurance Co. RRG?

I'm a general contractor doing residential const. and received a quote from my agent here in AZ.

Seems as though the policy is only as good as the company. How do I find out the finincial condition of the company?

What are your general thoughts on RRG's?

Thanks,
RBW

Check with your State Insurance Dept. Most states will provide financial information on financials, licensure etc.

RRG's are not rated by AM Best and are therefore a little harder to research.

Most RRG's have substantial financial information available for their agents to give to clients when requested. Have you asked the agent that is proposing this RRG.

I personally prefer to use a rated and admitted insurance carrier in AZ for RGC's if possible.

Good luck!

National Contractors is backed by the same people as the former American Patriot program which insured mostly roofers. Went belly up about 3 yrs ago. They are a new RRB with few assets and no track record.

Preferred is another RRG which has Lloyds as their main reinsurance vehicle. Also new, I would ride with them even though they are also still small because of the Lloyds re. Its not some offshore related vehicle.

ProBuilders has a 3 yr track record and $190MM+ in writings. They have also liberalized their form as they have grown. They offer more stability than either of the other two RRG's.

RRG's are federally enabled and owned by the policyholders. You are assessed money to purchase shares. Like non-admitted insurers RRG's are not subject to state insurance guaranty funds. RRG's must be approved by the states in which they write business but as a federal vehicle that is just about the only control the states have.

One thing to watch for with RRG's: cheap pricing for the new RRG's is a way to buy business and as a shareholder you should be concerned about what they are doing with YOUR company. Cheap pricing from the larger, older RRG's is usually because they have better underwriting experience and can do so without hurting their owners, YOUR company.
A solid construction RRG should not provide coverage for work completed prior to your first policy with them. Nor should they give wildly liberalized Additional Insured wording because that is the usually the start of their path downward into insolvency.

We are a California based wholesaler who represents both traditional insurers as well as RRG's. We know their plusses and pitfalls. We believe that they can be useful vehicles for contractors as long as you realize that once you accept coverage from them, they are YOUR company and could ultimately positively or negatively impact YOUR financials.

You are a smart man to inquire into the financial strength of the insurer--too many insurance buyers consider price only.

As others have noted, this entity does not receive the outside scrutiny of rating organizations such as AM Best and participation can be a real crap shoot.

I work for a large national broker that has a committee that evaluates insurers for financial strength. This market doesn't make our approved list. I'd recommend a standard insurer with an A or better rating from A. M. Best.

I searched AM Best for the rating and it states that there is no information available about the company at this time. I would suggest, if there is a number or address, to maybe google it or go to anywho.com and see if you can get a number to call. Ask them directly.

Captive Manager: Potomac Captive Managers, domiciled in DC. A captive.

Thanks for all the replies.

Now I'm really spooked!

No rating, no protection under any State Insurance Guarantee Insolvency Laws or Acts, no protection if the company becomes insolvent.

What do I do now? Should I go to another agent or just tell her that I want a different or better company? General liability ins. is hard to come by here in AZ. This is the only reasonable quote I have received.

I'm not sure of exactly what type of company I should request.

Thanks,

Randall Williams

How large is the agency you are dealing with - how many carriers do they represent? Did they advise you of their marketing efforts - how many carriers they approached and what were the results? You may need to contact a larger agency, perhaps an office of a large regional or national independent agent/brokerage firm.

You seemed to indicate that other quotes were obtained, they just weren't as low as the RRG. Just like bidding a construction contract, when one bidder comes in substantially low, you are suspicious that something was left out, or they weren't knowledgeable enough to price the job adequately to make a profit. Even if it costs more, just like hiring a contractor, select one that can do the job for you and offers some measure of confidence that they'll be around for the long run - when you need them.

Normally the most secure are stock insurers (as opposed to mutuals). Consider their A. M. Best rating, reputation for claims handling, additional services such as loss control/risk management they might offer, and price.

Correction to someone's reply yesterday. RRGs can be, and are, rated by AM Best. Quite a few hold A or A- ratings.

First, let's talk AM Best rating. AMB has a built in bias re RRG's as RRG's are organized to handle problem business.....one specific class of risk for which coverage is not normally available in the admitted nor nonadmitted markets. Best's bias is predicated on that very concept because they penalize companies for only writing one line of business whether they be admitted carriers, nonadmitted carriers or RRG's. A rating firm called Demotech, http://www.demotech.net , does try to rate the financial strength of RRG's. You might check specific RRG's at that site.

Second, you mention that National Contractors is the only carrier that gave you a "reasonable" quote. By your stating it that way, I presume that what you are saying is that their premium is lowest. You might think that coverage is a nonissue here, but remember that you are paying money for something, you hope, and all RRG's use proprietary policies....they are not standard. Granted that AZ is becoming like a mini CA as the dearth of contractor markets and that standard carriers might not be available, but you still will need some coverage if only with a Sunset Clause. Have your agent review a specimen copy of the policies of the main contractor RRG's writing in AZ. That's what he is being paid for. Make him earn his keep.

Third, the National Contractors has their reinsurance with a company called Icon Re which is based in the Caymans. Preferred has their with Lloyds. ProBuilders has the bulk of theirs with Arch and Max Re, both of which are rated by AMB. Follow the reinsurance. Follow the premium/money. Follow the coverage. Your last consideration should be price because no matter which RRG you sign with it is YOUR company and you could assume part of its liabilities should it fail.

As the CEO of an A- AM Best rated Risk Retention Group and an A rated risk pool, I have to say that I don't share the assessment of bias exhibited by AM Best. Our experience with them has been quite reasonable.

The Risk Retention Reporter also produces a RRG directory that has basic information & financial data for RRG's. It is available at http://www.rrr.com. It does not have ratings, but at least you can see what other options are available as it does summarize RRG's by risk group. I buy it because the RRG's that show up in AM Best books normally don't have much financial info included.

Also be aware that if you purchase the RRG and at a later time try to come back into the "insurance" market, many true insurance companies do not recognize RRG's and therefore consider you as having a lapse in coverage or no prior insurance. This could result in a large surcharge on your "insurance" premium.

Risk Retention Groups are licensed insurance companies. They are licensed and regulated by one state rather than being licensed and regulated by each state in which they do business. RRGs are required to register with all states in which they do business. I find it baffling that "real" insurance companies could consider being insured by an RRG a lapse of coverage.