July 12, 2011 by Suzanne Sharma
Travelers Canada took the #1 spot on Canadian Insurance Top Broker’s list of top 20 surety insurers based on net written premiums in 2010 (see full list below). These results are featured in the Canadian Insurance Top Broker 2011 Annual Statistical Issue, now available. For more information on the Annual Statistical Issue, click here.
Canadian Insurance Top Broker spoke to George Petropoulos, president and CEO at Travelers Canada about what makes this product unique from others in the P&C market, as well as ongoing trends in surety insurance.
Q. How does this product differ from others?
A. We are part of the insurance industry, but it’s important for people to understand that it’s not like insurance. It’s more like banking because it has a credit component to it. Typically with an insurance product you have two parties involved: the insurer and the insured. In a surety relationship, you have three parties: the construction company (or the party performing the contract), the owner or party that has engaged the contractor (developer or government body), and the insurance company that provides the assurance that the contractor completes the project.
In this type of contract, the primary obligation rests with the contractor. As an insurance company, we only step in if the contractor has failed with their obligations to the owner. It’s not a one transaction relationship because the client might bid and engage in multiple contracts in a year. So we set up a facility for the client that we will review periodically.
Q. What are some current challenges in surety insurance?
A. The challenge that we see today is around talent and having the right people on board who know how to execute this business. This is an ongoing issue for brokers as well because there has been a shortage of talent.
We’ve been focused at developing internal talent and this has allowed us to grow in this market place. We have the benefit of people who are training here locally in Canada, as well as in our parent company in the US. This has allowed us to more effectively grow our team so they can engage with our partners and contractors.
Q. What are rates dependent on?
A. We do have a rating system that we look at and it’s driven by the level of activity and credit quality of the relationship. So the stronger the credit quality of the client (much like with a bank) they are able to borrow a prime versus a slightly higher rate. This will be driven by the relationship and the quality of the contractor themselves.
Q. Can you provide some tips for your broker partners working in this market?
A. We see it more as a relationship than a transaction. As an organization, we want to get to that position where we’re the trusted advisor in a relationship and can provide clients the benefit of our experience and our ability to see the broader market as a whole. If brokers focus on the same thing, they’ll be able to benefit in their relationship with that client as well.
Here are the top 20 surety insurers (based on net written premiums in 2010).
*all figures for net written premiums are $,000
For more categories of Top 20 insurers, click here.
This story was originally published by Canadian Insurance Top Broker.