OVERVIEW
The All Lines Aggregate program is a uniquely cost effective alternative to conventional insurance plans. It is a tailor made package which blends risk retention, risk transfer and customized claims handling in a framework which effectively manages insurance costs and coverages and which can unlock significant long-term savings.
The program can combine Property, General Liability coverage, Automobile Liability and Crime coverage into a single package. Public Officials and Educators Legal Liability, as well as, Law Enforcement Liability can be included for Public Entities.
The All Lines Aggregate (ALA) distinguishes itself favorably from traditional insurance products where the total dollars an insured may spend on out-of-pocket “deductibles” is often unknown and unlimited. We can protect your insured’s assets and earnings power with specific and aggregate stop loss covers so as to identify the maximum combination insurance and loss costs in each policy period, while also allowing immediate benefit from unspent usual and expected loss costs.
OBJECTIVES
The cyclical nature and dramatic price swings of the insurance marketplace makes budget stability very difficult. In a “protected” self-insurance program, a significant portion of an organization or public entity’s costs are developed in the self-insured segment and are, therefore, not subject to these swings.
Your client’s superior loss experience should not be submerged in an insurance company’s more widespread, less sensitive statistics. Good claims experience should reward an Insured.
The insured is able to purchase all desired lines of coverage within a single policy.
An organization or public entity should retain only as much risk as is deemed affordable or predictable. The blanket of security excess insurance affords should be seen as a vital element of any program in providing the means to transfer unaffordable or unpredictable risk.
The Insured realizes immediate savings through the improved cash flow that results from not paying away the self-insurance portion of the package as premiums to insurance companies. Long term savings through aggressive loss control causes a reduction in both the volume and value of recurring losses.
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THE ADVANTAGES
The package approach reduces the administrative costs of traditional insurance, and since we make it possible to select a deductible or self-insured retention, the insured will not be trading premium dollars for loss dollars in the area of usual and expected losses, thus obtaining optimal cash flow.
The annual Aggregate Stop Loss is identified and quantified at the outset and is the maximum amount of self-insured loss costs. We can, therefore, budget accurately the maximum costs of your client’s insurance program with no limit on the amount of potential savings.
Claims procedures, defense counsel selection, litigation management and claims settlement authority will be tailored to fit the Insured’s operations and desired levels of participation rather than being obliged to follow methods mandated by an insurance company.
The program structure and pricing will continue to be based on your Insured’s exclusive exposures and expected losses. The losses of an entire industry group, or geographic region, therefore, will have much less of an adverse effect on the stability of this important corporate expense.
The program provides protection with lines and limits of insurance coverage that on an individual basis may be unavailable or uneconomical for your Insured to acquire.
The policy form contains broadened insurance coverages tailored to meet your Insured’s specific needs, thereby avoiding gaps in coverage, which often occurs with traditional insurance programs.
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THE STRUCTURE DEFINED
The Premium is the amount of money given to the insurance carrier to pay for all losses in excess of a pre-determined level, up to the limits of liability provided.
The annual Aggregate Stop Loss is established by the insurance carrier and is based on the individual organization or public entity’s previous loss experience as well as a factor for projected losses, which anticipates inflationary and development factors.
The Insured has considerable control in the claims administration process. The client can select one of the approved Third Party Administrators, and can decide what authority level will be given to the administrator for the payment of claims, thus having direct impact on the reporting and settlement process. The third party administrator represents the client and adjusts claims for both the All Line Aggregate insurance policy and normally the insurance companies providing the excess insurance coverage.
The Aggregate Excess Coverage is provided by the carrier and protects the organization or public entity from abnormal frequency of loss. In the event the total amount of losses exceeds the Aggregate Stop Loss in a given year, the organization is fully insured, up to the limits selected, for losses below the Self-Insured Retention.
The Insured’s S.I.R. is the amount that the insured is responsible to pay. It is selected for the organization as the maximum amount of any single occurrence the insured will absorb for each line of insurance.
A Maintenance Deductible for property, inland marine and automobile physical damage losses functions in the same way as any insurance deductible for small losses, thereby, protecting the stability of the Aggregate Stop Loss. This deductible is $500 for property and inland marine exposures and $250 for automobile physical damage coverage. Larger deductibles are available and can also apply to liability and crime coverages, further protecting the Aggregate Stop Loss.
The Clash Coverage of the ALA is unique. It limits a loss involving different lines of insurance to a single self-insured retention, that being the largest SIR applicable.
The Specific Excess Insurance provides coverage above the self-insured retention, by line of coverage, which protects the organization from abnormal severity of loss. The first level of this coverage is provided by the ALA with additional specific excess insurance providing appropriate catastrophic coverage.
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IS THE ALL LINES AGGREGATE PROGRAM RIGHT FOR YOUR CLIENT?
Any account whose All Lines premiums exceed their “normal” losses should consider some degree of risk retention as a means of reducing these costs.
As a selectively protected risk management program, the All Lines Aggregate was designed as a viable alternative for the organization or public entity that:
• Has annual insurance costs – including premiums, deductibles, retained losses and assessments – in excess of $200,000 without Workers’ Compensation and $400,000 with Workers’ Compensation
• Has normal losses below annual insurance costs
• Wants to have some control on how insurance costs are spent
Organizations or public entities with self-insured retentions or high deductibles are excellent candidates for the All Lines Aggregate Program.
Multi-line aggregate programs are not for every Insured. The organization or public entity’s risk-bearing attitudes, evaluation of program costs, ability to absorb costs and willingness to establish a long-term relationship with excess carriers and a comprehensive loss control program are all factors that must be carefully evaluated.