How Specialty Insurance Helps Companies Through Crises

How Specialty Insurance Helps Companies Endure Crises

As a one-stop shop for specialty insurance, Argo Insurance in Bermuda writes property, casualty and professional liability policies that can help companies endure crises.

Freight train speeding along green countryside at sunset

When news of a disaster pops up in your feed, the story usually describes multiple entities affected by the event. The need for specialty insurance is never higher than it is in those moments. Argo Insurance’s role is to keep businesses running smoothly with customized coverage that will address an array of exposures.

Imagine, for example, a train operator speeds through a slow zone, causing the train to derail. Fortunately, no one is seriously injured in the incident – but the derailment sparks a fire that spreads to a nearby commercial farm and an energy substation, causing millions of dollars in property damage.

Regulators determine that the crash was caused by a faulty signal and that the company was not up to date on their signal maintenance. Shareholders of the publicly traded company sue the board for allegedly misleading them about the company’s level of compliance with its stated maintenance policies.

Given this hypothetical scenario, read on to see how casualty, commercial property, and directors and officers (D&O) coverage would come into play – and to learn the benefit of having all of that specialty insurance coverage through one provider.

Commercial property insurance covers the rail company’s assets

Physical damage to the rail operator’s own property such as the locomotive, the train cars and rail infrastructure (track, roadbed, bridges and tunnels) would be covered by a property policy. The policy would also cover the rail operator’s loss of income, if it had to suspend its rail services while repairs are carried out, and extra expenses incurred for rerouting other trains.

Tailoring its property products to meet clients’ specific needs, Argo writes primary and quota share business for clients across all commercial sectors.

“The biggest differentiator is our service,” said Nicholas Wills, Argo Insurance senior vice president, property insurance underwriter. “The resources we have available are fundamental to brokers and clients. We’re able to provide within-office claims, modeling and wordings. Having those capabilities sets us apart from the competition.”

Argo’s ability to offer multi-line solutions also benefits its policyholders. Working so closely together helps property and casualty underwriters serve clients who often seek more than one type of coverage.

“Many clients are currently looking to have more than one line with the company,” said Wills. “They look for the depth and overall relationship on their account.”

The industries covered by Argo Insurance’s property policies include but are not limited to the following:

Casualty insurance covers the operator’s third-party liability

Damages payable to both the nearby commercial farming facility and the energy substation for the physical damage caused by the rail operator’s actions could potentially be covered by a casualty policy such as those Argo offers.

In some events, a casualty policy may also cover responsibility for bodily injury and the cost of pollution cleanup.

Losses in the casualty business typically stem from newsworthy events, and they are often catastrophic – train crash damage can total $40 million to $50 million.

Argo’s casualty unit is focused on writing third-party liability exposures for Fortune 1000 entities. Clients include railroads, energy companies, hotel groups and real estate operations.

The potential for extreme losses on these accounts makes it particularly important to develop a close relationship between insurer, broker and client. About 75 percent of Argo’s casualty clients send risk managers, treasurers and CEOs to Bermuda to have active conversations about risk.

Collaboration between casualty, property and professional liability underwriters is vital to this relationship, explains Deirdre Lohan, Argo Insurance senior vice president, casualty manager.

“Frequent collaboration with our property and professional colleagues allows us to customize comprehensive programs that better meet all the needs of our clients,” said Lohan. “We can leverage our individual writings to show our insureds that we have a big presence on their program.”

Directors and officers (D&O) insurance protects the execs

The National Transportation Safety Board issues a report determining that faulty lights caused the accident. The train company’s shareholders sue the company’s board, alleging that they made stock investment decisions under the belief that the company had been in compliance with its maintenance schedule.

For over a decade, Argo has provided professional liability insurance products with a focus on writing excess layer coverage for large corporations susceptible to shareholder class action.

In addition to writing traditional coverage such as D&O and employment practices, Argo Insurance’s risk experts can provide advice to help companies keep up with litigation trends and developing laws.

“Litigation in the U.S. has picked up considerably,” said William Wharton, head of Argo Insurance, Bermuda. “Plaintiffs are finding it relatively easy to sue companies. The frequency of event-driven securities class-action suits is increasing.”