Concord Specialty Insurance Company is an A- rated surplus lines company that is focused on providing fronting capacity to small and midsize programs. Our scope covers nearly every P&C line, except workers comp, and extends across all states except California, Iowa, Massachusetts, New York, and South Dakota. Concord Specialty will retain between 0-20% of the risk, and cede the remaining risk to one or more strong reinsurers.

Our goal as a fronting company is to provide state eligibility, financial strength, and A- rated paper. While we provide support, it’s the MGA or TPA leading the charge in program development, sales management, and claims handling.

Unlike many fronting carriers, we are willing to work with startups. Our preferred program is one with low limits and short policy terms. We understand that getting a new program up and running is difficult and time consuming. We don’t impose a high annual minimum premium, but rather just an amount that allows us to cover our costs and make a small amount while the MGA or TPA tries to make the program successful. Concord Specialty will work with MGAs and TPAs on new programs and provide the support needed to get the first policy written.

Like all fronting companies, we prefer reinsuring to large, highly rated reinsurers. For some programs, like property insurance, we require that level of reinsurer given the risk and volatility. If you are looking for a front to take a large portion of the risk, Concord Specialty is not the right carrier as our balance sheet is not set up for that.

But, for most other kinds of insurance, we will consider reinsurers rated below “A”, unrated carriers, and captive insurers. The key for these reinsurers is the collateral account. We work with various banks and financial institutions that have experienced trust departments to hold collateral. It is critical that the Trust Account holds sufficient reserves to meet regulatory requirements and to give us comfort that all ceded losses will be covered. The Trust Account will generally be invested in CDs and T Bills, which is particularly attractive in today’s high interest environment.

The key to setting up a program with a Trust Account is determining the proper reserve requirement. Actual insurance premiums and losses are often not available, so alternative data must be utilized instead. Underwriting and actuarial analysis is then applied to the data to determine how closely those statistics will match the proposed program and how losses might change if they are protected by insurance. Sometimes, loss data from a similar type of risk is used to set a reserve. The program will be closely monitored to ensure that the initial reserve pick is sufficient.

If you have a startup surplus line insurance product and need a front, give us a call. We are happy to work with brokers or directly with MGAs and TPAs. Call Mark Holtschneider at 410-868-9608 or email Mark@lnic.oc or call Jake Egert at 516-314-3637 or email