From the Front Lines: BOPs

Shane PageShane Page

Piedmont Insurance Associates

How did you get started at your agency? 

My wife and I started Piedmont Insurance as a scratch agency in 2006, which means we had no customers or policies on the books as of day 1. Our first appointment was with Erie Insurance, which we quickly came to realize is one of the strongest brands in the industry. We have since built solid relationships with a number of regional and national carriers, and we have grown to almost $7 million in direct written premium. We have multiple locations in North Carolina serving local communities, but we also do a fair amount of business virtually in neighboring states throughout the southeast—the majority of which are small business customers. Small businesses and the owners who run them are the building blocks of our agency.

Why business owner policies? 

BOPs are the most effective way for carriers to package coverage for their target markets.  Good BOPs provide specialized coverage extensions for specific industries, and are typically more cost-efficient than buying similar coverage “a la carte” on traditional commercial package policies. In addition to providing added value for the customer, they are easier to service and lower errors & omissions risk for the agency, since the insured receives useful coverage they may not have even thought to ask for.

How have BOPs changed over the years? 

Target appetites and industries are much greater than they used to be just a few years ago, and carriers are rolling out new BOP products on a regular basis to expand their offerings. Increased competition means lower rates and better coverage for small business customers, many of which would not have been eligible for a BOP in years past. BOPs are no longer limited to mom-and-pop retail. Appetites now include contractors, restaurants, garages, wholesale and manufacturing, just to name a few.

Biggest BOP misconceptions? 

While many BOPs have similar language in their endorsements and extensions of coverage, they are not one size fits all. There are wide disparities in limits, sublimits, limitations and exclusions. Although it’s true that BOPs in general are competitively priced, buying a BOP from a carrier that has a product designed for an insured’s specific industry is the best way to secure unique coverage that may not be applicable to all businesses.

Future of BOPs?

Availability will continue to increase, and direct writers have already begun to compete for market share in an already competitive environment. For commercial insurance, I think it’s safe to say that BOPs are seen as the product most susceptible to automation and commoditization. The value of the independent agent comes from finding the right BOP and pairing it with other risk considerations—like auto or workers comp—in a consolidated agency relationship, to prevent unintended coverage gaps when purchasing separate policies from direct writers.

Favorite BOP success story?

Contractor BOPs are one very good example of where we frequently find significant premium value opportunities. I could name dozens of specific examples, and the story is always very similar. Purchasing general liability, additional insured endorsements, waivers of subrogation, installation floaters, miscellaneous equipment coverage and hired/non-owned auto coverage can add up to thousands of dollars in premium when purchased separately.

When purchased as a BOP policy, the same coverage frequently includes all these items for premiums starting around $450 a year. The insureds are thrilled—not only with the price and the coverage, but with the ease of access to certificates that already include the endorsement language frequently requested by their customers or general contractors.

Jordan Reabold is IA assistant editor.