Navigating the Ins and Outs of Security Firm Insurance

Are you ready to navigate the security guard insurance market? Prepare to arm yourself with the essential knowledge shared by industry specialists Vince Polese and Greg Zschiesche . In our latest episode, we tackle the shrinking pool of insurers, dissect the nuances of liability concerns that have come to the forefront with cases like the Surfside Condo collapse, and analyze the diverse risks associated with various security environments. This is a must-listen for understanding the complexities and challenges that security guard firms face in securing adequate insurance in today's marketplace.

Vince and Greg shed light on the labor dynamics within the security sector, emphasizing the growing presence of retirees and veterans in the field. They share valuable insights on establishing fair contracts and a meticulous vetting process that's critical for recruiting top-tier talent. Furthermore, we discuss how wholesalers like CRC Group can be a guiding light through these intricacies, underscoring the importance of fostering strong relationships and staying abreast of market trends. Whether you're an agent, a client, or simply intrigued by the inner workings of insurance for security firms, our discussion offers a wealth of knowledge that is sure to assist you in charting a course through these challenging times.

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Transcript

Scott Gordon: 0:23

Hello everyone. Today, Amanda and I are joined by Vince Polese, a senior casualty broker and senior vice president with our Jericho, New York office, and Greg Zschiesche, an associate casualty broker with CRC Group's Houston, Texas office. They're going to talk with us today about the challenges around ensuring security guard firms.

Amanda Knight: 0:44

This is the Placing you First podcast from CRC Group.

Scott Gordon: 0:48

This podcast features news and insights from a vast knowledge base of over 5,100 associates who write more than 35 billion in premium annually.

Amanda Knight: 0:57

Plus, we give you the latest information on what's happening at CRC. This is the Placing you First podcast.

Vince Polese: 1:05

And now the hosts of the podcast Amanda Knight and Scott Gordon.

Scott Gordon: 1:09

Thanks for joining us guys, thanks for having us, thank you for having us.

Amanda Knight: 1:12

You know I think this is the first time we've ever broached this topic on the podcast, and the companion piece that we wrote to go with this, I'm pretty sure was the first time we've really gone in depth on security guard firms. So for those who maybe haven't dug into that article yet, can one or both of you sort of give us the short version of what the market looks like for security guard firms right now?

Greg Zschiesche: 1:38

I would say in a nutshell that the state of the security guard market is as hard as it's ever been.

Greg Zschiesche: 1:45

A number of programs that have historically played into space have either cut back limits, cut back capacity or exited the space altogether.

Greg Zschiesche: 1:56

We were noticing it seems like either monthly, weekly, quarterly there are updates relative to carriers positions in this space. For example, I just found out earlier this week that a go to excess market that has been writing lead access for us in the space is changing their position, likely non renewing their entire security guard book from a lead access perspective, and is really not interested in playing in the space in a lead position going forward. So it's those types of changes that just make the what's already a difficult situation that much more difficult. You know, I think that with the birth of a number of different MGA's that have sprung up or popped up over the course of the past, you know, two years or so Some of those folks have interest, many of them do not, and so, unlike many other classes of business where you've seen sort of seen this influx of capacity that's come in, unfortunately that influx of capacity just hasn't really been available to insurers in this space.

Vince Polese: 2:59

Yeah to add to Greg's commentary. It's kind of we can go on and on and on about what the marketplace is looking like, but taking a view of the last 20 years, because we've been involved with it in that time period, it was a foregone conclusion that you could get any guard deal done in a program. There was always a program that would fit the mold the auto, the GL and the access. When we were getting brought, when we were brought in on to the deals more times, many were brought into the access. So fast forward 20 years, it's almost as if there's a perfect storm. A lot of things have happened in the marketplace that's just caused a lot of these firms to exit out of the space. They've been unprofitable for at least one or two lines of business. It could be casualty, it could be auto, it could be access, it could be verdicts. It's just a real challenge of a marketplace right now and luckily for us, we've got some expertise in the class and we're starting to get a lot more opportunities, as they've presented themselves.

Scott Gordon: 4:01

Yeah now, one of the things that struck me as kind of amazing about the Surfside Condo collapse a few years ago was that the security firm ended up on the hook for more than 500 million of the $1 billion settlement. That just blew my mind. Is that a common thing for security firms to be left pulling the bag like that?

Vince Polese: 4:24

Not necessarily what happened. So a lot of times what happens with the guard space is, in fact, when they are protecting a property such as this, they're responsible for the safety of the people that are inside of it. I'm not necessarily sure what the allegations were at the end of the day, but I think it may have been a part business decision from the insured and carers to pay the claim. They felt that it was wording that they provided in their policy, which was the care custody control peril, so the property was under their care custody control, so to speak. So there were allegations that they could have warned people to evacuate and didn't. But I think it was a business decision that all the carers made to make this settlement happen.

Vince Polese: 5:14

Now, if you look at some of the carers that are offering coverages right now, they are putting building collapse coverages exclusions on it. So there are a couple of MGU's that have actually put that on it, which I thought was a little heavy-handed, but they don't want to necessarily bend the hook for building collapse. The carer of the insured is a huge insured, a multi-billion dollar conglomerate, and they had the limits and, as a result of them having limits, they made the decision to do it, or the carers made the decision to pay it. So not common practice, but in this particular case they felt it was within their duty to pay it, so they did. At least that's what I can tell from the article that was provided, that was published.

Amanda Knight: 5:59

I mean, I think, even if that's a rare occurrence, when I think about security guard firms and the variety of places you now find security guards that maybe we didn't have years ago, the different sort of establishments of all kinds, it seems like the role can vary pretty widely from one security guard situation to another. And in my mind you guys obviously correct me if I'm wrong you're the podcast stars today, but it seems like, with such a varying sort of role, that that creates more opportunity for different kinds of liability. Does that make sense?

Vince Polese: 6:37

It does 100%.

Amanda Knight: 6:39

With that in mind, are there some tougher venues or tougher kinds of security guard work, if that makes sense that are more difficult to ensure because of where or what they're doing?

Greg Zschiesche: 6:53

So, just like we just talked about regarding the condo collapse, there's been other unfortunate instances that have transpired in recent years, for example, the Travis Scott concert, the Jason Eldine concert in Las Vegas. So, using those two examples, those firms that are providing services in the form of crowd control or trying to manage those types of festivals, events, really anything with a high number of patrons who are participating has become much more difficult. Oftentimes, these events are being put on by a common promoter, or a common entity, if you will, who has some pretty strong language where they push a lot of the liability down to the security guard firm, and so being able to comply with those contracts makes it difficult for especially those that are smaller operators, those that don't necessarily have the more chest behind them, to be able to afford a robust policy or one that can necessarily meet all of the contract requirements, and so to be able to meet those requirements or be able to satisfy those requirements. I think that what these agents and insurers are quickly learning is that the number of available markets who are willing to play and willing to write the risk it comes at a very nice or very high premium.

Greg Zschiesche: 8:18

I should say it's not cheap and, quite frankly, I just I don't see it. I don't see the markets softening anytime soon until I think we can get, as a society and as a country, better controls around this very thing. And I'm certainly not trying to go the into the direction of gun control or whatever. That's not what I'm saying. I'm simply saying that you know, the more that these instances show their rear, their ugly face, I think it will continue to warrant or justify needing security. As an example, I know that in Texas we just recently wrote an account where the schools themselves are now starting to hire off duty officers to patrol the schools themselves, and so it just sort of is really a sign of the times and kind of where we're at. You know, good, bad or indifferent.

Vince Polese: 9:07

Yeah to Greg's comment. Retail exposure, public exposure that the guards are responsible for is becoming more problematic from coverage standpoint and getting correct limits needed and also coverage is needed and it's at a premium. So what was in a program, a competitively price, is not coming out of the program and as a result of that, we're seeing massive increases and or not massive increases, a slight increase so, but everything's increasing. So it's a bad story that we're telling to these folks but unfortunately, as a result of the school shootings, the special event issues retail, hospitality, overall public safety Guard firms are just taking the teeth really. So it's really a problem.

Amanda Knight: 10:01

With that in mind you know, knowing that it's tough no matter how you cut it Maybe just not as tough for some as for others, depending on where and what they're doing Are there things that these firms can do or keep in mind to try to give themselves the best shot at obtaining optimal coverage at the best possible price?

Vince Polese: 10:23

I think right now, what's really important is the contracts that they sign, making sure that they're not punitive for them. Sometimes these guys need the work and they'll sign whatever they can get their hands on. So you got to watch that. I think that the labor force out there Sometimes it's a challenge for these guys to step up. It's really important them to have a really good vetting process and a screening process so that they are hiring the best they can and they're gonna have to pay for it. So a lot of the hourly charges that these guys are getting now are getting much more. It's much more for these people that they're getting and which is a good thing for a lot of people. More retirees are coming on to the stage. More people that are retiring from the military or police are being employed. So there's a labor pull out there. But you got to be really, really careful and you got to be really really you got to scrutinize a lot.

Scott Gordon: 11:18

There's a lot of, a lot more variables that come into play in this, like the knittingwood, would imagine. I didn't know that they were like the shepherds of the well-being of the establishment, like in surfside. That's crazy. And speaking of shepherding, it seems like you could use some shepherding through the marketplace out there. It's pretty daunting right now. How does working with the right wholesaler like oh, I don't know CRC group, make a difference for agents and clients?

Vince Polese: 11:46

We've been at it. It's such a long time I'd like to think that we've been In building our expertise for the last 20 odd years. I do believe that, at the end of the day, most of the companies that we work with know that and they appreciate that and they look for us for guidance. We've got Greg, myself, lyles, we've got a few of the folks that really sort of like focus in on this space, and it's really something that you can't dabble in. You really need to understand the nuances of the policy forms. You really need to understand the nuances of the marketplace, and I will tell you that there are carers that do do deals for us that may not necessarily do them for other wholesalers, and the same applies to some other wholesalers that we compete against. So it's really a heavy relationship driven situation where CRC brings that to the marketplace, where we know the marketplace, we know the coverage forms, we know the pitfalls and we try to walk these guys through the forest as best we can.

Greg Zschiesche: 12:53

So I think one of the things that Vince pointed out and I really do want to make sure that we sort of drive this point home is that I certainly can't speak to our competition or competitors or how they approach this space. But one thing I will tell you is that within CRC, those that actually do focus in this area or spend a great deal of time, such as Vince Liles and myself, we collaborate very well and often so. We're constantly idea sharing, we're constantly feeding each other information on what's new, what to look for, trends, new entrants in the market, those that are exiting the market. So anyway, I'd like to think that when our agents contact us with a deal, they're not just really getting one broker within CRC. They're sort of getting the tribal knowledge of the main players within CRC or those that focus in the space within CRC, so it's the broader knowledge of the organization.

Scott Gordon: 13:50

This has been fun. I like this one. This is an interesting topic and, like Amanda said, this is really the first time we've covered it.

Amanda Knight: 13:57

Vincent Gregg, thank you so much for taking time out of your day to join us. If you're a listener, thanks for joining us too. Providing current insights into the marketplace is just one more way CRC Group is placing you first. We'll see you next time.