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Question:

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Hi Ken,

    Regarding SARRG, one of the big questions in the past has been, does it have enough resources to be able to pay off possible big claims against a client, as compared to other  insurance companies ? In the past it's resources were rather limited. Do you know how it stands now in comparison to say, Scottsdale, Hartford etc ?

Gene

Reliable Alarm

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Answer:

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    I am confident that Sarrg has the ability to respond to claims it insures.  I asked Sarrg's chief honcho Bart Didden to respond to this question.  Here is his answer:

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Hi Ken,

    One of the continuing challenges of selling the SARRG (Security America Risk Retention Group) insurance policy is our "competitors" created buzz about the ability of the company to pay off large claims. What these "competitors" don't admit is that they have been legal expense insurance and not G/L with E&O.

    Because of all of case law, the cohesive manner that the contracts are built  to limit exposure and YOUR e-mails that raises importance of proper contract usage has resulted in the reality that the potential for a full limit claim payout continues to diminish.

    Because SARRG does not just automatically write anyone who fills out our application, our exposure is less than other companies. One example of our underwriting guidelines is the 5% discount that we apply to companies that use your contracts.  In fact, Sarrg will not write insurance for companies that do not use proper contracts.

    Over the last nine years our cash reserves have increased by double or better because of sound management policies. We have had claims of unspecified amounts that could have exceed policy limits, but we successfully defended the rights of our insureds.

    We have also settle claims when it made sense! One such claim started at $195,000, included the sprinkler company, the alarm company and the monitoring company (our insured). There was a question of liability for all three, there was no contract to be found for our insured, so we negotiated out for less than $50,000.00 with no legal fees.  

    Today, SARRG is fortunate to be among a very few risk retention groups to be rated by A.M. Best, B++, the next better rating is A-. This is not a JD Powers award, we spent better than a year working with A.M. Best to achieve this ranking by explaining our industry, our business model and explaining the contract provisions to limit our RISK. In the wake of the financial crisis of our national economy, this is  indisputable evidence that the management of SARRG is making the right moves to sustain the availability of our product.

    The big insurers you mentioned have subsidiaries to share the risk; SARRG does not have a subsidiary, we have arms length business associates, a consortium of risk partners at Lloyds of London. On any loss SARRG pays the first $250,000.00, then our partners cover the rest. In this relationship SARRG has enough coverage to maintain operations even in the worst case, dooms day, actuarial report.

    I will post the first disclaimer now, your readers should note that whether it's SARRG or some other carrier, that your coverage only goes as far as what you buy. If you buy 1 million, get sued for 5 million and lose the full amount, you have to cover the difference, 4 million.

    My advice, buy as much insurance as you can afford, conduct internal audits that you can find your signed customer contracts (do one letter of the alphabet each month) and run your business right to avoid risk through employee spot inspections of their work and meaningful job specific education. Don't send a non-qualified employee to do anything at your customers location, ever!

    Its all about risk management.  The alarm company needs to do its part and SARRG will do its part as well.

    Disclosure - Bart Didden is president of U.S.A. Central Station Alarm Corp., which is also a policy holder in the SARRG insurance program. Ken Kirschenbaum is the Corporation Council for U.S.A. Central Station Alarm Corp., and an approved defense council for the SARRG program.

Bart A. Didden

Executive Claims Manager

Member, Board of Directors

Security America Risk Retention Group