(The following article is based on Mr. Gajewski's presentation at the Target Markets Program Administrators Association's Mid-Year Meeting, which was held in May in Atlanta, Ga.) The number and variety of professional associations in the United States never ceases to amaze me. There are associations for almost every industry. For example, there is an association for personal assistants–the people hired to do your grocery shopping and buy your airline tickets. There is also one for wedding planners, of which there may be 150,000 in the U.S. Whatever the occupation they serve, all these associations represent opportunities for launching insurance programs.At Meadowbrook Insurance Group, we underwrite, insure, place coverages and provide services for more than 50 association-endorsed insurance programs. When assessing program opportunities, we consider associations as essentially specialty programs "right under your nose."This article will describe for program administrators and agencies the benefits of association endorsements when developing specialty insurance programs. This type of program, structured and communicated properly, can provide significant value and benefits for all parties. I'll explain how to market to associations, design programs, serve national and local membership needs, and avoid pitfalls by addressing traditional areas of concern.The days of paying $300 in annual association dues without getting something tangible in return are gone. Today there's a "Sam's Club" mentality among association members: "How do I get my money back in the form of benefits?" Your program answers that question not only for members but also for the organization itself. When marketing to associations, we emphasize that an insurance program is a three-pronged tool: It attracts new members, increases member retention and creates a source of revenue for the association. These three benefits will perk up the ears of any association executive, because they are the three major concerns they deal with every day. Mention them and I guarantee you will have their attention.At the same time, you should emphasize that insurance isn't just another add-on membership benefit, like credit cards or merchandise programs with office-supply stores. It's not a commodity but a cornerstone of the association. In a stressed industry, where coverage isn't readily available or needs to be carefully tailored to individual needs, obtaining access to dedicated insurance can be one of the most important reasons to join an association.There are two primary sources of information about trade and professional associations. Columbia Books previously published a hard-copy state and national directory, but currently it is available in an online version. It offers statistics and contact information for 13,000 executives in nearly 9,000 associations. You can search by budget range, location, industry, type of organization, etc. The product costs about $700, and there's a premium version costing $3,000 that allows users to download the information into Excel or Outlook.The second source is the American Society of Association Executives (an association for people who work for associations), a national organization with state chapters. Founded in 1920, ASAE has more than 22,000 association CEOs, staff professionals, industry partners and consultant members.We recommend that agents and program managers focus on an industry or product line for which they have a particular affinity or experience, so the ability to search these resources by industry type can be valuable. Their Web site addresses are www.associationexecs.com and www.asaecenter.org.With contact information in hand, the marketing process is fairly straightforward. Start with a short-and-sweet letter to the executive director, introducing yourself and emphasizing the three points mentioned above. Follow up to obtain a personal appointment. If all goes well, you'll likely be asked to make a presentation to the association's board of directors.The board presentation will be more formal. You'll highlight your firm's capabilities, market access and expertise, either in that particular industry or in a necessary line of business. Depending on the size or sophistication of the association, you may also present to a dedicated insurance committee. Often, if an association is actively soliciting insurance solutions, it might schedule multiple presentations over several days.If you find yourself in such a "beauty pageant," how do you separate your company from the pack? By developing and presenting a program that benefits all the participants. Obviously, the association members have a need for coverage at a reasonable cost and perhaps tailored to their industry, which your program will provide. The association benefits from the service and income and, more important, by establishing a relationship with you, based on trust.Such a partnership is formed by maintaining open lines of communication and by keeping the board informed on how the program is tracking. You can provide quarterly participation reports, premium reports, retention reports, claim reports, etc. If the program has a dividend feature, you can provide a report on it as well.Naturally, a partnership is a two-way street. You provide the product and service, while the association promotes the program and helps it grow. To that end, your presentation should also define what you expect from the association–namely, its exclusive endorsement of your firm for either all its members' insurance needs or a specific line of coverage. You will want the organization's help with promotion, mailings, announcements and news releases. Ask to be kept aware of all the chapter meetings, regional events and, of course, the national convention. These events present an opportunity for you to exhibit at the trade show or, better yet, to conduct safety and insurance seminars for members. Finally, request that the association promote the program on its Web site, or perhaps even allow you to create a custom insurance Web site for the program.Once you have obtained an endorsement, you can turn to marketing the program opportunity to carrier markets. If market relationships are established prior to the endorsement, sometimes the insurance companies will attend presentations with you or otherwise assist with marketing. It's imperative to find a carrier with a group underwriting philosophy, as opposed to individual risk underwriting.Program structureThe association will be keenly interested in how much revenue your program can generate for it. This revenue takes the form of a promotional allowance fee. For example, for a program with up to $250,000 of written premium, 2.5% could be paid back to the association as its promotional allowance fee. When the premium exceeds that total, the association's share could increase to 3%. If a program grows to $3 million in annual written premium, that's $90,000 for the association–and rest assured that's serious money to many associations. Such an additional revenue stream can reduce the need to increase membership dues, which associations typically dread doing.The association must invoice you for their promotional allowance fee. You cannot simply write a check without getting an invoice. Also, they have to list their promotional efforts, such as providing advertising space, assisting with mailing expenses, convention and booth fees, etc.Beyond the coverage itself, an insurance program for an association can provide other benefits, like dividends. A dividend program has all the features of a typical guaranteed cost program but also offers insureds the opportunity to earn dividends, if the performance of the group as a whole exceeds the insurance company's expectations. A dividend feature encourages association members to take steps to prevent claims and also provides an incentive to remain in the program. The dividends are mailed to each member with a co-branded letter from the association and the program administrator, retail agency or company, thanking the member for his or her participation and attention to safety.Marketing an association program is an ongoing process. When the endorsement is finalized, send out a press release announcing the partnership between the program administrator or carrier and the association. Also send personal announcement letters or promotional fliers to each member. Most associations have several publications in which you can place ads or even arrange to have your expert articles on pertinent topics published, such as safety tips or overviews of certain insurance coverages.It's critical to make personal calls to the members to obtain their expiration dates. The dates are the key to creating realistic expectations, and an explanation of how you expect the program to grow should be part of your continued reporting to the board of directors. During the first year, most members will sit on the sidelines, waiting to see if the program takes off. You are going to write some business, but you are not going to obtain critical mass in the first 12 months. Year No. 2 will be more of the same, but you will probably start hitting on some of the renewal dates. The third year is when the program should be clearly taking hold. The database of X-dates should be fully established and, unless the association is very large, you should be writing at least half the members. Association-endorsed programs share some common concerns. From a carrier's perspective, exposures of members in certain local or regional areas may differ significantly from the exposures of those in the rest of the country. There may also be considerations with a particular line of business, like workers compensation. You may not be able to include the coverage in a national program in certain states, but rather have to obtain it from monopolistic state funds. In states with tough coverage environments, you may need to help state associations form a self-insured group.Alternative options should be explored, including risk-sharing via alternative market vehicles like association group captives or rent-a-captives. These vehicles allow the association and its members to have their "skins in the game" by sharing in the underwriting profits and investment income generated by their program. Of course, these vehicles require capital contributions to fund a risk-sharing position. With capital at risk, diligent review is required through actuarial analysis and financial modeling.Historically, one of the biggest concerns with association programs has been adverse selection. For a program to become successful–especially from a dividend standpoint–you want insureds to demonstrate a history of managing their exposures and exercising safety. That, however, runs counter to the association's desire to provide an insurance solution for all its members, regardless of how safety-conscious they are. The way to handle this issue is to work with the carriers to create multiple-tiered pricing and underwriting guidelines, so you're able to accommodate all members but also reward the best ones.Finally, you need to define and assess your competitors from several perspectives. These include other similar associations and sub-group associations, regional and national insurers (and their distribution systems), and agent program competition.Given the vast number of associations in the U.S. and their varied insurance needs, program managers enjoy ready-made pools of prospects from which to choose. Program administrators need not search far and wide for a new market niche–sometimes it's right under your nose.Phil Gajewski is a vice president in the business development unit at Meadowbrook Insurance Group, where he assesses specialty program opportunities and develops relationships with agents, associations and municipal entities. Mr. Gajewski joined Meadowbrook in 1997 in the company's corporate communications department, where he helped the company earn numerous awards for annual report and Web site design. As a former insurance industry guide on About.com, he has authored many industry articles and has been a featured speaker on Web marketing techniques for workers compensation business. He holds the CPCU and ARM designations, and is the immediate past president of the Greater Detroit Chapter of the CPCU Society.