In addition to the interest in his firm's Oregon and Washington specialty programs, Morgan says he's seen a big jump in applications for risks outside the boundaries of the two Northwest programs—for nonprogram risks in California individually written on the wholesale side.

“We see a lot of people who typically would not buy earthquake insurance now buying it. It's across the board” for all three West Coast states, he says, noting that concerns about tsunami threats are also behind the surge of applications. “Typically, tsunamis are covered under the flood portion of the policy,” he says.

“After New Zealand and Japan, people are saying, 'this isn't a Hollywood sci-fi film. This is a real exposure. We need to have something in place,'” Morgan says.

DIY Advantage

Bliss & Glennon offers what Morgan refers to as self-rater programs for residences in Oregon and Washington, allowing brokers to answer a few easy questions and fill out a short application by e-mail or fax to bind coverage.

“We were always interested in doing a self-rater program,” says Morgan, noting that it's very difficult to do anything like that in California “because underwriters want the control. They don't want to give you that authority because it's California.”

“But we knew that there was a good market for quake in Washington and Oregon. We also knew insurance companies had a lot of capacity for those two states. Because they had so much capacity, they were much more open to the idea of finding a different vehicle, like a program, to use that capacity,” he says.

Referring to the residential product for Oregon and Washington, Morgan says total insured values (TIV) could be as high as high as $2.5 million. Premiums start at $400.

“Basically, if it's built after 1950 and it's not on bay mud, and the TIV's not more than $2.5 million, you have coverage,” he says, noting that total premium volume for the program, written on London paper, is roughly $300,000.

For commercial, TIVs can't be more than $25 million and limits up to $10 million are available. Deductibles can be as low as 2.5 percent. “We don't want unreinforced masonry, and we'll look at [buildings] as old as the early 1900s,” he says.

“The residential side is more of a 'program' because it's more of a box. For commercial, we have the in-house pen. We act as underwriters,” he says.

Rivera says V3's competitive edge with its California commercial program is its use of risk-modeling technology together with unique actuarial rating models and outputs like margin calculations that consider probable-maximum-loss estimates—all at underwriters' fingertips.

“We spent a lot of time building a very technical rating model” that has a direct feed out to RMS, she says, referring to the Newark, Calif.-based modeling firm. “We actually send data electronically out to RMS, and it comes back to our rater on all of these small accounts. We fully model every location.”

“Rather than worrying about modeling the account, our underwriters are actually spending their time analyzing the output of the actuarial model,” asking why certain indications are high, others are low—and then selecting business “that is best priced for what it's doing to our overall portfolio.”

Rivera believes there's inconsistency in the way competitors prices the business today. “So if we are consistently analyzing our portfolio, our goal is to really take advantage of those times when the market is charging more than it really adds to our overall portfolio” in terms of risk, she says.