Rising Star Kyle McClellan of NSM Stands By His Clients in the Niche School Bus Market

Arranging coverage for companies that transport students has become increasingly difficult due to nuclear verdicts that are inhibiting reinsurance appetite.
By: | September 15, 2023

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Here’s our conversation with Kyle McClellan, practice leader at NSM Insurance Group and a 2023 Power Broker winner in the transportation category.

Risk & Insurance: How did you get into insurance?

Kyle McClellan: Growing up, one of my closest mentors was in the insurance business, which originally drove me to follow their path at NSM Insurance Group. While in college, I interned at NSM, and it served as my first experience in the industry. I began to take a real interest in the business and understand the various roles and responsibilities everyone plays.

The internship gave me great exposure to the insurance field and helped drive me to pursue a career in the brokerage world and join NSM’s retail division, NSM Insurance Brokers. I’ve always had an entrepreneur’s mindset, starting various businesses and side hustles while in college, and to me, the brokerage business was an opportunity to build a business within a business.

R&I: What are the largest risks now facing clients in the transportation market?

KM: Within the transportation market, I focus specifically on working with school bus contractors.

The biggest challenge I see now is that there is a limited field of insurance carriers looking to write this class of business. Some are currently exiting, which will create opportunities for others — however, not all carriers are eager to raise their hand and double down on this class of business.

Much of this has to do with the reinsurance marketplace and the nuclear verdicts we have been seeing in recent years. There has been a significant rise in claims severity.

Instead of a claim being closed and resolved under the primary $1 million auto liability limit, it’s now elevated and piercing umbrella layers into the millions. This has a ripple effect on the overall class of business, and ultimately drives up the cost.

So now on top of rising interest rates, gas prices, driver shortages and delays in new bus deliveries, insurance costs are also added to the list of challenges faced by school bus contractors.

R&I: Can you give an example of how you have helped a client overcome such a risk?

KM: Considering what we’re seeing in the market, part of our job is to ensure that our clients are receiving access to the most comprehensive and competitive insurance programs. For years, I have been developing relationships with all the markets looking to write this class of business.

Now more than ever, we are tasked with conducting full marketing efforts to obtain the best results for our clients — whether that’s obtaining options through captive insurers or looking at large-deductible programs.

Our goal is to bring new ideas and strategies to the table and identify ways to drive down the cost in this environment. Part of that process is displaying how our clients work throughout the year and the types of services we offer to help them mitigate risk.

NSM has an internal claims and loss control team that provides claims handling and trends, which we utilize with the markets to paint a picture of a client’s loss history. NSM has also formed a partnership with a third-party regulatory and compliance team that assists clients with various needs throughout the year.

All this information is packaged together to ultimately make our clients stand out and look more attractive in the marketplace.

R&I: Why is clear and regular communication and being proactive so important to managing and mitigating against risk?

KM: Communication and transparency throughout the year is imperative to developing a long-term, successful relationship with clients.

Part of NSM’s model is to conduct quarterly risk and claims management meetings with clients who are faced with a fair amount of claims activity. This consists of a thorough review of all open claims, where we deliver the current status and future action plan for each claim.

It can also serve as an opportunity to consult with the various adjusters if needed. It ensures we are all collectively on the same page with the claims process and that our clients are being heard.

The same can be said for our pre-renewal meetings.

Now more than ever, we are conducting pre-renewal meetings at least 120 days in advance to deliver expectations and agree on the marketing strategy. The goal of this meeting is to avoid any surprises at renewal and, at times, to allow the client to prepare for an upcoming increase.

Conducting these meetings months in advance and being proactive no matter what the news is — good or bad — is important for managing our clients’ expectations.

R&I: What role does education and training have to play in improving claims and loss control moving forward?

KM: The school bus industry is highly regulated, and given the nature of the business — transporting children — I think everyone would agree that more training and education can never hurt. Ongoing training is imperative for an operation to succeed and for obtaining the best results when tragedy strikes.

Unfortunately, in recent years, I have seen some companies experience horrific accidents that they had not encountered in over 50 years in business. In those situations, it is extremely difficult because what has become so routine just got turned upside down.

Training for the worst will ensure that your team is prepared if and when a tragedy occurs. NSM is equally prepared in those situations, with 24/7 claims support, a pre-accident plan with approved counsel and a team of accident reconstruction experts ready to go.

Our team conducts various trainings throughout the year and is often called on for back-to-school meetings with drivers. Rather than waiting for the worst to occur, our team strives to be proactive and deliver training and education to clients, so they are well prepared if and when a situation occurs. &

Alex Wright is a UK-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at [email protected].

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