SPECIALTY LINES MARKETS
From a tight to a tighter market
By Larry France
When it was decided a year ago to include this class of business as a Specialty Market topic, the general overall apartment and condominium market was headed in the direction of a difficult risk to place regarding underwriting and rating factors. The insurance market firmed in most classes during that time. In addition, the recent terrorist events in our country are impacting all lines of coverage to some degree.
Information gathered for this article indicated that respondents' rates generally were up 10% to 20% in the West, 15% to 30% Mid-West, and as much as 40% in the East.
Capacity, if it hasn't already, will probably shrink. The number of stories in a building, especially in new construction, will certainly be a factor in underwriting acceptability.
Another factor to consider will be whether the carrier's treaties are up for renewal in January. Look for pricing to go upward, underwriting standards to tighten, and enhancements to be restricted.
Carriers have either pulled back from this class or, in some instances, have put a moratorium on new business.
Condominiums have become very attractive as vacation homes, retirement homes, and as a primary residence where maintenance is handled for the owner. The form of ownership is unique-- individual ownership of a single unit in a multiple-unit building with joint ownership on a percentage basis of the part of the property that is shared by all of the other unit owners in common. These include hallways, grounds, approaches, driveways, and lobbies.
Coverages most common are property, liability, crime and workers compensation. Other coverage considerations are condominium D&O, signs, autos, maintenance equipment, windstorm, earthquake or DOC.
Markets that are looking for new submissions can and will be very selective and will require the agent to provide complete submissions.
Tom Rossi, regional vice president of Century Insurance Group, says that they are seeing a substantial increase in submissions in the habitational classes. "Standard carriers are re-evaluating their positions on this class. They have been increasing rates or withdrawing from the market completely. As an underwriting company, we have always been a market for this class of business. However, we firmly believe in underwriting the exposures and charging an appropriate premium. As an industry we need to get back to the "Basics."
Rossi states that all submissions should contain the following "Basic" information:
--Prior carrier history
--Completed applications, including a habitational supplemental questionnaire
--Correct ISO classifications codes
--Units of exposure, sales, payroll, area, etc.
--Currently valued company loss runs
--Complete description of the risk and surrounding exposures
"Keep in mind," says Rossi, "a completed application is the underwriter's picture of a risk. Underwriters are more likely to provide better service and competitive quotes based on a Picasso rather than an underexposed snapshot."
Complete submissions are carrying more weight than ever. Reinsurers require certain information, depending on the program or coverage. This information is vital to maintaining the integrity of the program. They will audit the carrier or MGA to check for compliance to those treaty agreements. This procedure was lax across the industry during the past several years--but not any more. That is why agents may feel that they are being required to obtain more details than in the past.
Besides the normal property problems, earthquake, windstorm and flood present even more of a challenge. Two alternatives have emerged to fill these voids.
ICAT Manager Ben Wallis states: "The apartment and condo industry faces numerous challenges in finding adequate and cost-effective earthquake and windstorm insurance coverages in today's hardening markets. The capacity 'crunch' is the driving force behind books of business being re-written from coast to coast. Carriers non-renewing apartment and condo accounts, as well as increasing price and deductibles for others, is the norm."
According to Wallis, reinsurance capacity and pricing are the governing catalysts for these current market conditions. "Carriers that have written business in the apartment and condo market have struggled to spread their exposures throughout their territories and states. This being said, available coverage in key areas (Miami, Los Angeles, San Francisco, Galveston, etc.) has become increasingly problematic, due to concerns that these areas are prone to major catastrophic events."
Minimum premiums in California, Florida, and Texas, for example, go as high as $15,000 to $20,000 for earthquake and windstorm coverage. "The E&S trend over the past 10 to 15 months has been to write the property/liability exposure, excluding earthquake and windstorm, with one carrier and attach the catastrophic coverage throughout other markets. This leads to nonadmitted arenas where the product, pricing and conditions differ from the standard markets."
"With no relief for the reinsurance markets in sight, producers will find it increasingly difficult to place coverage in high-volume areas. The key for all agents and brokers is to diversify and spread the risk within their own portfolios, hence creating a confident and trusted book of business that carriers will not shy away from," Wallis says.
ICAT provides "A" rated admitted paper for commercial catastrophic coverage (earthquake and windstorm) for small to medium-sized businesses. Flood insurance is another hurdle to address when placing a risk in this class.
CondoProFLOOD is an insurance product created especially for residential condominiums. According to Herb Segal of CondoProFLOOD, "Affordable flood insurance became a major concern for condo associations in 1994." Flood insurance polices now contain a coinsurance clause, which forces policyholders to increase limits to comply with 80% of building replacement cost.
In 1995, premiums increased. Because of increased flood limits some policyholders faced coinsurance penalties; others let their policies lapse entirely.
Segal says: "CondoProFLOOD now offers an alternative for buildings in Flood Hazard Areas. Our policy is a flat limit without coinsurance, credits better construction and multiple locations, and offers a payment plan."
Additional features include:
--Flood coverage in "A" zones, B, C, and X (not written in V, all states except HI and VI, Dade, Broward, and Monroe counties in FL).
--Competitive premiums
--Minimum policy limit of $250,000 per complex
--Maximum policy limit of $15,250,000 per complex or higher
--Multiple buildings on one policy
This class will most likely become competitive and require more detailed submissions to obtain the best product for your client.
The following have responded to our survey and indicated that they are a market for apartment and condominium risks.
Agency Marketing Services, Inc.
P.O. Box 41786
St. Petersburg, FL 33743
Contact: Stephanie Hays, Suzanne Ricciuti, Ken O'Neill
Phone: (800) 542-2805, Ext. 129
Fax: (727) 343-4123
Web site: www.agencymarketing.com
An MGA/E&S broker that operates in FL only, offering various property limits up to $10 million, liability of $1 million/$2 million and $10 million umbrella. Target markets are both large and small accounts with EPL and D&O also offered. Coverage is provided by both domestic and foreign companies, all A rated.
BAT Insurance Corp.
465 S. Beverly Dr.
Beverly Hills, CA 90212
Contact: Tony Trocino, Jerry Irion
Phone: (310) 282-0753
Fax: (310) 282-7133
An E&S broker operating in CA and NV with limits of $50 million. Looks at preferred accounts--completely updated buildings with good loss experience are acceptable. Carriers are Greenwich and PMI, both A rated.
Burns & Wilcox, Ltd.
30833 Northwestern Hwy., Ste. 220
Farmington Hills, MI 48334
Contact: Phone 800 number for local branch office
Phone: (800) 521-1918)
Web site: burnsandwilcox.com
An MGA/E&S broker that operates in all states except ME, NJ, NY and AK. Limits vary per carrier, as do target markets. GL and umbrella coverages are available. Various carriers are used to place coverage.
Century Insurance Group
2400 Corporate Exchange Dr., Ste. 290
Columbus, OH 43231
Contact: Tom Rossi, Jim Murphy
Phone: (800) 428-4384
Web site: www.centurysurety.com
An insurance company that operates in most states. Limits vary by account. Target markets are apartments and condos. GL, property, and excess are available. Various A rated companies are used to place coverage.
CondoProFlood Insurance Agency, Inc.
145 Rosemary St.
Needham, MA 02494
Contact: Herb Segal, Dan Fiscus
Phone: (781) 455-6664
E-mail: herb@endlar.com dan@endlar.com
Web site: www.endlar.com
An MGA operating in all states with limits of $15 million/$250,000 in-house; higher limits are determined per-case. Target market is condominiums with flood insurance offered for all zones except V. General Star and Lloyd's are the A rated carriers.
Continental Agency of CT
P.O. Box 187109
Hamden, CT 06518
Contact: Gerard Prast
Phone: (800) 922-2563
Fax: (203) 288-2312
E-mail: gprast@ca-group.com
Web site: www.ca-group.com
An E&S broker operating throughout the New England states with limits of up to $25 million. Target markets are coastal, high-value condo and homeowners, and apartment buildings or complexes. Carriers are Lloyd's, Great American, Chubb, Hartford, and American Equity.
Continental/Marmorstein & Malone
P.O. Box 586
Paramus, NJ 07652
Contact: Bill Malone
Phone: (800) 932-0249
Fax: (201) 261-8922
E-mail: bmalone@ca-group.com
Web site: www.ca-group.com
An MGA/E&S broker operating in NJ and NY. Limits are $1 million/$2 million with higher primary limits available. All classes are considered. Also available are property/GL, EL/umbrella, tenant discrimination, vacant property, special program-condo D&O, property managers PL including professional, tenant discrimination and EPLI. Carriers are Western World, Essex, American Empire, American Equity, USLI/Mt. Vernon, and Burlington.
Crump Insurance Services, Inc.
7557 Rambler Rd., Ste. 350
Dallas, TX 75231
Contact: Sharon Ward
Phone: (800) 888-7126
Fax: (214) 265-2683
Web site: www.crumpins.com
An MGA/E&S broker operating in all states with limits of up to $50 million and higher--excess also available. All industries are considered with D&O and EPL also offered. Various A rated carriers are used to place coverage.
Crusader Insurance Co.
23251 Mulholland Dr.
Woodland Hills, CA 91364
Contact: Gary A. Corbett
Phone: (800) 669-9800
Fax: (818) 591-9856
Web site: crusaderinsurance.com
An insurer that operates in AZ, CA, NV and OH with limits of $1 million. Will not consider condos. Crusader is the A rated carrier.
The Distinguished Programs Group
6 E. 43rd St., 15th floor
New York, NY 10017
Contact: Jim Tesoriero
Phone: (888) 355-4626, Ext. 3150
Fax: (212) 297-3132
E-mail: jtesoriero@distinguished.com
Web site: www.distinguished.com
An MGA operating in all 50 states with limits of $5 million, $10 million, $25 million, $50 million $100 million and $200 million. Classes not written are vacant/distressed properties and properties in the course of construction. Also offered are D&O and crime coverage for condos and co-ops. TIG and Kemper are the A rated carriers.
The Embassy Insurance Group
4110 N. Scottsdale Rd., Ste. 340
Scottsdale, AZ 85251
Contact: Bob Kindness
Phone: (800) 214-5808
E-mail: bkindness@embassyinsurance.com
Web site: www.embassyinsurance.com
A program manager that operates in all states with limits of $10 million. Most classes are considered, with crime also offered. Various A rated carriers are used to place coverage.
Gateway Underwriters Agency
755 S. New Ballas Rd., Ste. 130
St. Louis, MO 63141
Contact: Mary Beth Fox, Mike Ehrhardt
Phone: (800) 325-7652
Fax: (314) 567-4552
An MGA operating in IL, KS, MO and NE with limits of $10 million, including umbrella. Most classes are considered; will write resort/time-share condos. Also offered are property, GL and umbrella. USLI/Mt. Vernon, Western World, Nautilus, National Fire and Marine, and Lloyd's are the A rated or better carriers.
H.W. Gorst Co., Inc.
805 Fairmont Ave.
Glendale, CA 91203
Contact: Cindy Langbehn, Ext. 123
Phone: (818) 507-0900
Fax: (818) 507-1133
Web site: www.gorst.com
An E&S broker that operates in CA only, with liability limits of $100,000 to $1 million. Target market is one- to six-story apartment buildings. Will write liability for swimming pools, crime, glass, property and additional insureds. Scottsdale is the carrier.
International Catastrophe Insurance Manager, LLC
2995 Wilderness Pl., Ste. 1NE
Boulder, CO 80301
Contact: Ben Wallis, National Marketing Coordinator
Phone: (800) 694-4228
Fax: (800) 754-6919
E-mail: marketing@icatmanagers.com
Web site: www.icatmanagers.com
An MGA in stand-alone earthquake and stand-alone windstorm coverage in the exposed coastal regions of the United States. Earthquake is offered in CA, OR and WA; and windstorm is offered in AL, FL, MS, NC, SC and TX. Total building limits of $7.5 million are available with higher limits available per location. Target market is small to medium-sized commercial risks, including habitational. Also offered are content/business personal property, business interruption, ordinance or law, special class coverages, and earthquake sprinkler leakage. Clarendon National and AXA Re America are the A rated admitted carriers.
Insurance Innovators Group
P.O. Drawer 969
Glenside, PA 19038
Contact: Etty Herzig, Barbara Randall
Phone: (800) 523-6422
Fax: (215) 885-7300
Web site: www.iiigroup.com
An MGA operating in DE, MD, NJ, NY and PA and offering GL limits of $1 million/$2 million/$1 million plus umbrella or excess. Property varies. D&O coverage also is available. Various A rated carriers are available for coverage.
M.J. Kelly Co., Inc.
4415 E. Sunshine
Springfield, MO 65809
Contact: Gary Spurrier
Phone: (800) 725-7211
Fax: (417) 883-7103
E-mail: gspurrier@mjkelly.com
Web site: www.mjkelly.com
An insurance broker operating in AR, IL, KS and MO. Limits for 1-4 family apartments are $150,000 to $300,000 in-house; limits for condo-owners are $100,000 in-house. Target market is 1-4 unit apartments and condo-owners only. USLI is an A rated carrier, and Universal Fire is B rated.
Lewis-Chester Associates
119 Summit Ave.
Summit, NJ 07901
Contact: Maryellen Alvarez, Bill Frankel
Phone: (800) 356-7681
Fax: (908) 273-0192
Web site: lcgroup.com
An MGA/agency operating in AZ, CO, CT, DC, DE, IL, IN, KY, MA, MD, MI, NJ, NY, OH, PA and RI with various limits. Target markets are apartments, condos, senior housing, publicly financed/privately owned. Not written are motels, hotels, rooming houses and nursing homes. Also offered are package, umbrella, auto, tenant discrimination, boiler, workers comp, EPLI and nonprofit D&O. Zurich, Hartford Steam, and Evanston are A rated carriers, and PSM is B rated.
London American General Agency, Inc.
10085 Carrell Canyon Rd., Ste. 100
San Diego, CA 92131
Contact: Greg Liewald
Phone: (858) 547-9000
Fax: (858) 547-9199
E-mail: gliewald@londonamerican.com
Web site: www.londonamerican.com
An MGA/E&S broker operating in CA only with market capacity limits. Target market is nonstandard risks with GL, property, earthquake, D&O and umbrella also offered. Major nonadmitted carriers rated A or better are used to place coverage.
McSweeny Agency
505 High St.
Burlington, NJ 08016
Contact: Richard McSweeny
Phone: (609) 387-0101
Fax: (609) 387-7171
An MGA/E&S broker operating in NJ and PA only with property limits of $5 million, plus excess and liability limits of $10 million plus excess. Will consider all risks with coastal and urban also acceptable. Scottsdale, Burlington, Hartford, Lloyd's and others are all A rated.
NorthCoast Excess & Surplus, Inc.
2244 East Enterprise Pky.
Twinsburg, OH 44087
Contact: Jeff Burke
Phone: (330) 405-9890
Fax: (330) 405-9893
E-mail: ncoastxs@msn.com
An E&S broker that operates in OH only with property limits of up to $10 million and liability limits of $2 million/$2 million, plus umbrella/excess. Most classes are considered, and A rated admitted and nonadmitted carriers are used to place coverage.
Pacific Specialty Insurance/McGraw Insurance Services
3601 Haven Ave.
Menlo Park, CA 94025
Contact: Mark Preininger
Phone: (800) 828-3003
Fax: (650) 780-4845
E-mail: mpreininger@mcgrawgroup.com
An insurer that operates in CA only with limits of up to $250,000 personal property, up to $100,000 dwelling, and up to $500,000 PL. All classes are considered--with earthquake, replacement cost, loss assessment and animal liability also offered. Carriers rated A by A.M. Best are used to provide coverage.
Philadelphia Insurance Companies
One Bala Plaza, Ste. 100
Bala Cynwyd, PA 19004
Contact: Sean Sweeney, Marge Revelli
Phone: (800) 873-4552
Fax: (610) 617-7940
E-mail: mrevelli@phlyins.com
Web site: www.phlyins.com
An insurer that operates in all states except AR, IA, KS, MO, NE, NM, OK, the SE quadrant of WY, and the TX panhandle. Limits are $3 million aggregate and $10 million umbrella. Will not consider apartment buildings or condos built before 1980. Also offered are employee dishonesty, reward reimbursement, sewer & water backup, and coverage for loss of condo fees. Philadelphia Indemnity is the A rated carrier.
Prime Insurance Syndicate, Inc./ I.E.B.S.
P.O. Box 439
Sandy, UT 84091
Contact: Emanuelle Mercado
Phone: (800) 456-4576
Fax: (313) 408-8081
E-mail: UDA@primeis.com
Web site: www.primeis.com
An MGA/insurer operating in all states with limits from $100,000 to $1 million. All classes are considered. Carriers are Prime--B rated, and Lloyd's--A rated.
Roush Insurance Services, Inc.
P.O. Box 1060
Noblesville, IN 46061
Contact: Gabe Derzhavets, Tony Armor, Jerry Roush
Phone: (800) 752-8402
Fax: (317) 776-6891
Web site: www.roushins.com
An E&S broker that operates in IL and IN only with limits of $1 million property/$3 million liability in-house; higher limits are available. Target market is student housing with inland marine for maintenance equipment, and workers comp for employees also offered. Carriers are Gainsco, Reliant American, and Scottsdale, all A rated.
Robert A. Schneider Agency
5620 Smetana Dr., Ste. 225
Minnetonka, MN 55343
Contact: Sue Karkhoff
Phone: (800) 862-6038
Fax: (952) 938-0701
E-mail: sk@rasinc.com
An MGA/E&S broker operating in IA, MN, ND, SD and WI with limits of $15 million. Prefers smaller risks under $1 million. D&O, umbrella, GL and property also are offered. Illinois Employees and USLI are the carriers.
S.H. Smith & Co.
41 N. Main St.
West Hartford, CT 06107
Contact: Jack Kramer
Phone: (800) 356-0168
Fax: (860) 561-6709
Web site: shsmith.com
A purchasing group operating in all states with limits of $250 million. Target markets are apartments and condos. Personal liability also may be included. Carriers are rated A or better by A.M. Best.
Surplus Insurance Brokers Agency, Inc.
P.O. Box 749
South Bend, IN 46624
Contact: Sean Urbansk; Carol Dhoore
Phone: (800) 342-5706
Fax: (800) 578-7758
E-mail: surbanski@surplusins.com
An MGA that operates in IN only with limits of $1 million. Will consider property and umbrella. Scottsdale is the A rated carrier.
Target Capitol/Target Insurance Services
3033 Ogden Ave., Ste. 300
Lisle, IL 60532
Contact: Joanie Kamholz
Phone: (630) 961-9605
Fax: (630) 961-0284
An MGA operating in several states offering limits of $1 million/$2 million, $100,000 products/completed operations, $50,000 fire damage. Target markets are apartments, condominiums, and townhomes (including associations) 4 stories or less. Century Insurance Group is the A rated carrier.
U.S. Risk Group, Inc.
10210 N. Central Expy., Ste. 500
Dallas, TX 75231
Contact: betty@usrisk.com
Phone: (800) 232-5830
E-mail: betty@usrisk.com
Web site: usrisk.com
An MGA operating in TX only with limits of $1 million/$2 million. Subsidized classes are not written. Also offered are nonprofit D&O and property. Various A rated carriers provide coverage.
Unifax Insurance Systems. Inc.
23251 Mulholland Dr.
Woodland Hills, CA 91364
Contact: Gay A. Corbett
Phone: (800) 669-9800
Fax: (818) 591-9856
An MGA operating in AZ, CA, NV and OH with limits of $1 million. Will not write condos. Crusader is the A rated carrier.
W.H. Greene & Associates, Inc.
3095 Southwestern Blvd.
Orchard Park, NY 14127
Contact: Bill Greene, Robert Schiele, Michael LaMarca
Phone: (716) 675-3095
Fax: (716) 675-6722
E-mail: mail@whgreene.com
Web site: whgreene.com
An MGA that operates primarily in NY; umbrella written in most states. Limits are $1 million/$2 million, CGL. Target market is hard-to-place risks, with property and umbrella liability also offered. The A rated or better carriers are Northfield Tudor and Admiral, all nonadmitted.
Western World Insurance Co.
400 Parson's Pond Dr.
Franklin Lakes, NJ 07417
Contact: Timothy Hochkeppel
Fax: (201) 847-1010
Web site: www.westernworld.com
An insurer operating in all states with limits of $1 million/$2 million. Also offers GL and property. Western World and Tudor are the A rated carriers. *
