SPECIALTY LINES MARKETS
Both construction and sales
opportunities are growing
By Larry G. France
Look around anywhere you travel and you will see that condominiums are appearing as fast the contractors can haul in the necessary construction materials. They are selling even faster, most before the ground is broken.
This translates to many new prospects for independent agents. Sales opportunities range from commercial property to nonprofit D&O for community associations.
A very similar type of risk which is also experiencing vast growth is timeshare/interval ownership. Due to the similarity of these two classes and the abundance of new risk, timeshare/interval ownership will be a new category in the 2004 edition of The Insurance Marketplace (www.insurancemarketplace.com). Coverages can include property, CGL, automobile, inland marine, B&M, EDP, nonprofit and for-profit D&O, and umbrella. These coverages will apply for both condominiums and timeshare exposures.
Willis Programs has developed a program called ResortGuard, which addresses both of these risks. "According to the American Resort Development Association (ARDA), interval ownership is the fastest growing form of vacation ownership in North America," says Willis's Brooks Chase. "This growth is driving the industry towards different and more complex and diverse forms and therefore creating tough challenges for brokers and underwriters to properly cover the exposures of these new types of risks." Chase also states that the combination of for-profit developers and managers, combined with numerous nonprofit ownership associations, creates its own set of challenges.
"Property pricing is stabilizing," says Chase, "but GL rates continue to rise in order to build towards profitability of that line. Nonprofit D&O capacity is readily available. Rates are stable as various programs compete for blocks of business based on form and service."
In the case of nonprofit community associations, which includes condominium, home, property and master associations with commercial exposures as well as timeshares and cooperatives, D&O is necessary and, in some states, mandatory by law.
Joel Meskin, SVP at Ian H. Graham, says that, based on Graham's experience, the nonprofit D&O and fidelity markets have remained constant. "The only area we have experienced capacity issues in has been on higher limits as a result of what reinsurers are willing to write."
Meskin says that many condominium associations are placing their D&O with their package policy, which results in only a minimum of savings and can lead to coverage inadequacies. Meskin recommends that rather than bundling D&O coverage in a package, insureds receive more substantial coverage with a specialty stand-alone program.
Another consideration in not placing D&O with the package policy is exhaustion of liability limits of the primary policy. Many of the coverages available for this class of business will be found in specialized programs. As in all specialty coverages, a target approach is more desirable than a general product.
John Pagoumian, NAPCO LLC, says that the trends within the property insurance market relating to condominiums are similar to those of the overall market. "While the number of insurance carriers that will entertain condominiums is still limited, the overall market is bearing single-digit reduction in rates and, on a rare occasion, a low double-digit reduction. However, habitational risks with significant amount of catastrophe/wind exposure are still a challenge to place and remain on the firm side of the pricing model."
Pagoumian says that "over the past 12 months overall capacity has increased. This is partly a result of the significant rate increases this industry segment has experienced over the past two years and the perception of insurance carriers that current rates may be adequate to underwrite this class profitably. Underwriting requirements remain fairly constant, if you have a well-built and protected risk with minimal losses and the ability to retain significant retention. You will see an increased number of underwriters who will show interest in writing these risks."
Pagoumian says that this overall trend has created a sense for the insurance buyer that the hard market has reached its peak and is showing a downward trend. "Barring any unforeseen events, the immediate future does not show any indication that the current market trend will change."
Last November's condominium article mentioned that the Toronto skyline was inundated with new construction and that units were sold even prior to completion. That has not changed. The Canadian market almost mirrors the United States regarding the past history of capacity, rates and outlook for the future.
Jim Mahood, Gilford Associates in Nepean, Ontario, says the condominium market has experienced substantial rate increases with corresponding reduction in capacity over the past two years. "The increase in rates has averaged 25% to 40% in that two-year period. We anticipate for the rest of 2003 a continuation of rate increases, albeit a lower percent with a stabilization of the capacity crisis. Our expectation is that we will continue to see moderate rate increases in 2004, 10% to 15%, with capacity being available at the rates we are proposing." Mahood says that "from an insurer's perspective, the increases in rates have caused our clients to focus on loss control in order to manage their rising premiums, so the loss ratios for this program continue to be excellent."
It appears that capacity for this class is not a crisis. Rates are stabilizing. There are markets looking to book premium. And last but not least, new prospects are cropping up each day.
The following responded to our survey and indicated that they are a market for condominium risks. Not all markets are operating in all geographical areas. Note the target market indicated by each listee.
Aon Specialty Product Network
200 E. Randolph St., 18th fl.
Chicago, IL 60601
Contact: Tiffany Tegan
Phone: (877) 275-2776
E-mail: moreinfo@ask-aspn.com
Web site: www.askaspen.com
An MGU (AUSCO and Ian H. Graham) and E&S broker (Swett & Crawford) operating in all states with D&O limits of $500,000-$10 million. Will not write timeshares, builder/developer ownership interest or member of the board. St. Paul is the carrier.
Arrowhead General Insurance Agency, Inc.
402 W. Broadway
San Diego, CA 92121
Contact: Arrowhead Marketing Department, Ext. 6931
Phone: (800) 333-5553
Fax: (858) 320-6899
E-mail: mktg@arrowheadgrp.com
Web site: www.arrowheadgeneral.com (corporate)
www.arrowheadagents.com (agents)
An MGU, program administrator, general agency that operates in CA, CT, NJ, NY and VA with personal property limits from $25,000-$250,000 (depending on the state), and liability limits of up to $500,000 (depending on the state). Target markets are 1930 and newer construction in CA and coastal risks in CT, NJ, NY and VA. Can offer short-term vacation coverage and condos rented to others coverage in CA, as well as increased loss assessment coverage and building & alteration coverage in CA, CT, NJ, NY and VA. Clarendon is the A rated carrier.
AVRECO Brokerage
550 West Van Buren St., 12th fl.
Chicago, IL 60607
Contact: Mark Senkbeil, Edward Kean (monoline GL), Kathie Hearlston-Clark, Ken Karsted (monoline property)
Phone: (800) 776-7475
Fax: (312) 922-9562
An E&S broker that operates in all states with limits of $100 million. All carriers are A rated.
BAT Insurance Corp.
465 S. Beverly Dr.
Beverly Hills, CA 90212
Contact: Tony Trocino
Fax: (310) 282-7133
E-mail: trotony@earthlink.net
An E&S broker operating in CA and NV only with limits of $5 million. Target market is buildings constructed since 1972. Will not cover older buildings. Magna Carter is a B rated carrier; Markel and Evanston are rated A.
Burns & Wilcox Ltd.
220 Kaufman Financial Center
Farmington Hills, MI 48334
Contact: Call 800 number for local branch office
Phone: (800) 521-1918
Web site: www.burnsandwilcox.com
An MGA/E&S broker that operates in all states except AK, ME, NJ and NY with limits that vary by carrier. Target markets vary by carrier. Can offer GL and umbrella.
Century Surety Group
P.O. Box 163340
Columbus, OH 43231
Contact: Joe Bova, Thomas Rossi
Web site: www.centurysurety.com
An insurer that is not available in MA and NY. Limits of $1 million/$2 million are available. Can offer excess/umbrella of $5 million. Century is rated A.
Delaware Valley Underwriting Agency, Inc.
420 S. York Rd.
Hatboro, PA 19040
Contact: Joel Kaplan
Phone: (800) 388-0215
Fax: (215) 672-7983
E-mail: info@dvua.com
Web site: www.dvua.com
An MGA/E&S broker that operates in GA, KY, NC, NJ, NY, OH, PA, SC and WV with various limits. Target market is non-coastal frame construction or superior construction. Can offer D&O and umbrella. All carriers are rated A.
The Distinguished Programs Group
6 E. 43rd St.
New York, NY 10017
Contact: James A. Tesoriero
Phone: (888) 355-4626
Fax: (212) 297-3146
E-mail: jtesoriero@distinguished.com
Web site: www.distinguished.com
An MGA that operates in all 50 states with property limits of up to $50 million per location, CGL of up to $41 million/$2 million per location, and umbrella of up to $100 million per location. Target market is condominiums. Can offer D&O liability and crime. Chubb and Great American are the A rated or better carriers.
Evolution Insurance Brokers
8722 Harrison St.
Sandy, UT 84090
Contact: F. Darrell Lindsey
Phone: (877) 678-7342
Fax: (801) 304-5551
E-mail: fdl@eibdirect.com
Web site: www.eibdirect.com
An E&S broker that operates in all states with all limits. Will consider all classes. Prime is rated B and Lloyd's is rated in the A range.
Excel Insurance Service, Inc.
301 Oxford Valley Rd., Ste. 402A
Yardley, PA 19067
Contact: Dennis Pellegrino, Dennis Pellegrino, Jr.
Web site: www.excelins.com
An MGA/E&S broker operating in NJ and PA only with unlimited limits. Can offer D&O, property, and GL. All carriers are rated A or above.
Gateway Underwriters Agency
755 S. New Ballas Rd., Ste. 130
St. Louis, MO 63141
Contact: Mary Beth Fox
Phone: (800) 325-7652
Fax: (314) 567-4552
E-mail: marybeth.fox@gua-stl.com
An MGA that operates in IL, KS, MO and NE with limits of $1 million/$2 million. Can offer property & liability, EQ and D&O. Coverage not offered when developer is still involved. Nautilus, Western World, USLI, and Scottsdale are the carriers.
Gifford Associates Insurance Brokers (HUB International)
346 Moodie Dr.
Nepean, Ontario, Canada K2H
Contact: Terry Markell, Jim Mahood
Phone: (800) 570-8770
E-mail: gifford@giffordhub.com
A general insurance broker that operates in eastern Ontario, Canada, with limits of $50 million + Cdn. Target market is residential condominiums (both property-managed and self-managed. Can offer D&O, fidelity, pollution, and equipment breakdown insurance. Carriers are Aiva/ING (rating dependent on construction and losses).
H.R. Keller & Co., Inc.
1520 Sheridan Dr.
Buffalo, NY 14217
Contact: Rob Martin, John Barton
Phone: (800) 424-2202
An E&S broker/wholesaler that operates in NY state only with limits that vary by company. Can offer D&O. Various carriers are used to place coverage.
Hull & Company, Inc.
2150 S. Andrews Ave.
Ft. Lauderdale, FL 33316
Contact: Carl Bartiotti (commercial lines)
Phone: (800) 678-4855
Web site: www.hullco.com
St. Petersburg, FL
Contact: Larry Beller (commercial lines)
Phone: (800) 727-4855
NC, SC, VA
Charlotte, NC
Contact: Donna Porter (commercial lines)
Phone: (800) 241-4855
Texas
Dallas, TX
Contact: Jack Huff, Carol Gordon, Lori Lemons (commercial lines)
Phone: (800) 765-4855
California
Stockton, CA
Contact: Jeff Case (commercial lines)
Phone: (866) 434-2210
An E&S broker that operates in CA, FL, NC, SC, TX and VA with limits of up to $50 million. Target markets are condominiums, town homes, and homeowners associations. Can offer property, excess property, CGL, umbrella, HO-6, D&O, and personal articles floaters. Carriers are Empire Indemnity, AIG, Lexington, USF&G, USLI, Scottsdale, General Star, and Evanston, all rated A or above.
Ian H. Graham Insurance/Aon Community Association Services
5161 Lankershim Blvd., Ste. 240
North Hollywood, CA 91601
Contact: Joel W. Meskin, Sue Barochiere, Jamison Nelson
Phone: (800) 621-2324
Fax: (866) 229-3754
E-mail: joel_meskin@ianhgrahaminc.com
Web site: www.ihginsurance.com
A managing general underwriter that operates in all 50 states with the following limits: nonprofit community association D&O liability--$3 million ($5 million on referral); nonprofit community association fidelity/crime--$3 million; nonprofit community association umbrella--$1 million-$5 million; property manager E&O--$1 million ($2 million on referral); property manager fidelity/crime--$3 million. Target markets are nonprofit homeowners associations, property owner associations, condominiums, cooperatives, timeshare and commercial associations where membership is premised on real property ownership. These other nonprofits are written by sister association Aon Association Services. Will not write for-profit associations, or associations where membership is not based on real property ownership. Can offer nonprofit community association D&O, fidelity/crime, umbrella; and property manager E&O, fidelity/crime. The A rated carrier is Continental Casualty.
Insurance Innovators Group
P.O. Drawer 969
Glenside, PA 19038
Contact: Etty Herzig, Barb Randall
Phone: (800) 523-6422
Fax: (215) 886-2482
Web site: www.iiigroup.com
An MGA that operates in DE, MD, NJ, NY and PA with GL limits of $1 million/$2 million/$1 million, plus umbrella or excess (property varies). Can offer D&O. All carriers are A rated.
International Excess Agency, Inc.
26451 Curtiss Wright Pky.
Richmond Heights, OH 44143
Contact: Diane Madigan, Ext. 2083
Phone: (800) 937-3497
Fax: (888) 291-1382
E-mail: info@internationalexcess.com
An E&S broker that operates nationwide depending on state tax filings required. Property primary and excess limits of up to $100 million, and liability primary and excess of up to $100 million. Target market is condominium resident associations. More difficult to place are associations where large number of units are rented to others or students, where there is a poor loss history and where the developer is still involved in the project. Can offer condominium owners E&O and excess flood. The many property liability and E&O markets are all A rated or better.
IT Risk Managers, Inc.
P.O. Box 504
Okemos, MI 48805
Contact Larry Harb
Phone: (888) 280-8710
Fax: (517) 381-8699
E-mail: info@itriskmanagers.com
Web site: www.itriskmanagers.com
An E&S broker that operates in all states with limits of $100 million. Target markets are real estate portfolio - property manager, condominiums and apartments, and hard-to-place. Can offer property and umbrella, primary and excess. All carriers are rated A or better.
M.J. Kelly Co., Inc.
4415 E. Sunshine
Springfield, MO 65809
Contact: Lori Drake, Heather Duffield, Shawna Cooke
Phone: (800) 725-7211
Fax: (417) 883-7103
E-mail: ldrake@mjkelly.com
Web site: www.mjkelly.com
An E&S broker that operates in AR, IL, KS, MO and OK with various limits. Target market is risks with property limits under $3 million. Can write property, GL, D&O and umbrella. Various carriers are used to place coverage.
NAPCO LLC
333 Thornall St.
Edison, NJ 08837
Contact: John Pagoumian
Phone: (732) 549-5222
Fax: (732) 549-0221
Web site: www.napcollc.com
A property intermediary broker and reinsurance broker operating in the United States and Canada, with $1 billion-plus limits. Target markets are condominiums, garden apartments, habitational, hi-rise, condo associations, coastal properties, and other locations with catastrophic exposures. Wind, flood and earthquake are also written. Various A rated or better companies are used.
NIF Group/NIF Pro
30 Park Ave.
Manhasset, NY 11030
Contact: Nancy Williams or any NIF Group office listed on Web site
Phone: (800) 892-8892
Web site: www.nifgroup.com
An MGA, E&S broker that operates in all states; also holds surplus lines licenses in CT, FL, GA, MA, NJ, NY, PA and RI. Limits available are $3 million/$3 million. Can offer D&O and package. All carriers are rated A or greater.
Pacific Specialty Insurance
3601 Haven Ave.
Menlo Park, CA 94025
Contact: Robert Large, (800) 828-3003; Customer Service, (800) 303-5000
Phone: (800) 303-5000
Fax: (650) 780-4848
Web site: www.mcgrawgroup.com
An insurer that operates in CA, GA and TX with unscheduled personal property limits of up to $250,000 (ACV), dwelling (replacement cost), loss of use (10% of unscheduled personal property limit). Can offer optional liability up to $300,000, med pay, earthquake, woodstove, deductible options, loss assessment, optional replacement cost for unscheduled personal property. Pacific Specialty (CA, GA) is rated A, and Pacific Specialty Lloyd's (TX) is also an A rated company.
Prime Insurance Syndicate Inc./I.E.B.S.
P.O. Box 4439
Sandy, UT 84091
Contact: Rick J. Lindsey
Phone: (877) 243-8181
Fax: (801) 304-3702
E-mail: rjl@primeis.com
Web site: www.primeis.com
An MGA (IEBS) and insurer (Prime) that operates in all states with all limits. Will consider all classes. Prime is rated B- and Lloyd's of London is rated in the A range.
Princeton Risk Managers, Inc.
435 Wall St., Research Park
Princeton, NJ 08540
Contact: Carmella Maglione
Phone: (800) PRM-0099
Fax: (609) 924-8155
E-mail: cmaglione@princetonrisk.com
Web site: www.princetonrisk.com
An E&S broker that operates in NJ, NY and PA with property limits of up to $75 million and liability of $1 million/$2 million/$1 million (plus umbrella). Target markets are high-rise and garden-type condo complexes including coastal. Chubb, United National, Lexington, International Insurance Co. of Hannover, Lloyd's, Tudor, American Empire, Seneca, and C&F are the carriers.
Quaker Special Risk
P.O. Box 415
Sea Girt, NJ 08750
Contact: Frank Walsh
Phone: (800) 447-4180
Fax: (732) 223-6666
Web site: www.qsr-insurance.com
An E&S broker that operates in all states with GL limits of $1 million/$2 million, $10 million umbrella, and $25 million property. Target markets are coastal frame condo associations and high-rise condos. Can offer GL, property plus umbrella, and condo association D&O. Lexington and Lloyd's are the carriers.
RISC Inc.
2001 Bryan St., Ste. 2900
Dallas, TX 75201
Contact: Peter Gordon-Wright, Donna Schoeneman
Web site: www.gorisc.com
An E&S broker that operates in all states except TX (agent must have own surplus lines license) with $25,000 minimum premiums. Target market is condominiums. If the agent is not in TX, he or she must be able to file the taxes. New agents must write $100,000 annually to be appointed. All carriers are A rated.
Roush Insurance Services, Inc.
P.O. Box 1060
Noblesville, IN 46061
Contact: Gabe Derzhavets, Jerry Roush, Scott Sackers
Phone: (800) 752-8502
Fax: (317) 776-6891
E-mail: gabe.derzhavets@roushins.com jerry.roush@roushins.com scott.sackers@roushins.com
Web site: www.roushins.com
An MGA that operates in IL, IN and OH only with limits of $1 million property/$3 million liability in-house. Higher limits are available. Can offer inland marine for maintenance equipment. Century Surety, Evanston, Essex, and Scottsdale are the A rated carriers; Atlantic Casualty is rated B+.
Russell Bond & Co., Inc.
295 Main St., Ste. 866
Buffalo, NY 14203
Contact: Michelle Dimartile, Ext. 142
Phone: (800) 333-7226
Fax: (716) 856-0403
E-mail: mdimartile@russellbond.com
Web site www.rusellbond.com
An MGA that operates in NY only with all limits. Target markets are minimum personal property limits of $40,000. Will consider risks with claim problems, dog exposures, seasonal secondary, co-ops. Can offer umbrella, D&O, and condo association. U.S. Underwriters is the A rated or better carrier.
S.H. Smith & Co.
41 N. Main St.
West Hartford, CT 06107
Contact: Jeff Parmenter
Phone: (800) 356-0168
Fax: (860) 561-3606
E-mail: jeffp@shsmith.com
Web site: www.shsmith.com
An E&S broker operating in all states with limits up to $150 million. Will write tenant occupied dwellings as well as property, GL, umbrella and D&O. Carriers are Admiral, American Empire, First States, Great American, Chubb, Indian Harbor/Affliated FM and Royal.
Southern Insurance Underwriters, Inc.
P.O. Box 105609
Atlanta, GA 30348
Contact: Charles Roberts, Barbara Coming, Stacy Donlevy
Web site: www.siuins.com
An MGA/E&S broker that operates in AL, FL, GA and SC with limits of $5 million plus. Can offer property, casualty, and D&O. Scottsdale, Essex, Lloyd's, and USLI are the A rated or better carriers.
Superior Access Insurance Services
P.O. Box 57092
Irvine, CA 92619
Contact: Joe Auditor
Phone: (800) 272-7550
Web site: www.superioraccess.com
An E&S broker that operates in AZ, CA, NV and TX with maximum property limits of $12 million. Will consider only buildings under 25 years old with a maximum of three stories. Can offer property, liability, crime and inland marine. Century is the A rated carrier.
U.S. Risk Insurance Group, Inc.
10210 N. Central Expy., Ste. 500
Dallas, TX 75231
Contact: Julie Byington
Phone: (800) 232-5830
An MGA/E&S broker that operates in all states on a nonadmitted basis with all limits on property and GL limits of up to $3 million/occurrence/$3 million aggregate in-house, plus umbrella. Can layer accounts if there is a need and the limits warrant. Target market is condominium associations. Can offer hired & non-owned auto, ordinance or law, equipment breakdown, full glass coverage, and condominium special form. The A rated or better carriers are Colony, Admiral, Chubb, Westchester Surplus, Mount Hawley, Royal, Clarendon, Scottsdale, First Specialty, Columbia, General Star, and Essex.
United Brokers Inc.
P.O. Box 1243
New Albany, IN 47151
Contact: Crystal Burns, Janice Taylor, Ron Gapp
Phone: (800) 444-4824
Fax: (812) 949-4015
Web site: www.ubinc.com
An MGA/E&S broker that operates in most states with property limits of $10 million, liability of $10 million, and D&O of $1 million. Can offer D&O. Penn America, USLI, Colony, and Markel are the A rated or better carriers.
USA Insurance Group, Inc.
158 N. Harbor City Blvd.
Melbourne, FL 32935
Contact: Marketing
Phone: (800) 213-6093
Fax: (215) 396-4220
E-mail: info@usasr-ins.com
An MGA that operates in all states except AK, CA and HI with limits of up to $15 million. Target markets are homeowners associations, town home associations, and condominium associations. Can offer property and inland marine. Carriers are ARCH, Lloyd's, and Westchester, all A rated.
Western World Insurance Co.
400 Parson's Pond Dr.
Franklin Lakes, NJ 07417
Contact: Timothy P. Hochkeppel
Phone: (201) 847-8600
Fax: (201) 847-1010
Web site: www.westernworld.com
An insurer that operates in all states with limits of $1 million/$2 million. Target market is residential condo associations. Can offer GL and property. Western World and Tudor are the A rated or better carriers.
Willis Programs
Pease International Tradeport
1 New Hampshire Ave., Ste. 200
Portsmouth, NH 03801
Contact: Brooks Chase
Phone: (877) 251-8237
Fax: (603) 334-3090
Web site: www.resortguard.com
An MGA/program administrator that operates in all states with limits of $1 million primary and $10 million umbrella. Target markets are destination resorts, resort hotels, destination spa hotels, boutique hotels, timeshare/interval ownership condominiums, and large scale leisure style community associations. Can offer property, liability, auto, crime, and umbrella. Admitted and nonadmitted carriers are used, depending on the state. Chubb is the carrier for D&O and extended crime. *
