Taking flight
Insuring antique aircraft is just one of Arlington/Roe's specialty niches
by Elisabeth Boone, CPCU
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| Airfields are part of the normal life of Arlington/Roe personnel (left to right) Travis French, Broker; Bonnie Bryant, Broker; Pat Truman, Brokerage Assistant; Bryan Smrcina, Broker; Jim Roe, CPCU, President; and Connie French, Vice President-Aviation. |
The Flying Tigers ... the Jolly Rogers … the Black Sheep … these names conjure up visions of the rakish daredevils who risked it all to engage the enemy in the fierce air battles of World War II. The planes they flew—the P-38 Lightning, the B-17 Flying Fortress, the Stearman biplane—are treasured by collectors and admired by World War II buffs. Once available for as little as $300, these “warbirds” now sell for hundreds of thousands of dollars and are becoming increasingly popular, much in the same way as vintage automobiles.
Many World War II aircraft were destroyed after the war, and relatively few remain. For example, just 1,326 Stearmans still exist, and approximately 640 T-6 AT (Advanced Trainer) planes survive today. Many of these legendary craft are still airworthy: Rough Notes publisher Walt Gdowski proudly flies both his bright yellow Stearman and his sleek T-6, and displays them at air shows around the country.
Arranging insurance for these and other antique aircraft is a highly specialized discipline that requires both underwriting expertise and market knowledge. Many of these risks find a home with Arlington/Roe & Co., Inc., a specialty wholesaler that is based in Indianapolis and has an aviation office across from the Louisville International Airport in Louisville, Kentucky. Other office locations are Chicago, Illinois, and Grand Rapids, Michigan. The agency is in the process of purchasing another MGA in Bowling Green, Kentucky.
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| Bryan Smrcina, who is a veteran aviation broker, also holds a pilot’s license; and Connie French was instrumental in establishing Arlington/Roe’s aviation department. |
Arlington/Roe was founded in 1964 by Francis Roe, father of the current president and owner, James A. Roe, and operates as a managing general agent and excess-surplus lines broker. The agency’s aviation business, which represents about 8% of total volume, is written nationwide. For other lines, the firm is active in five Midwestern states. Initially established in the Roe family kitchen as a Foremost Insurance general agent for mobile home and recreational vehicle insurance, Arlington/Roe has since expanded to offer other specialty personal and commercial lines. The agency operates a separate practice for each business unit, staffed with experts in that line. “When a risk comes in the door, it goes straight to the appropriate practice,” Roe says. “What we’re trying to deliver to retail independent agents is not only access to markets they don’t have, but also the specialty expertise they need. We bring that, strictly on a wholesale basis, to the insurance equation.”
Arlington/Roe is now a third-generation family business with Jim Roe’s oldest son, Andy, underwriting and producing business in the commercial underwriting practice, and second oldest son, Patrick, in the personal lines department. With some 1,000 years of combined insurance experience, the staff of Arlington/Roe comprises a close-knit group of dedicated professionals. “We’re constantly on the lookout for quality people who can help extend the products and services we offer,” Roe says. From a kitchen table office in 1964, Arlington/Roe has grown to an organization of some 120 employees and premium volume of $100 million, including a recent acquisition. The firm hasn’t forgotten its roots. “We still have my dad’s first desk and typewriter here,” Jim Roe says.
Serving as vice president of aviation is Connie French, who joined the agency in 1991 with 25 years’ experience and was instrumental in establishing the aviation department. Her son, Travis, is an aviation broker and student pilot who will join the agency full time after he graduates from college in the spring. Veteran aviation broker Bryan Smrcina holds a pilot’s license and brings to the table some 20 years’ experience with both carriers and wholesalers. Bonnie Bryant is an aviation broker whose insurance career spans 30 years. The agency arranges coverage for a wide range of exposures in addition to vintage military aircraft and works with top-rated domestic and international carriers for both aviation and general business. For a complete list of Arlington/Roe’s general and aviation products, as well as its practices, see the chart on page 42.
Partnering with agents
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| Bryan Smrcina with Travis French, Connie’s son, who is an aviation broker and student pilot. |
Arlington/Roe has relationships with some 1,600 independent agents and brokers for its general business, which is written in Indiana and the surrounding states of Illinois, Kentucky, Michigan, and Ohio. A considerable amount of general business is written through surplus lines carriers. About 300 agents nationwide use the agency for aviation risks; the majority of this business is placed with admitted carriers. “Aviation insurance, while subject to state regulation, has the flexibility of uncontrolled rates that does not apply to the rest of the admitted property/casualty industry,” Roe says. He notes that although some aviation insurers specialize in certain risks, Arlington/Roe works with all the leading markets and can offer virtually any coverage an aviation buyer needs.
Many of the retailers for whom Arlington/Roe places aviation business have only an occasional need for the agency’s aviation services. “Typically, if a retail agency specializes in aviation insurance, it really doesn’t need our assistance,” Roe says; however, “an agent might not have access to a particular market, and we might be able to get him or her access. “Our focus is really on the generalist independent retailer who has a customer with a specialty need,” whether that be for aviation or other business, he says.
Arlington/Roe welcomes retail agents who seek a long-term relationship and who can satisfy the agency’s requirements:
• In business for at least three years
• $1 million P-C premium volume
• Three quality standard carriers represented (no direct writers)
• A minimum $25,000 premium volume commitment within 12-24 months )
• Appropriate E&O coverage with a minimum limit of $1 million
Competition on the rise
Because it is active in so many lines of business, Arlington/Roe must keep its finger firmly on the pulse of market conditions. “The marketplace has started to become even more competitive,” Roe observes. “Most insurers made money in 2003, and that led to the beginning of competition in 2004, especially on the property side.” On the aviation side, with access to both domestic and London markets, “We can find a home for almost any risk,” says Connie French.
Like other agencies, Roe comments, “We’re facing the challenge of changing from a hard market, where we were just trying to find coverages, to a situation where we’re trying to deliver quick access to markets as well as good quality products and services.” Over the last few years, he says, “We’ve focused on our back-office management system—quoting, binding, and issuing—so we can get a lot of things done a lot faster. In fact, in 2003 we invested over $500,000 in an agency management system so we would be able to respond to the needs of a more competitive marketplace.”
Over the last five years, he continues, “We have aggressively grown our business so that we can be a bigger factor with both the insurance carriers and the producers we do business with. Our business is based a lot more on relationship than on product,” he explains.
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“Our focus is … on the generalist independent retailer who has a customer with a specialty need [for aviation].”
—James A. Roe, CPCU |
On the aviation side, Connie French says, “One of the challenges we face is getting retail agents to actually want to write aviation insurance. They stay away from it because they’re not comfortable with it. We want to convince them that they don’t have to be the expert; we’ll be the expert, and there are opportunities for them and us to write profitable business.” She encourages retail agents and brokers to ask their clients and prospects if they own a vintage military aircraft, pleasure aircraft, or have commercial aviation interests or related aviation risks.
An important way in which Arlington/Roe works to stay ahead of the market is through its involvement in trade associations for the wholesale industry. The agency is actively involved in the American Association of Managing General Agents (AAMGA), National Association of Professional Surplus Lines Offices (NAPSLO), Aviation Insurance Association (AIA), and Professional Liability Underwriting Society (PLUS). In addition, the agency participates in such organizations as the Society of CPCU, Society of CIC, National Association of Insurance Women, the IIABA, and PIA. Roe was president of AAMGA for the 1999-2000 term and is currently AAMGA government affairs chairman.
On the firing line
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| Some of the Arlington/Roe team are pictured in the firm’s Indianapolis office. |
Because it writes considerable business on a brokerage basis, Arlington/Roe also is keenly aware of the problems that are plaguing the mega-brokers as well as several of the largest standard carriers. Charges of secret contingent commissions and bid rigging have the industry in a tailspin and can be expected to have far-reaching consequences.
Roe tends to believe that the actions of a few are not emblematic of the way the industry as a whole does business. “I don’t believe that where there’s smoke, there’s necessarily fire,” he remarks.
One unfortunate consequence of the unwelcome spotlight in which the insurance industry is squirming, Roe observes, is that “there’s going to be a lot of mistrust on the part of buyers.” Taking a more optimistic view, he says, “I think this is a great opportunity for the industry players that are above board and highly ethical to stand up and say, ‘We’re in a great business; we do things the right way.’ We should make sure that we continue to tell people that this is a legitimate business and we are going to do things ethically and professionally.”
That’s the way it is at Arlington/Roe, and that’s the way it’s been since the agency opened for business 40 years ago in the Roe family kitchen. *
Arlington/Roe
Practices and Products |
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| Practices • Aviation • Bonds • Commercial Brokerage • Commercial Binding/Underwriting • Medical Malpractice • Personal Lines • Professional Liability • Standard Small Business • Transportation & Garage • Workers Compensation |
Aviation coverages • Aerial photography/mapping • Agricultural risks • Air ambulance operations • Air taxi operations (charter) • Aircraft news reporting • Aircraft traffic survey • Airport excess liability • Aviation fueling operations • Aviation workers compensation • Charter/cargo operations • Commercial airports • Contractors at airports • Control tower liability • Corporate aircraft and fleets • Excess aircraft liability • Fixed base operations (FBOs) • Flight schools • Flying clubs • General liability • Hangarkeepers • Helicopters • Industrial aid aircraft • Manufacturers aviation products liability • Non-ownership liability (personal/corporate) • Pleasure aircraft • Private airstrips • Products liability and completed operations • Repair and service operations • Sailplanes • Sales demonstration aircraft • Transition pilots • Vintage military aircraft |
For more information:
Arlington/Roe & Co., Inc.
Phone: (800) 878-9891
Web site: www.arlingtonroe.com