Marketing

Home is where the risk is

Underserved residential and habitational risks find a home with Dauntless Specialty Brokerage

By Elisabeth Boone, CPCU

There isn’t an agent alive who doesn’t know how to write a basic homeowners policy. But not all residential risks can be handled by a standard HO-2. Consider antique homes with irreplaceable architectural features … vacation residences located in charming seacoast villages or near popular ski slopes … housing for seniors, students, and disabled persons … public housing … apartment and condominium buildings . . . the list goes on.

Owners of vintage homes are often affluent individuals who also may collect classic cars or enjoy sailing in a sleek private yacht. Here too, plain vanilla personal lines policies won’t do the job.

For many agents, risks like these may be unfamiliar territory—and they’re also not usually target markets for standard property/casualty carriers.

Such exposures are, however, meat and drink for Dauntless® Specialty Brokerage. Based in Middletown, Connecticut, Dauntless is the in-house specialty brokerage for MiddleOak, which is the group trade name for Holyoke Mutual Insurance Company, founded in 1843, and Middlesex Mutual Assurance Company, established in 1836. Dauntless also places business with outside markets on both an admitted and a nonadmitted basis.

“We created Dauntless to implement our strategic specialty plan, which has two prongs,” explains Bill George, chief operating officer and executive vice president of MiddleOak. “One was to provide a high level of complementary brokerage capabilities to MiddleOak’s specialty product offerings. Our objective was to create barriers to entry around what MiddleOak offers from a specialty perspective and give our agency partners world-class access to market leaders in a way that would allow them to maintain comfortable relationships with their underwriters,” George says.

“Our secondary thrust was to offer wholesale distribution capability at a national level,” he continues. “Our wholesale brokerage allows us to give every agent access to the same specialty capabilities that MiddleOak’s appointed agents enjoy.” MiddleOak currently operates in 22 states, with 16 more to be added in 2008, and a goal of writing business nationwide within the next few years.

George joined MiddleOak in 2000 as senior vice president and general manager of specialty business, which at that time, he notes, “wasn’t a business yet.” George brought 15 years of underwriting, sales, and marketing experience to his new position. He works closely with Bob Mueller, a 30-year industry veteran who is executive vice president of corporate underwriting and strategy at MiddleOak and who was the primary architect of the specialty initiative.

Serving as vice president and general manager of Dauntless Specialty Brokerage is Rick Cote, who has been with MiddleOak for 10 years and has held positions in sales, sales management, marketing, and underwriting. Rob Keller is distribution manager for the brokerage, which also has an office in Salem, Massachusetts.

The “undeservedly underserved”

Dauntless Specialty Brokerage prides itself on addressing the needs of what it calls “undeservedly underserved” markets, primarily residential exposures.

“That phrase was coined several years back to express our thinking about creating a specialty capability,” Mueller says. “The idea is that, even in soft markets like we have now, there are classes of risk that lack insurance capacity or are not being offered the kinds of coverages they need. Those are undeservedly underserved markets.

“In other cases, it’s simply a question of an underwriter being willing to do three things,” Mueller says. “One is to take the time to understand the exposure in order to properly price and underwrite the coverage. The second is to be able to put together the capital and reinsurance support needed to absorb the risk. The third is to have the resources to put together creative solutions for the exposure.”

Holyoke Mutual and Middlesex Mutual participate in a reinsurance pooling arrangement with COUNTRY Insurance & Financial Services, which carries an A+ Best’s rating and is one of the 50 largest insurers in the United States.

“The significance of our relationship with COUNTRY is that it has $3 billion in written premium and provides capital and surplus of $1.6 billion to support our underwriting activities,” Mueller says. “We think of ourselves as operating and being accessible to agents as a small company but having the capacity and financial resources of a large company.”

Notes George: “The fact that Dauntless is paired with MiddleOak and COUNTRY means that we have the paper and reinsurance backing of a big organization coupled with the problem-solving capabilities of a specialty brokerage.”

Those qualities make Dauntless a strong player for the residential exposures it pursues. These risks, George says, “fit the definition of undeservedly underserved markets for many reasons. An example is the antique home market. Those customers are underserved because most carriers offer them the same coverage they would write on a contemporary home. The owners of antique homes want a company that understands what they have.”

“Our program, the Restorationist, is designed specifically for pre-1930 homes that are treasured antiques, lovingly restored by their owners,” Mueller explains. “In the event of a loss, we give the insured what we call ‘old for old.’ If the house has 200-year-old wide chestnut floors, the owner expects them to be restored or replaced, and not with something from Home Depot. We’ll get chestnut boards from an old barn or some other source and have a craftsman create and install new floors that are identical to the original,” Mueller says. “In the same way, we can restore or replace original antique glass, plaster moldings, and other design features.”

The Restorationist program is available in Connecticut, Maine, Massachusetts, New Hampshire, New York, Pennsylvania, Rhode Island, and Vermont. It provides unlimited guaranteed restoration cost coverage as well as full law and ordinance coverage, water backup, and unlimited additional living expenses. A total loss cash settlement option is available.

For high-value homes that are not antique, Dauntless offers the Premier Living program with features that are appropriate for affluent homeowners.

Other products designed for the affluent client are a personal yacht program and a classic car policy.

Habitational niche programs

In addition to its upscale personal lines products, Dauntless offers insurance programs for an array of commercial habitational risks. Collectively these comprise what Dauntless calls its “core” programs.

Worlds Apart is a property and liability program for underserved apartment classes, including student, public, affordable, and senior housing; mixed apartment/mercantile lessors risk occupancies, urban multi-family dwelling and high-rise buildings. The insured must own a minimum of five residential rental units; there is no maximum number of units or building/property size. The program is available in 19 states.

For each building, the insured can choose Special, Standard, Basic, or Fire Only Perils. Special Perils includes equipment breakdown. Coverage is available on a guaranteed unlimited functional replacement cost, functional replacement cost, or actual cash value basis.

The program also offers coverage for loss of income (actual loss sustained for 18 months), and comprehensive liability including personal injury, employee dishonesty, law and ordinance, mechanical breakdown, earthquake, water backup, sump overflow, and flood.

An optional Tenant Emergency Assistance Endorsement reimburses tenants who are displaced because their units are uninhabitable after a fire at the building. The coverage provides up to $1,000 per unit with no deductible and covers emergency expenses including packing, insuring, carting, and storing household goods; net costs of arranging new utilities; temporary hotel room rental, and replacing furniture or clothing.

CAPstone is a program for condominium, homeowner, and cooperative associations. “All-In” coverage is provided for unit owners’ fixtures, improvements, alterations, and major appliances. Optional guaranteed replacement cost coverage is available on buildings. The program also provides comprehensive liability coverage, including personal liability; D&O coverage is available through Dauntless. The program is offered in 19 states.

The same basic and optional coverages are available for underserved community associations such as secondary and seasonal associations; non-owner occupied/investor associations; coastal associations; resort associations (ski, beach, or lake, etc.); very high-value associations, and timeshares.

VIP (Vacation Income Properties) is a program for vacation properties that are in rental pools. The product is designed for secondary or seasonal use of one- and two-family homes and condominium units that are used solely for rental or for combined rental and personal use. Property must be professionally maintained and managed via contract with a local professional property or real estate manager or caretaker.

Owners can choose building coverage, contents coverage (optional theft), fine arts floater, loss of rents coverage (actual loss sustained), and detached structure coverage, comprehensive liability with limits up to $2 million per occurrence, and deductible options starting at $1,000. VIP is available in Delaware, Maine, Maryland, Massachusetts, Michigan, New Hampshire, Pennsylvania, Tennessee, Wisconsin, and Vermont.

Dauntless also offers products that complement its core programs: personal and high-limit umbrella, directors and officers liability, wind coverage, DIC/flood and earthquake, hail, excess property, and an underground storage tank program. These complementary products are available only to insureds who are covered by one of Dauntless’s core programs.

“All of our programs are designed for segments of the habitational business that require unique coverage, underwriting, or pricing approaches,” Cote says. “As specialists, we grasp the nuances of these risks and know how to match price to risk.”

Adds George: “MiddleOak has a long history of being an underwriting company. To us, the four legs of the chair are individual risk underwriting, individual risk pricing, loss control, and claims capability. This commitment carries over to the capabilities delivered through Dauntless Specialty Brokerage.”

Because of the importance Dauntless places on loss control, George says, “Our own people look at every single risk. That’s a huge commitment. We see what’s on the application, and we match it up to what’s really on site—not only what we observe, but what we learn in our interview with the owner/operator or the residents. We evaluate not just the physical aspects of the risk but also those intangible factors that are critical to effective loss control.

“Our claims capability brings it all together,” George continues. “Applying our four-leg strategy to each and every risk is what we believe gives us our greatest competitive advantage.”

The right partners

“We define success as being a leader in our markets,” George says. “To do that, it’s critical to have the right partner carriers. In 2004, Dauntless was a scratch agency, and we had to talk with other insurers and make sure our story really resonated with them. We went to key companies and brought our underwriting, loss control, and claim files. I’m very proud of the fact that we were granted an appointment with every single company we sought out,” George declares.

“We made clear to these carriers that we were committed to developing mutually beneficial relationships with them, but above all I think it was our fundamentals that allowed us to obtain appointments with industry leaders,” George says. “We have proprietary programs within our brokerage that the companies don’t even give to their directly appointed agents. They appreciate the quality of the submissions they get from us because, essentially, they’re dealing with another insurance company.”

Virtually all of the business Dauntless writes is placed through admitted carriers with Best’s ratings of A or A+ with a financial rank of X or higher, George says, with the exception of wind business, which is written in nonadmitted markets.

“Our goal is to have all of our programs available in most or all states within the next five years,” George says. “About 950 of our agents have direct appointments with MiddleOak. We also work with about 350 retailers who access Dauntless as a wholesaler for both our core and complementary products. An agent can place one risk with us or many; there’s no volume requirement.

“Here’s a success story,” George says proudly. “Within the last 24 months, two retailers came to Dauntless, each with just one or two risks. During that time, those two agencies developed a total of $3 million in premium and have spun off to direct appointments with MiddleOak.”

Rob Keller, distribution manager for Dauntless, sums up his company’s commitment to its partner agents. “We work hard to earn the support of our agents each and every day,” he says. “In order to be successful, we must have something compelling to offer within these niche markets. We must be able to answer the question our agents are silently asking: ‘Why should I do business with you above any and all other options?’

“The answer is simple,” Keller asserts: “Provide them with valuable solutions to their clients’ business problems. We continue to develop new products and coverage enhancements that provide a distinct advantage and help fuel our growth. *

For more information:
Dauntless Specialty Brokerage
Web site: www.dauntlessbrokerage.com