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SPECIALTY LINES MARKETS Contractors market Signs of softening By Larry G. France The contractors market continues to have its challenges—some would call them problems. Problems are things that need to be solved. Challenges are opportunities that some will relish, accept and make the most of. If you have been in our industry more than a week, you will recognize that utopia is not in our vocabulary. In fact, sometimes it appears that we cannot stand prosperity. We complain about the low premiums but continue “price selling” (This is not meant to cast a bad light on producers who sell quality, value and service), and pricing continues to fall. Many times, agents and brokers end up with two options—either lowering the price or losing the business. When the market hardens, remem-ber that pricing is up, but choice of markets is limited. The contractors market has been stirred up for many years. The good news is that there are markets that want to write this business and work to provide the best product possible. First, let’s bond a little. “The contractor surety forecast for 2007 should be more of the same with regional variations,” according to Susan A. Sallada, CIC, of Universal Service Agency. “Surety companies for the most part will continue to maintain underwriting guidelines, with some softening seen in the middle regions of the United States. There has been some lowering of rates by regional carriers, which has pressured the national surety companies to follow suit. Underwriting results will influence this trend. Due to losses, the reinsurance markets tightened underwriting standards several years ago. This trend should continue depending on performance, with limited field authority and increased home office review.” Sallada says that “financially strong, established accounts will continue to have market choice of sureties. New construction businesses and environmental contractors will find bonding troublesome. The emerging contractor market has proven difficult to many sureties and several have chosen to participate in the SBA program.” Sallada predicts that the consoli-dation of surety companies will continue and that there will be a rise in surety bonds required for construction projects for churches, nursing homes, offices, etc. She concludes: “Interest rates and inflation directly impact a contractor’s profit margin, which subsequently affects surety loss ratios. The construction and surety industry mirrors the economy. Indicators are that 2007 should be another strong year for the economy, construction and surety market.” The housing slowdown has had a dramatic impact on the logging industry. Ed Daigle, Jr., president of Daigle & Associates, says that “in the last few months we are seeing a cutback in our loggers buying new equipment and a few more cancellations on equipment policies, which would indicate that they are getting ready for a slowdown in the housing market.” Daigle insures all types of contracting and farming equipment, but 70% of its volume is from logging contractors. “In certain sections of the country, where the demand for pulp and paper is still strong, we are seeing a little ramping up, but as a general rule things are slowing down a bit,” says Daigle. He adds, however, that “small contractors are becoming more and more active, which is pretty normal at times like these.” And speaking of certain areas of the country—California and contractors—now we are talking. It’s the home of Montrose lawsuits, other assorted legal pitfalls and a consumer-oriented DOI. Remember, in our industry the history has been: “It starts in California and moves eastward.” Where is the construction market today? “We are seeing signs of a softening construction market, especially on the commercial side,” states John Erickson, vice president of programs at Western Networked Insurance Services. “The few carriers that have been writing the larger commercial contractors are now having some competition on renewal pricing and include Additional Insured Endorsements, which they had refused to use the year before.” Erickson says that “as long as carriers have the capacity to grow and actuarially make a profit, we can expect to see further softening. The danger, of course, is the entry of new carriers that seek to buy their way into the construction market though they have limited underwriting expertise.” Erickson says that the Manifest-ation Clause that applies to injury or damage that first “manifests” during the policy period has been helpful. “Several insurance carriers have used this clause successfully over the past few years to mitigate losses. Now they are seeing signs that other markets are willing to issue general liability contracts without it. My guess is that it will continue to be used but in a more limited way, where deemed appropriate by underwriting to protect carriers from certain exposures rather than as a blanket clause applied to all contractors.” Erickson foresees the residential contractors, those engaged in habitational construction such as homes, apartments, condos, assisted living facilities and mixed-use properties, still will have difficulties finding insurance carriers. “While there are more players than a year ago, the underwriting, coverage limitations and pricing is sometimes too much of a burden for the small contractor to handle.” Barbara Parker-Hatch of Yates & Associates is seeing very much the same situation in California. Parker-Hatch says that Yates is finding “multiple markets willing to write the commercial contractor business, but the residential contractors are still a challenge. Many markets have come forward with the claims-made approach and this has helped the residential contractors. The agents and insureds seem to have a better understanding of this coverage form and the pricing appears to be acceptable.” The Manifestation Clause is being used by several companies, she says. “The verbiage varies by carrier, so it is really important the MGA discloses the limitations and that the retail agent understands and can explain it to his or her client.” In general, large accounts are not having the same problems, but there is a big hole for the little guy such as the small residential artisan contractor. “Pricing is really high and coverages are very restrictive” for the smaller contractors, Parker-Hatch concludes. “The Canadian construction industry is very competitive,” says Tom Reikman, president of The Wholesale Group in Brampton, Ontario. “Over the past five years the industry has gone through sustained growth. Construction is occurring everywhere and is becoming very profitable for many companies.” According to Reikman, “The insurance industry has also been very competitive in this sector as well. There are well over 15 major insurance carriers writing in this class and all have competitive terms and conditions. Some of the more difficult construction classes—demolition, tunneling, etc.—can be placed with a select few carriers who specialize in difficult classes. “The Canadian insurance industry has seen another profitable year and there are no signs of the competitiveness changing in the near future,” says Reikman. The contractor market has never been on what you could call an even keel. The nature of the client’s operation, geography of the construction project, and carriers with the knowledge and expertise to write the business all play a part in the construction insurance market. Upcoming Specialty Lines articles will address recreational vehicles/land and water in March, special events/prize indemnification/weather in April, and social services in May. The following have responded to our survey and indicate that they are a market for contractors. Abacus Insurance Brokers, Inc. A program manager that operates in all 50 states with any amount of inland marine coverage limits. Will consider any type of contractor. Various A rated carriers are used to place coverage. Aberdeen Insurance Group An MGA/E&S broker that operates in DE, MD, NJ and PA with limits of $1 million/$2 million. Target classes are small to medium residential and commercial artisan contractors, and small to medium residential general contractors. Will not write hot or torch roofing. Can offer contractors equipment, builders risk, property, commercial auto and workers comp (PA only). Carriers are rated from B+ to A+. ACSTAR Insurance Company An insurer that operates nationwide with limits of $20 million/$50 million. Target classes are small contractors and miscellaneous and special purpose contractors (surety bonds). ACSTAR is an A rated carrier. Agency Marketing Services An MGA/E&S broker that operates in FL with limits of $1 million/$2 million. Target classes are artisan, construction and roofing. Will not write auto, workers comp or bonds. Can offer A&E. Carriers are Atlantic Casualty, Essex, USLI, Hermitage. Agency Specialty Product Network An MGA/E&S broker that operates in all states with miscellaneous limits. Will consider all contractor classes. All carriers are A rated. All Risks, Ltd. and All Risks of CA Insurance Services, LLC. An E&S broker that operates in all states with limits that differ by branch office, up to $100 million. Target classes are general contractors (residential & commercial), artisan contactors, utility, street/road, environmental, and residential trade contractors. Can offer GL, umbrella and pollution liability. All carriers are rated A- or better. American Risk Management Resources Network, LLC An E&S broker that operates in all states with limits of $25 million. Target classes are restoration contractors, and first- and third-party mold coverage on new commercial construction. Will not consider single-family home builders. Can offer GL and professional liability. Carriers are Zurich, Liberty, Evanston, Everest, and Gemini. American Safety Insurance Services, Inc. An insurer that operates in all states with contractors limits of up to $5 million and environmental limits of up to $11 million. Target classes are residential and commercials contractors, artisan contractors, environmental and remediation contractors, and fixed-site environmental exposures. Will not write roofers. American Safety Indemnity, American Safety Casualty, and American Safety RRG are all A rated. Anthony R. Davis Agency, Inc. An MGA/agency operating in most of the continental United States. Arlington/Roe & Co., Inc. An MGA that operates in IL, IN, KY, MI, OH and TN with limits of $1 million/$2 million. Target classes are artisans, general contractors, environmental, equipment and demolition. Will not write residential roofing or EIFS. Can offer bonds. Capitol, Nautilus, Western World, CNA, Northland, ACE, Maxum, and Berkley Specialty are the carriers. BISYS Specialty Programs An E&S broker that operates nationwide with limits of $1 million/$2 million and umbrella/excess limits of up to $100 million. Target classes are residential and commercial contractors, any type of general contractor or trade contractor, wrap-up and project placements, environmental impairment liability, contractors pollution liability, and remediation cost and expense containment. All carriers are A rated. Britt/Paulk Insurance An MGA that operates in all states except HI and also in DC with limits of $100 million. Will consider all classes. Will not consider civil works. All admitted and surplus carriers are A rated. Bruce V. Schneider Associates, Inc. An MGA/E&S broker/agency that operates in the 48 contiguous states with basic hull and P&I limits of $1 million; unlimited excess available over basic. Target class is personal and commercial including contractors. Can offer excess P&I. All admitted and excess carriers are A rated. Buckingham Badler Associates, Inc. An MGA/E&S broker that operates in CA, CT, NJ, NY and PA. Capitol Insurance Companies An insurer that provides surety coverage in all states (please contact for state availability for P-C) with CSL and GL limits of $1 million/$2 million. Target class is small artisan contractors. Will not write contract surety, remediation contractors, or environmental improvement contractors. Can offer workers comp (in IA, IL and WI), and inland marine. Capitol Indemnity, Capitol Specialty, and Platte River are all A rated carriers. Casualty & Surety, Inc. An MGA/E&S broker that operates in all 50 states (MGA only in AL, FL Panhandle, KY, MS, TN, VA and WV) with limits of $1 million plus excess. Target classes are contractors, artisans, equipment and environmental contractors. Will not write surety bonds. All carriers are rated A+. Central Insurex Agency, Inc. An E&S broker/general agent operating in IL, IN and OH with limits of up to $5 million on most classes. Target classes are general contractors and artisans. Can offer inland marine, and property builders risks—ground-up/renovations. All carriers are A rated. Century Surety Company An insurer that operates in all states except MA, RI and NY with limits of $1 million/$2 million. Target classes are general contractors, artisans, and home builders. Can offer excess limits of up to $5 million. All carriers are rated A-. EIB (Evolution Insurance Brokers) An E&S broker that operates in all states with all limits. Will consider all classes. Can offer monoline liquor/assault and battery/after 3 a.m. closing time. Prime Insurance Syndicate is a B+ rated carrier. Excel Insurance Service, Inc. An MGA/E&S broker that operates in NJ and PA with no limits. Target classes are contractors, general contractors, D&O, excess/umbrella, and environmental. Will not write auto liability. Scottsdale (A+), Colony (A), plus other carriers are used to place coverage. Freberg Environmental, Inc. An MGA that operates in all states with limits of $10 million. Target classes are environmental contractors for all lines, and all contractors for contractors pollution liability. Can offer CGL, professional liability, contractors pollution liability, commercial auto, and property inland marine. Carriers are Hudson and Arch, both A rated. Gateway Underwriters Agency An MGA that operates in IA, IL, KS, MO and NE with limits of $5 million on some classes. Target classes are artisans, EIFS, GCS (residential and commercial), lead, asbestos, mold remediation (broker). Will not write bonds. Nautilus (A+), Western World (A+), National Indemnity (A++) and Oak River (A++) are the carriers. H.R. Keller & Co., Inc. An E&S broker/wholesaler operating in PA and NY with limits that vary by company. Will consider all contractor classes. Can offer E&O, pollution, commercial auto, inland marine, builders risk, workers comp, and property. Various carriers are used to place coverage. The Harry W. Gorst Co., Inc. An MGA/E&S broker operating in CA only with limits of up to $10 million on GL. Target class is small artisan and general contractors. Will not consider contractors involved in new residential construction (e.g., custom homes, tract homes, apartments, condos and town homes). Carriers are Scottsdale (A+), Western Heritage (A+), Colony (A), and Wellington Specialty (A-). Hull & Company, Inc. An E&S broker operating in all states with limits of up to $10 million. Target class is all types of commercial and residential contractors. Can offer property, contractor’s equipment, commercial auto, and umbrella. Various A rated carriers are used to place coverage. Insurance Center Special Risks, Ltd. An MGA/E&S broker that operates in CT, MA, ME, NH, NY, RI and VT with limits of $1 million/$2 million. Target classes are artisans and GLs. Will not write surety bonds. Can offer contractor’s equipment floaters and tool floaters. The A rated carriers are Essex, Colony and Lloyd’s; Everest Indemnity (through National Environmental) is rated A+. Insurance Innovators Group An MGA/E&S broker operating in CT, DE, MA, MD, ME, NH, NJ, PA, RI and VT with limits of up to $2 million/$2 million. Target classes are residential, commercial and industrial contractors, including paper general contractors. All carriers are A rated. Intercorp. Inc. An MGA, program administrator, wholesaler operating in all states with limits of $10 million. Target classes are asbestos abatement, lead abatement, soil/groundwater remediators, storage tank contractors, and environmental consultants/testers. Will not write architects, civil engineers, structural or geotechnical. Can offer contractors pollution liability, professional liability, CGL, and excess/umbrella liability. All carriers are rated A or better. Izzo Insurance Services, Inc. An MGA/wholesaler that operates in all states except AK and HI with EL limits of $1 million. Target classes are machinery installation, electricians, plumbers, and HVAC contractors. Will not write asbestos abatement or lead abatement. Can offer monoline workers comp and EPL. AIG, ACE, Hartford, Amtrust and Zenith are the carriers. Jacobs and Associates An E&S broker that operates in OH and adjoining states with limits of $10 million. Target class is general and artisan contractors. Will not consider project and construction managers. Can offer inland marine, property and installation floaters. Carriers are Scottsdale Surplus Lines, Wellington, Western Heritage, Colony, and Admiral. James River Insurance Company An insurer that operates in all states except NH, NY and OH with limits of $5 million/$5 million. Target classes are all commercial and residential contractors, including environmental, contractors pollution liability, and contractors professional liability. Will not write surety bonds. James River rated A-. Jimcor Agencies An MGA/wholesale broker operating in CT, DE, MA, MD, NH, NJ, NY, OH, PA, RI and WV with primary limits of $1 million/$2 million/$2 million with high limit excess available. Target classes are artisan contractors, general contractors, service, trade contractors, owners’ interest, home builders (one-man operations up to major hotel construction projects). Will not write wrap-ups. Can offer business auto in some states, GL, professional liability, contractors pollution liability, builders risk, equipment floaters, installation floaters, and owners/contractors protective liability. All carriers are rated A or better. Klinger Associates, Inc. An E&S broker that operates in IN and throughout the Midwest with limits of $25 million. Target classes are contractors, artisan contractors, equipment, environmental remediation contractors, and construction coverages. Will not write bonds. Can offer property, inland marine, contractor’s equipment, umbrellas, and builders risk. All carriers are A rated. London American Risk Specialists An MGA/E&S broker operating in AR, LA, NM, OK, TN and TX with limits of $1 million/$2 million. Target classes are carpenters, remodeling contractors, drywall installation, etc. Can offer property and inland marine. Carriers are Penn America, Western World, and Burlington. M.J. Hall & Company, Inc. An MGA/E&S broker that operates in AK, AZ, CA and NV with liability limits of $100,000 or higher and inland marine limits of $5,000 or higher. Target classes are commercial contractors (including apartments), new residential home builders, custom home builders, artisan contractors, and wrap-ups. Will not write surety. Can offer property, inland marine, builders risk, excess liability, and commercial auto (not available in all states). Carriers are rated from B+ to A++. Metcom Excess An MGA/wholesaler that operates in NJ, NY and PA with limits of $10 million. Target classes are mold remediation contractors, USTs, ASTs, consultants, and fixed facilities. All carriers are A rated. Mid Atlantic Insurance Services, Inc. A wholesaler/standard market broker operating in AL, AZ, CO, DC, DE, FL, GA, MD, NC, NJ, NM, OH, PA, SC, TN, VA and WV with all standard policy limits available for property/casualty insurance. Target classes are contractors and service risks. Will not write excess and surplus lines. AIG, OneBeacon, Hartford, WCAMC, Key Risk, Travelers, Zurich, BIA, CNA, Chubb and First Comp are the carriers. Midlands Management Corp. An MGA that operates in various states with various limits. Target classes are artisan contractors, environmental contractors/consultants, and contractor’s equipment. Will not write bonds or tract home builders. Can offer GL and professional liability. All carriers are A rated or better. NIF Group, Inc./NIF Pro An MGA/E&S broker that operates primarily in the eastern states (admitted in all states) with primary limits of $2 million/$2 million (excess of any limit). Target classes are all artisan contractors, general contractors, commercial/residential contractors and hard-to-place. Will not write construction managers. Can offer excess, umbrella, inland marine, auto, per-project aggregate, waiver of subrogation, OCPs, wrap-ups and owner’s interest. All carriers are A rated. NorthCoast Excess & Surplus Agency, Inc. An E&S broker that operates in OH only with limits of up to $5 million. All admitted and nonadmitted carriers are A rated. Northeast Surety, LLC A broker that operates in CT, MA, ME, NH, NJ, NY, RI and VT with all limits. Target classes are all types and sizes including difficult-to-place, environmental, start-ups, surety bonds, and attorneys’ surety bonds. All primary, secondary, and SBA markets are A rated and Treasury listed. Prime Insurance An insurer (Prime)/ MGA (IEBS) that operates in all states except AK, CA, CT, LA, NH, NY, RI and TX with all limits. Will consider all classes. Can offer monoline liquor coverage, assault and battery, and after 3 a.m. closing, in the hospitality industry. Prime is a B+ rated company. Quadrant Insurance Managers An MGA that operates in AL, AR, CA, CO, CT, DC, DE, FL, GA, IA, IL, KS, KY, LA, MD, MI, MN, MO, NC, NE, NM, NV, OK, PA, SC, TN, TX, UT, VA and VT with primary limits from $500,000 - $1 million. Target classes are general contractors, paper GLs working solely on condos/townhouses/apartments/residential, all residential building trades, contractors (drywall, electrical, foundation, artisan, etc.), and trust programs for large developers. Can offer roofing contractors, both residential and commercial. Carrier is rated A-. Quaker Special Risk An E&S broker that operates in all states except AK, HI, MT, ND, SD and UT with limits of $1 million/$2 million/$2 million; and $10 million umbrella/excess. Target classes are home builders, residential GCs, roofers, janitorial risks and swimming pool contractors. Will not write surety bonds. Can offer contractors pollution and design/build professional. All carriers are A rated or better. RISC, Inc. A program administrator that operates in all states except DE and NY with GL limits of $1 million/$2 million/$2 million, plus $25 million umbrella. Target classes are roofers, fire sprinkler contractors, electrical contractors, street/road/bridge, utility contractors, excavation, swimming pool, landscape, concrete, and fire equipment distributers. Call for classes not written. Can offer workers comp, fleet auto and property. AIG, CNA, Admiral, Navigators, RSUI, and Gemini are the carriers. Roush Insurance Services, Inc. An MGA/E&S broker that operates in IL, IN and OH with limits of $1 million/$2 million with excess up to $25 million. Target classes are environmental contractors, contractors (carpentry, remodeling, electrical, plumbing, general contractors). Can offer commercial auto, inland marine with equipment floater, property, umbrella, and excess. Scottsdale, Evanston, Essex, Century Surety, Atlantic Casualty, NECC (Everest Indemnity), Freberg (Hudson Specialty), and Old Republic Surety are the carriers. Russell Bond & Co., Inc. An MGA/E&S broker operating in CT, MA, NJ, NY, PA and VT with primary limits of $1 million/$2 million and umbrella of $25 million. Target classes are artisan, specialty contractors, remediation contractors, and all types of environmental contractors. Will not write residential general contractors (more than 8 houses a year), construction managers, or project managers. Can offer environmental, property, EPLI, workers comp, builders risk, RR protective, umbrella, OCP, CGL, equipment floaters and E&O. All carriers are rated A- or better. S.H. Smith & Co. An E&S broker that operates in all states with limits of $1 million and up. Target class is contractors. Can offer EPLI and E&O. All carriers are A rated. S.I.U., LLC An MGA/E&S broker and Lloyd’s Correspondent operating in CA only with limits of $2 million/$2 million, and $5 million excess and $5 million property. Target classes are residential artisan contractors, small equipment rental, commercial contractors, OCP and COC. Will not write new residential construction, environmental and general contractors with over 30% subcontracting. Can offer inland marine and equipment breakdown. Specialty Risk Associates, Inc. An MGA operating in AR, LA, MS, OK and TX with limits of $1 million/$2 million. Target classes are painters, electricians, handymen, plumbers, drywall, flooring, fence erection, carpentry, grading of land, lawn care, and janitorial. Can offer tool floaters and contractor’s equipment. Carriers are Scottsdale, Colony, Essex, Capitol Indemnity, Republic Vanguard, and Western World. Swett & Crawford An MGA/E&S broker that operates in all states and incidental Canadian exposure with limits as needed. Will not write surety. Can offer GL, inland marine, professional liability, excess/umbrella, product liability, builders risk, course of construction, and wrap-ups. All carriers are rated A- or better. Symons International Group (Florida) Inc. An MGA/E&S broker that operates in FL only with limits of $1 million/$2 million. Target classes are artisan contractors and small contractors. Will not write equipment contractors, environmental, surety bonds, or construction coverage. Burlington (A-) and Prime (B+) are the carriers. U.S. Risk Insurance Group, Inc. An E&S broker that operates in all states with limits of $1 million/$2 million/$2 million (excess up to $50 million). Will consider all classes but will not write bonds and workers comp. Can offer property, builders risk, and contractor’s equipment. All carriers are A rated. Universal Service Agency, Inc. An MGA/agency that operates in the U.S. territory as well as several worldwide markets. Target class is any surety, commercial surety or fidelity risks (fidelity/surety market only). Various carriers are used to place coverage. USG Insurance Services, Inc. An MGA/E&S broker that operates in all states except AK and HI with unlimited capacity. Target classes are residential/commercial general contractors, environmental contractors, artisan contractors, equipment, and builders risk. Will not write surety bonds. Can offer inland marine, OCP, builders risk, and installation. All admitted and nonadmitted carriers are A rated. Victor O. Schinnerer & Co., Inc. An underwriting manager that operates in all states and U.S. territories except the U.S. Virgin Islands with limits of up to $10 million. Target classes are general contractors, design/build, specialty and environmental contractors, including mechanical and engineering contractors. Can offer professional/pollution combined and professional and pollution. CNA is the A rated carrier. Western Networked Insurance Services A membership group/E&S and preferred agency operating in AZ, CA, CO, ID, NM, OR, TX, UT and WA with limits of $1 million plus umbrellas. Target classes are concrete cutters, larger roofers, other CAMS programs, commercial contractors, and bonds. Can offer contractors, auto and inland marine. CNA, Golden Eagle, Western Heritage, Century, America First, Colorado Casualty, Financial Pacific, Safeco, Hartford Bonds, and Allstate are the carriers. Western World Insurance Company An insurer that operates in all states with GL limits of $1 million/$2 million (no surety). Target class is light commercial and residential, except CA. Will not write remediation or removal; no tract housing or condos; no town house construction. Can offer GL and property. Western World is rated A+ as is Tudor. Worldwide Facilities, Inc. An MGA(Heritage General Agency)/E&S broker that operates in all states with all limits. Target classes are residential and commercial contractors, developers, general contractors and subcontractors; artisans; and wrap-ups (OCIP, OCP). Can offer property (all-risk, builders risk/inland marine, COC DIC/catastrophe perils, equipment, wind); environmental; manufacturers; and professional liability (architects/engineers, construction managers, building inspectors). Admiral, Interstate, Rockhill, Navigators, Gemini, First Specialty, and James River are the A rated or better carriers. Yates & Associates Insurance Services, Inc. An MGA that operates in CA only with various limits. Will consider all classes. Can offer excess/umbrella, commercial auto, professional liability, and Gap coverage. All admitted and nonadmitted carriers are A rated. * |
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