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Going it alone Proudly independent, Colemont Insurance Brokers scores big with construction risks By Elisabeth Boone, CPCU In an insurance world that’s increasingly dominated by mega-mergers and vertical integration, one rarely encounters a large organization that’s actually free of the myriad corporate ties that bind. One such organization is Colemont Insurance Brokers, which, since its establishment in 1992 as Heath Insurance Brokers, has grown to become one of the top five specialty brokerages in the United States with more than $1 billion in gross premium. Now privately owned, Colemont began its existence as the North American wholesale branch of London-based brokerage Heath Lambert. In 2004 the firm’s management bought Heath Insurance Brokers from its parent and renamed it Colemont, a name that reflected the company’s location at the corner of Cole and Monticello Avenues in Dallas. Colemont officially opened for business under its new name and ownership on April 1, 2005. Marshall Kath is chief executive officer, and serving as chief operating officer is David Stevoff. Gene Eisenmann, one of the three founders of Heath Insurance Brokers, is chairman emeritus of Colemont and, although retired, “remains on as a coach and motivator and source of inspiration,” Stevoff says. Other members of the top management team are Joy Keller, chief financial officer, and Michael Mahan, senior vice president and corporate secretary. Serving as both an excess-surplus brokerage and a program administrator, Colemont also has in-house underwriting facilities. The firm has 15 offices across the country that are staffed by 450 insurance professionals, and its brokers have experience placing a wide array of property, casualty, transportation, financial services, and worker injury risks. The firm works with approximately 3,500 retail producers nationwide. Colemont also operates an international division, Colemont Global Group Ltd., with offices in the United Kingdom, Russia, Spain, Sweden, Bulgaria, Estonia, Finland, and Latvia, as well as Miami, Florida; Chile; and the United Arab Emirates. A clear mission For any insurance intermediary, its lifeblood is the retail agents and brokers who rely on it to place complex, highly specialized risks. Colemont Insurance Brokers is no exception. “Our mission is to serve our retail agents, who are our clients, and to bring the right risk to the right market,” Stevoff says. “One of the hallmarks of our organization is service, and it always has been. We started in what was a very soft market in 1992, and back then we didn’t have the name, the recognition, or the staying power of our competitors,” he observes. “All we had was our personal reputation for integrity and our commitment to provide quality service. We built this organization from the ground up on a model that emphasized service and does so to this day.” In keeping with its independent, entrepreneurial spirit, Colemont has chosen not to build a complex, many-layered bureaucracy. “We have a relatively flat operating structure,” Stevoff says. “Our six regional presidents report to me.” Colemont is active in a large number of specialty markets. Commenting on the firm’s broad underwriting appetite, Stevoff says, “In those early years, we couldn’t afford to pick and choose what we wanted to write. It’s always been my motto to find a market where my client, the retailer, has a need, whether it’s a construction account, a product liability or property account—no matter what the need, we have to find a market for that account,” he declares. “We do have a broad broking appetite; we are a full-service firm. Over time, some of us have specialized in certain classes of business. We all try to focus on what we do best; but, given the size and nature of our organization, I think we’re hitting all the bases.” Gaining an edge As Stevoff noted above, competition abounds in the excess/surplus and specialty lines arena. How does Colemont seek to position itself to gain an advantage over competitors? In addition to its emphasis on top-notch service, Stevoff responds, Colemont enjoys the benefits of size. “There’s power in numbers,” he comments. “And we have the clout and the respect in the marketplace to get things done for our clients. For firms that can compete with us on size, they don’t necessarily have our advantage of independence and our ability to make decisions that keep our organization on top,” he says. “I like to use the analogy of a speedboat versus an ocean liner. This market changes so fast that you have to be a speedboat; you have to have the ability to stop, turn on a dime, and find a new market for whatever your client needs. When you become an ocean liner, it’s difficult to be successful in a rapidly changing market.” Over the 14 years of its existence, Colemont has achieved impressive growth. The firm finished its first year of operation with $18 million in premium; since then, it has grown to more than $1 billion in premium. The growth has come through a combination of acquisitions and the development of new business. “We’re always looking for acquisitions, whether it be individuals or entire operations,” Stevoff says. “We do rely on organic growth, but that’s only going to get us so far. In a soft marketplace, we’ve grown by opening new offices. We did not want to open 100 offices around the country, but we wanted to have offices in key locations so we’d be well placed geographically,” he explains. Colemont’s 15 U.S. offices are located in Atlanta; Chicago; Columbus, Ohio; Dallas; Fresno, California; Hartford; Houston; Los Angeles; Miami; Nashville; Phoenix; Sacramento; San Francisco; Syracuse, New York; and Woodland Hills, California. “For our office president positions,” Stevoff says, “we’ve chosen experienced, talented people who have significant connections and who can hire qualified people from the immediate area. Little by little, through our connections in the industry, we’ve built each office into a strong regional operation.” Focus on construction In September 2006, Colemont hired Marc Adler and Tim Downey and established an office in Phoenix. Marc and Tim are experienced specialty brokers who now serve as senior vice presidents of Colemont. The full-service office is part of Colemont’s Southern California operation and offers all general property and casualty products, with plans to develop programs that are unique to the office. The products are offered to their clients throughout the West and Northwest. Both Adler and Downey bring to the table significant experience in meeting the needs of construction-related risks, a class of business that is important to the Colemont organization. “Colemont has always been a player in the construction industry, primarily in Texas and on the West Coast,” Stevoff says. Also growing rapidly is the southwestern market that is served by Adler and Downey in the new Phoenix office. “Marc and Tim bring us the high level of expertise we were looking for in the Southwest, which has a huge market for construction risks,” Stevoff says. Getting out in front Historically, construction was not Adler or Downey’s sole focus, “We gravitated to construction in the late ’90s,” Downey says. “It became obvious to us that in Arizona and Nevada, the market was hardening rapidly for residential construction, whether it was single-family or multi-family homes. We decided it was important for us get in front of that trend so we could really be of assistance to our clients. Not very many people were active in the market at the time, so we got ahead of it early and grew with the industry. As the admitted market closed down, we grew,” he says. “We established a number of key relationships in both the wrap-up and specialty homebuilder markets,” Downey continues. “As everyone in the industry knows, as you become more successful, you attract new clients, and for us it was as simple as that.” Adds Adler: “As the market took such a dramatic turn, our goal was to be ahead of the curve, whether it was writing wraps or looking at trade contractors or general contractors, commercial as well as residential. There was a need here in the West and Southwest where the market was changing rapidly and where conditions were very different from what the East and Midwest were facing. The standard markets decided they were no longer going to play in the residential construction market, and some markets even withdrew from writing commercial business. This created a need for coverage throughout the construction industry.” Although arranging insurance for construction risks is in itself a complex exercise, Adler and Downey embrace a mission that goes beyond providing coverage for projects. “We offer a broad spectrum of products to our clients,” Adler says. “We write directors and officers liability, EPLI, environmental coverage, property-driven business as well as product liability, builders risk, professional liability, DIC, umbrellas and more.” Notes Downey: “Construction leads to everything else. If a contractor builds an apartment building, he has the construction risk and the builders risk, and then there’s the completed operations piece. The same goes for retail and office construction. Architects and engineers need E&O. To meet all these needs, we have to be a generalist.” “We tell our agents we’re not driven by having to write the large risk; our aim is to present the products to satisfy their clients’ needs,” Adler says. “The same agent who brings us a million-dollar wrap project may call us later about a client who needs coverage for a vacant building. The premium may be only a couple of thousand dollars, but the point is, this is the same agent we’ve partnered with over a long period of time. It’s that relationship that drives what we do.” A market in flux Conditions in the construction market, of course, vary by state, and sometimes by territory within a state. “The opportunities for construction business, whether it be general liability, wrap, builders risk, or whatever, are emerging to different degrees in each state, and we constantly monitor what’s going on,” Downey says. “We have our key agents in the various states, and we’re trying to find new partners so we can grow with the market in each state.” Traditionally, excess/surplus and specialty wholesalers have encountered their strongest competition from standard carriers when the market is soft. Today, Adler observes, “the standard carriers have ventured back into the commercial construction market; however, they still don’t have an appetite for residential construction. On the E&S side, the number of markets for construction have grown dramatically—this is especially true in the residential wrap market. For wraps, there was one principal player six to seven years ago; there now are in excess of 15. Pricing that has always been considered exorbitantly high has sharply lowered. Residential products still remain in the E&S arena, but as in any other market, the smell of money has a way of attracting new players who want to get a stake in the game.” It’s a different story on the commercial side, Adler observes. “The standard carriers are certainly looking to get back into the market. While their pricing can be extremely competitive, in our view the opportunities go well beyond pricing. Standard carriers aren’t always able to offer coverages that are needed by some commercial contractors. An example is the CG 2010 1185. Although it’s virtually unavailable for residential risks, it’s still a major component of a commercial construction program. As much as the standard carriers want to get back into the game, they will not always write some of the broad forms and additional coverages that contractors are requiring. In our markets, the rate might be higher, but contractors are able to get the coverage they need. We don’t want to be bidding against the standard market,” Adler says, “but at the same time, if we can offer better coverage, we’ll take the opportunity to go after the account.” “We do business with a limited number of retail agents,” Downey points out. “Our companies like doing business with us because they have high hit ratios with us. We’re careful about whom we do business with, and we’re careful about the risks we bring to the market. Our carriers know we’re looking after their interests, and they, in turn, look after ours.” What’s ahead? Colemont’s game plan is to continue to provide stable markets in some demanding specialty arenas. “The biggest challenge we face is the need to recognize when the market is changing from hard to soft, and to adapt to those changes in ways that benefit our agents, their clients, and our firm,” Stevoff says. “In many cases the standard markets are opening up for the retail shops, and we’re not seeing opportunities, even on accounts that typically would fall into the excess/surplus lines category. Life as a wholesale broker in a hard market is easier than life in a soft market, when we have to be out on the road, pounding on doors, looking for retailers. We have to continually reinvent ourselves.” * For more information: |
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