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Insuring the great outdoors From ATV tours to whitewater rafting, Gillingham & Associates has adventure risks covered By Elisabeth Boone, CPCU If you’ve ever saddled up at a dude ranch, paddled Class Five rapids with a guide, or kicked up powder on a snowmobile tour, you know the thrill of pitting yourself against nature. You also know that the quest for adventure can be risky business. Businesses that cater to these outdoor thrill seekers are acutely aware of these risks—a wide range of bodily injury exposures, not to mention the normal property, automobile, inland marine, directors and officers, and crime exposures associated with running a business. Remote locations far from fire department and medical help, combined with the potential for natural perils like wildfires and windstorms and the tendency of tenderfeet to break the rules, present a daunting array of concerns. Gillingham & Associates, a program manager located in Westminster, Colorado, at the base of the Rocky Mountains, has made these risks its business. “We focus exclusively on outdoor recreation and hospitality business, which has gotten to be a relatively broad category for us,” says Tom Gillingham, chief executive officer. Gillingham’s multiline Great Outdoors Insurance Program, offered nationwide through independent agents and brokers, can provide coverage for a wide range of outdoor recreation and hospitality-related risks: outfitters and guides; fishing and hunting lodges; resorts and lodges; RV parks and campgrounds; dude and guest ranches; hunting preserves; trap, skeet, and sporting clay shooting; rod and gun clubs; hunting leases; bed and breakfasts; snowmobile tours; ATV tours; whitewater rafting tours; consulting foresters; and more. Gillingham also can accommodate nontraditional outdoor recreation and hospitality accounts whose requirements go beyond the guidelines of most specialty programs. The program carries endorsements from several associations, including the KOA (Kampgrounds Of America) Owners Association, the Dude Ranchers’ Association, the Association of Consulting Foresters, the Single Action Shooting Society, and the Michigan United Conservation Clubs. Tom Gillingham, son of the firm’s founder, is one of three young brokers running Gillingham & Associates—all of them avid outdoor enthusiasts. Glenn Sudol, a former fishing guide, is president and underwriting manager, and John Mahoney serves as chief operating officer. Tough business “This is a pretty tough business,” Sudol says, “but a lot of people look at the outdoor market as glamorous and want to get into it because they enjoy going to beautiful places and taking part in outdoor activities. When they get into the business and start learning about the exposures, they find out how difficult it is to insure these risks,” he remarks. For example, Sudol says, “You have Protection Class 10 property (unprotected frame property that is five miles or more from a fire department and 1,000 feet or more from a fire hydrant), high values, horses, young drivers, boats, and guns. This is stuff the standard markets don’t really like.” In terms of competition, he says, “These are pretty good protective devices for us.” With respect to PC 10 properties, Gillingham says, “We have a substantial amount of business in Alaska where the lodge and buildings are accessible only by aircraft and not by road, so there’s no fire department standing by to respond to a fire. These are frame structures; sometimes they’re old construction, and there’s just no standard fire protection.” Adds Sudol, “Even in the lower 48, a lot of properties in parts of Idaho and Montana are only accessible by packing in, and in winter they’re only accessible by Sno-Cats or snowmobiles. If a fire were to start on such premises, it’s certain to burn the property.” Mahoney comments: “The fact that standard markets in general don’t like to write properties of significant value that are unprotected tends to narrow our competition; and on the liability side, the use of horses and guns takes out another swath of people who might be interested in competing.” Dealing from strength Gillingham & Associates has eight underwriting teams, each one handling a different region of the United States. The under-writers, based in the firm’s home office, work with retail producers to assess exposures and arrange appropriate coverage. Including the underwriters and the management team, Gillingham has a total of 35 employees. “I think our biggest advantage is that we’ve been doing this business consistently since 1991, and I’m not aware of anyone else who has that kind of track record in these classes of business,” Tom Gillingham says. “We’ve amassed a great deal of knowledge and expertise in the classes that we underwrite. We offer risk management and loss control services with an exclusive provider, and I’m not aware that any of our competitors offer similar services. “We also have dedicated claims resources that are very familiar and comfortable with the kinds of risks and losses we see with the Great Outdoors program,” he continues. “Another advantage is that we write business in all 50 states. We’re diversified by geography as well as by class.” “Because we cover so many areas of outdoor recreation,” Sudol comments, “we do have competition among the different classes of business, like RV parks, rod and gun clubs, shooting ranges, dude and guest ranches, hunting and fishing lodges, and resorts. But as far as one entity that serves all of those markets on a national basis, we don’t have that kind of competition. There are players that dabble in the different segments, but their carriers change over the years so they’re in and out of the market,” Sudol observes. Gillingham & Associates was established in 1991 in Steamboat Springs, Colorado, by Tom Gillingham’s father, Tom Gillingham Sr., who had retired as the owner of an independent commercial lines agency in Florida. “The new agency was sort of a semi-retirement project for him in that he had sold his Florida agency to Alexander & Alexander and moved to Steamboat to retire,” Tom explains. Finding he wasn’t quite ready for full retirement, the senior Gillingham started a new firm to focus on insuring recreation- and hospitality-related risks. Tom joined the firm in 1997 after graduating from college, and his father retired in 1999. COO John Mahoney’s insurance background encompasses 19 years in the industry, all of which was on the insurance company side until he joined Gillingham in 2006. Mahoney held senior management positions with Arch Insurance Group, Kemper, and Orion Capital. Before joining Gillingham, Mahoney managed the Denver operation of the Arch Insurance Group’s program division, which later became the insurer for Gillingham’s Great Outdoors program. President and Underwriting Manager Glenn Sudol came on board in 1993 and with Tom Gillingham is a principal of the firm. In its 16 years of operation, Gillingham & Associates has achieved steady, even rapid growth. “In 1993, when I started, we probably had about $300,000 of written premium,” Sudol says. “When Tom started in 1997, we were a $4 million to $6 million shop.” Since then the firm’s volume has increased to over $50 million. “A lot of our growth came from business we obtained after firms like Frontier and Colorado Western went out of business,” Sudol notes. Strong partners It’s often said that insurance is a relationship business, and that’s particularly true for specialty wholesalers, whose success depends on building solid relationships with both carriers and retail producers. “We use two carriers for our business,” Gillingham says. “Our primary carrier is Arch Insurance Group, which currently handles 95% of our volume. Our Great Outdoors program is written through Arch Insurance on an admitted basis.” Another Arch Group unit, Arch Specialty, is a nonadmitted insurer. “We also have a new relationship with First Mercury Financial Corporation, which we kicked off in the fourth quarter of 2006,” Gillingham says. “This is a distinct relationship that does not compete with our Arch relationship. It’s an exclusively surplus lines program that is designed to handle nontraditional outdoor recreation and hospitality risks that do not fit the Arch program,” he explains. “Both carriers have just been tremendous partners in helping us build and grow our business.” Examples of risks that aren’t appropriate for the Arch program, Mahoney says, “are more aggressive activities like whitewater rafting, ATV and snowmobile touring operations. Those are classes we place with First Mercury.” Nationwide, Gillingham & Associates works with approximately 1,500 retail independent agents and brokers. “The bulk of our business comes from agencies and brokerages that specialize in outdoor recreation and hospitality risks,” Gillingham says. “We are also willing to take individual submissions from licensed producers who may need to accommodate a client.” Adds Mahoney: “We basically have two kinds of relationships. First are the true specialists who have both a passion for and expertise in outdoor recreation risks. They actively seek endorsements, go to conventions, and pursue business well outside their geographic area. “The second tier is composed of rural mom and pop agencies that have either family or local community relationships with outdoor businesses. These are the producers who may write just one or two accounts a year with us. We welcome business from both sources,” Mahoney asserts. “We try to partner with independent agents who are located in resort and rural areas,” Sudol says. “For example, Jackson Hole, Wyoming, is the kind of place that has a lot of the classes we write, so we’ve had a relationship with a broker there for as long as we’ve been in business. In fact, our top 10 agents are close personal friends of ours because we’ve been doing this business together for so long.” Sudol mentions another source of business for the agency: independent agents who are members of clubs for various kinds of outdoor enthusiasts, like hunters and sport fishermen. “We often write their clubs for them,” Sudol says. “We position ourselves to serve the independent agent,” he asserts. “That’s who we market to, that’s who we advertise to, and that’s who we rely on to get applications in the door.” * For more information: |
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