Building up construction insurance, block by block

Agent Dave Sinclair remembers his first construction account well since it was only about six years ago. It was a plumber contract with a premium of about $70,000. Today Sinclair’s Wallingford, Conn.-based agency writes about $25 million in construction related premiums; that’s about 35 percent of his total business.

For Lisa Heppler, assisting a residential construction firm 12 years ago with a final workers’ compensation audit resulted in the agency’s first construction insurance account. Wick Pilcher Insurance Inc. in Phoenix, where Heppler is vice president and marketing manager, still writes the growing construction firm. The agency writes approximately $175 million in total premiums annually, about $10 million to $15 million in the construction segment.

Charles Comiskey can’t remember his first construction account because it was more than 30 years ago and there have been so many. But he still writes a number of his earliest accounts as partner in an agency that generates about half of its $10 million in commission revenue from contractors. Comiskey is senior vice president of Brady, Chapman, Holland & Associates Inc. in Houston and chair of the RiskProNet International construction practice group.

First blocks
Insurance producers seizing opportunities to land accounts it happens every day. But successfully building a big block of construction insurance accounts from that first one is a different story.

The way insurance producers have gone about building their construction business is a reminder that insurance is a relationship business.

Her father and grandfather were general contractors, so going to work in 1980 for an insurance agency that specialized in construction risk was a natural move, recalls Melody S. Peevy, now a partner with the Dallas, Texas-based Waldman Brothers. She still works with accounts that originated in 1980.

Her agency did a lot of surety bonding for contractors and acquired most of its insurance through those relationships. In addition, Peevy has become involved in local contractors associations to meet others.

“It’s definitely a referral business. Once you get to know a few contractors, they are all too happy to introduce you. It’s a tight knit community much like the insurance industry,” Peevy says.

Working with others
For Heppler, joining the RiskProNet group and gaining access to its construction insurance agents in every state has been very valuable in building this segment. “It brings an additional element to the table compared to local independent insurance agents. We compete against national brokers quite a bit in Phoenix and most have construction divisions so we have a group that focuses on construction.

“There are a lot of independent agents and brokers so what we try to do is set ourselves out as specialist in partnership with RiskProNet. That really helps when going into a prospect.”

Comiskey, of Brady, Chapman, Holland & Associates Inc., is also active in RiskProNet. He chose to grow by merging his own firm with another. “We only had 10 people in my firm. Regardless of what we perceived our capabilities to be, we were perceived to be small. When we merged, we became one of over 100 people. And that did away with that perception issue. It allowed me to deal in a larger arena. Plus they had more markets, offered greater support to me. It was a win-win. It has worked exactly the way we wanted it to work. I’ve been very fortunate since joining the firm and currently I’m the largest producer in the firm.”

Bonding with clients
The Kornreich/NIA Organization in New York entered the construction insurance business through the door of its large real estate insurance practice. As the owners of the real estate company they insured began expanding into development and managing, the insurance agency followed their needs.

“We expanded on behalf of the real estate owners,” explains Rubin Alspector, senior vice president at Kornreich/NIA. Having a bonding facility has also helped, he added. Today about 15 percent of his agency’s business can be traced to construction, Alspector said.

After he landed that first plumbing account, Connecticut agent Sinclair said referrals began to trickle in. Having built a risk management operation to serve his large non-construction accounts, he realized this same approach would appeal to construction firms.

“Contractors need and are more interested in risk management and loss control than other customers,” says Sinclair. “As a group they have big exposures and their premiums are large, so they pay attention. They tend to take a different view than other consumers.”

He says that while a major part of his job is matching up the right companies with clients, he has been successful by offering contractors much more. He teaches them how loss control works, provides workers’ compensation solutions and makes surety bonds available. “They don’t just get a policy,” he said.

Clueless in Florida
Not all agents are confident about how to build this business. Tony Martely, vice president of Elliott, McKiever & Stowe Inc. in Coral Gables, Fla., insures four general contractors and 20 to 25 subcontractors, from West Palm Beach to Miami. Martely said every year he studies his marketing and even has a marketing coach, but when his coach asks what his marketing strategy and sales target for the coming year are, his answer is: “I have no clue!”

“After 30 years I’m sitting here like someone on Johnny Carson because I don’t have any idea what types of policies I am going to write, whether it is construction or restaurants. To tell you the truth, I am lucky if I can keep what I have.”

Topics Agencies Contractors Construction