SMALL IS BIG IN CONN.:

Connecticut’s insurance industry, long dominated by some of the largest firms in the nation, is feeling a few sharp elbows from smaller companies that are making room for themselves in the market. Those firms have created a niche industry by providing insurance coverage that bigger firms are not, such as medical malpractice or professional liability insurance. “It’s the Silicon Valley of the insurance industry,” Tom Baker said. Baker teaches law and insurance at the University of Connecticut School of Law. One Beacon Professional Partners in Avon, for example, sells media liability insurance for legal costs related to accusations of plagiarism, libel and slander. Founded in February 2002 by six partners as a subsidiary of One Beacon Insurance of Boston, the company now employs 34. “It happened that we were growing at a time when larger carriers were seeing some shrinkage and divesting themselves of businesses,” said Randy Oates, chief operating officer at One Beacon. Several niche companies sprang up following the terrorist attacks of Sept. 11, 2001, which strained property/casualty insurance companies, and corporate scandals that exposed executives and officers to lawsuits. Larger companies sought to boost their competitiveness by cutting unit costs, Baker said, and in stepped the niche companies. They now dot the same central Connecticut landscape that has been at center of the insurance world since companies first protected shipments along the Connecticut River in the 18th century. “We have all of the basic infrastructure and skills, a reservoir of skilled employees,” said Jeffrey W. Blodgett, who heads research at CERC, formerly known as the Connecticut Economic Resource Center. The niche companies offer some benefits for prospective employees, such as autonomy on the job and more control over their work, Oates said. Dave MacLeod, president of the Guilford Specialty Group in Hartford, said employees look to the niche businesses “when people are tired of a real huge business and being a cog in the wheel.” The companies provide some jobs for a constantly churning industry, but the small number of employers limits new opportunities. Employment in the insurance industry in Connecticut has declined by 18 percent between 1990 and 2003, from 82,900 to 67,900, according to the U.S. Bureau of Labor Statistics. Gail Audibert, president of Gail Audibert Associates Inc., an industry recruiting firm in Farmington, said the small companies “really can’t compete with a company underwriting a lot of businesses and can absorb losses.” But Baker, of UConn, said niche insurance businesses are maturing enough to establish a cycle of their own in business growth and acquisition. “The successful startups end up being bought by the bigger ones eventually,” he said. (Associated Press)