Today, Ciardiello Insurance Agency generates about $15 million in annual premium volume, with construction making up 70 percent of our commercial business. Most of our construction clients are based in Connecticut--midsized businesses with insurance premiums ranging from $50,000 to $300,000 annually. They include general contractors, construction managers, artisans, subcontractors--anyone that has to do with construction.

Our agency represents carriers including The Hartford, Travelers, Acadia, Liberty/Peerless, Zurich and Wausau. Depending on the account, I do prefer working with a regional company where we're able to deal with a single underwriter directly for all aspects of the account. This significantly increases the ease of doing business and allows an agent/underwriter relationship to develop.

I naturally gravitated to construction--not only because the premium size is attractive, but because I enjoy the business and its people. In fact, I've been personally involved in the industry, working with an architect to build and improve my own house, and I've constructed and renovated about five commercial buildings as investments. Many of these buildings I GC'd myself, including a restaurant I own; other times I hire GCs to handle the projects and maintain a personal involvement in the project.

This knowledge is a huge asset that helps in my line of work. When a client calls me up and is renting a piece of machinery from WI Clark or United Rentals, I know exactly what he's talking about because I've done it myself.

While it's true that the residential market has halted, our customers do a lot of work involving government building, especially schools, which are being reconstructed, renovated or knocked down and being rebuilt as part of New Haven's School Construction Program. Yale University in New Haven, which isn't far from our agency, has also committed to almost $22 billion in construction over the next 10 years, and several of our contractor customers are involved in this work.

Rates are low right now, at least for good accounts. If I have a qualified construction company with a strong safety program, good track record and quality management, we can usually have them placed with a preferred market, unless they're involved in more high-risk activities such as blasting or involved in work at airports. We've had two consistent renewal years of rate reductions and I don't know how much lower they can go, unless the companies refile and get their base rates lowered. We're also noticing that excess lines are starting to compete with preferred carriers and their rates, although this trend is mostly in property rather than lines like construction.

Risk management is an up-and-coming practice in construction. In the past, risk management programs were primarily for large accounts, but now most insurers offer these services to small and midrange accounts. It's becoming a big factor in the placement of business. If I have to decide between a carrier that doesn't offer risk management and one that does, even on a $50,000 account, I'll consider the carrier that does first. For instance, Liberty provides its policyholders with OSHA 10 training and job site visits (see the cover article in the July AAB); they're very proactive in writing new business and keeping the business with the company.

There is always the potential to see claims on a job site, although the risk is far greater with residential construction. I attribute that to the fact that there are very strict controls on commercial job sites. The contractors I deal with work on large commercial job sites and experience this every day. These are sites where there are both a general contractor and a construction manager controlling almost every aspect of the project. All workers have been trained for safety before and during the construction. These kinds of controls are significantly less than on residential sites. At most job sites in Connecticut, every employee has to be OSHA trained, so you're seeing fewer accidents.

Although I know it's out there, I personally haven't had any issues arise with my customers around construction defect litigation. To protect themselves, GCs are requiring their subcontractors to sign agreements where they take on all the risk. Because I insure both GCs and subs, I just advise them to review such contracts with their attorneys before they sign anything. One posi8tive aspect is that a lot of carriers are now adopting language into their forms that indemnifies GCs, so we're not overly concerned about getting each and every certificate and language approved by an underwriter. It's simply too cumbersome.

Although technology is changing the way it's being performed, construction is still construction. For example, one of my excavator clients has equipped all its bulldozers with GPS. This allows operators to input the site map on a computer, and the bulldozer blade moves itself and grades the property. Job sites are also becoming a little more environmentally friendly in their concern about runoff and pollution. Although we're still the same industry in that we're just putting buildings up out of the ground, these trends are hopefully providing a better way of doing things.

The most important piece of advice I can give an agent looking to specialize in construction is to learn the business and the needs of the insured. Then make sure that you partner with the right company, one with the knowledge to perform the services--including loss control, auditing and underwriting--and the appetite to deliver. When I tell a client that I personally understand the business, I mean it, and I can bring in the professionals to do the loss control and audits in a knowledgeable way. Start small, grow big, and make sure you understand who you're doing business with.

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&quot;Start small, grow big&quot; - One agent's story of building a construction specialty

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