Today, Ciardiello Insurance Agency generates about $15 millionin annual premium volume, with construction making up 70 percent ofour commercial business. Most of our construction clients are basedin Connecticut--midsized businesses with insurance premiums rangingfrom $50,000 to $300,000 annually. They include generalcontractors, 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. Dependingon the account, I do prefer working with a regional company wherewe're able to deal with a single underwriter directly for allaspects of the account. This significantly increases the ease ofdoing business and allows an agent/underwriter relationship todevelop.

I naturally gravitated to construction--not only because thepremium size is attractive, but because I enjoy the business andits people. In fact, I've been personally involved in the industry,working with an architect to build and improve my own house, andI've constructed and renovated about five commercial buildings asinvestments. Many of these buildings I GC'd myself, including arestaurant I own; other times I hire GCs to handle the projects andmaintain 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 fromWI Clark or United Rentals, I know exactly what he's talking aboutbecause I've done it myself.

While it's true that the residential market has halted, ourcustomers do a lot of work involving government building,especially schools, which are being reconstructed, renovated orknocked down and being rebuilt as part of New Haven's SchoolConstruction Program. Yale University in New Haven, which isn't farfrom our agency, has also committed to almost $22 billion inconstruction over the next 10 years, and several of our contractorcustomers are involved in this work.

Rates are low right now, at least for good accounts. If I have aqualified construction company with a strong safety program, goodtrack record and quality management, we can usually have themplaced with a preferred market, unless they're involved in morehigh-risk activities such as blasting or involved in work atairports. We've had two consistent renewal years of rate reductionsand I don't know how much lower they can go, unless the companiesrefile and get their base rates lowered. We're also noticing thatexcess lines are starting to compete with preferred carriers andtheir rates, although this trend is mostly in property rather thanlines like construction.

Risk management is an up-and-coming practice in construction. Inthe past, risk management programs were primarily for largeaccounts, but now most insurers offer these services to small andmidrange accounts. It's becoming a big factor in the placement ofbusiness. If I have to decide between a carrier that doesn't offerrisk management and one that does, even on a $50,000 account, I'llconsider the carrier that does first. For instance, Libertyprovides its policyholders with OSHA 10 training and job sitevisits (see the cover article in the JulyAAB); they're very proactive in writing new businessand 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. Iattribute that to the fact that there are very strict controls oncommercial job sites. The contractors I deal with work on largecommercial job sites and experience this every day. These are siteswhere there are both a general contractor and a constructionmanager controlling almost every aspect of the project. All workershave been trained for safety before and during the construction.These kinds of controls are significantly less than on residentialsites. At most job sites in Connecticut, every employee has to beOSHA trained, so you're seeing fewer accidents.

Although I know it's out there, I personally haven't had anyissues arise with my customers around construction defectlitigation. To protect themselves, GCs are requiring theirsubcontractors to sign agreements where they take on all the risk.Because I insure both GCs and subs, I just advise them to reviewsuch contracts with their attorneys before they sign anything. Oneposi8tive aspect is that a lot of carriers are now adoptinglanguage into their forms that indemnifies GCs, so we're not overlyconcerned about getting each and every certificate and languageapproved 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 myexcavator clients has equipped all its bulldozers with GPS. Thisallows operators to input the site map on a computer, and thebulldozer blade moves itself and grades the property. Job sites arealso becoming a little more environmentally friendly in theirconcern about runoff and pollution. Although we're still the sameindustry in that we're just putting buildings up out of the ground,these trends are hopefully providing a better way of doingthings.

The most important piece of advice I can give an agent lookingto specialize in construction is to learn the business and theneeds of the insured. Then make sure that you partner with theright company, one with the knowledge to perform theservices--including loss control, auditing and underwriting--andthe appetite to deliver. When I tell a client that I personallyunderstand the business, I mean it, and I can bring in theprofessionals to do the loss control and audits in a knowledgeableway. Start small, grow big, and make sure you understand who you'redoing business with.