Broker Partnerships Seen As Central To E&S Insurer Business Strategies

David Leonard, president of RSUI in Atlanta, observed that market conditions that persist in 2010 are not very different from those that have prevailed throughout most of the history of the industry, explaining why strategies at his company are unchanged this year.

"Looking back at historical results of the property and casualty insurance business, most of the time we operate in what could be called 'other than hard market' conditions," he said. "That is, an environment of other than increasing rate."

That means "the things RSUI has to do to be successful are the same–all the time," Mr. Leonard said.

Echoing other E&S carrier executives, Mr. Leonard said these activities include:

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• Nick Bayliss, who came over from Arch in January as transportation product line manager with more than 20 years under his belt.
• Sal Pollaro from Zurich, who is going to open a D&O operation concentrating on the upper end of the Fortune 1000.

"We never really wrote the D&O before," Mr. Markel said, noting that the focus of Mr. Pollaro's group will be on medium- and smaller-size businesses among the Fortune 1000, and that the D&O products will be available for distribution through wholesalers. "We haven't written any D&O other than condominium and association–the really small stuff. We haven't written any for-profit D&O in 15 or 20 years."

In the transportation segment, Markel is making a garage liability product available to its wholesaler partners–another first for the company. "Clearly, we're looking for opportunities to broaden our wheels appetite, but it will not include long-haul trucking liability," Mr. Markel said.

On the property front, he noted that Markel is already a pretty big player, but he described existing operations as "disjointed"–with one unit for property-catastrophe, a separate contract division that gave some binding authorities to producers for small low-valued commercial properties, and a separate large property brokerage operation.

Mr. Warde is "redefining our appetite, and more importantly trying to effectively create one property team that is represented in all five regions with the ability to quote" all three types of property business, according to Mr. Markel.

"In spite of the fact that we don't think we're going to get any artificial help from the market, we're counting on some moderate growth this year," he said, explaining that he expects growth to be generated from the product enhancements, coupled with "the tremendous effort to totally transform the company into One Markel," he said.

Mr. Markel was referring to a structural overhaul that essentially wiped away the separate identities of four wholesale-driven E&S operations–Essex, Markel Southwest, Markel Underwriting Managers and Markel Shand. Markel now operates through five regional offices, Mr. Markel said, explaining that growth is possible under the new setup because every Markel wholesaler now has access to every Markel product.

Under the prior setup, with four subsidiaries operating independently of one another, a wholesaler would have to represent all four in order to have access to all of Markel's products, he said.

"We think the amount of investment we have made in the physical rework of our company–to be closer to the client with all of the product diversity that we bring, and the investments we're making currently in software support packages–speak volumes about our commitment to the wholesaler," Mr. Markel said.

He noted that the rework also gives the company an opportunity to review its wholesaler relationships–a process that will probably result in severing some ties.

"I don't mean to be cavalier or highfalutin about it, but some agents value what we do, and some agents don't necessarily add value–at least we don't seem to be numbered in their list of high-ranking markets in their shops," he said.

"We are consciously going through a process of evaluation that I think will end up reducing the number of agents that represent us in an effort to put our time, our money and enhanced service to those who do," he added.

The company doesn't have any target in terms of the number of agents that will be cut. "It's an agent-by-agent analysis and discussion, and I'm sure there will be some fallout," Mr. Markel said, speculating that the number of wholesale offices representing the company could fall by as much as 15-to-20 percent.

At Century Insurance, President Christopher Timm also described strategies that focus on wholesaler and general agent relationships, separately delineating efforts underway at Century's General Agency Group and its Special Risk Group.

In the GA group, for example, Mr. Timm said that agents "have been granted various levels of underwriting authority to allow them to quickly, efficiently and professionally service the needs of their retail agent producer base."

On the brokerage side, the Special Risk Group continues to build "focused, specialized underwriting divisions," he said, listing marine, excess, programs, environmental and construction as the current divisions and noting that efforts to attract and develop Century's underwriting talent continue into 2010.

"Overall, I would sum up our strategies as people, products, and value-added tools and processes to increase the value of a Century contract," Mr. Timm said, also referring to efforts to develop and refine systems for the GA group.

The insurer has also stepped up its marketing and sales efforts–efforts that will be spearheaded by a recently hired director of marketing, Andrew Markley. According to Mr. Timm, Mr. Markley is:

• Helping Century identify new products the company should be providing.
• Assessing geographic penetration possibilities in areas where the company is underrepresented.
• Developing new and exciting agency compensation programs.