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2 Wisconsin Circle
Chevy Chase, Md. 20815
301-961-9800; fax: 301-951-5444
Premium volume $444,000,000 $442,000,000
Gross revenues* $37,100,000 $37,000,000
Employees 305 304
Commercial lines 100% 100%
Admitted business 95% 95%
Non-admitted 5% 5%
The Schinnerer Group Inc. is transforming itself from a company known for its expertise in professional liability, to one that offers a broader array of products and services that help customers achieve their growth and profitability goals, an executive says.
The company has a "vision of a stream of products that brokers can use to cross-sell to their current customers and even more products that brokers can use to break into new markets," said Lorna Parsons, senior vp. In the process, Schinnerer also is tailoring its risk management services to its policyholders' specific practices as well as offering more general business management consulting services to risk managers.
The Chevy Chase, Md.-based underwriting manager, a unit of Marsh & McLennan's Seabury & Smith unit, ranked fourth on Business Insurance's list of the top wholesalers and maintained its longtime position as the top underwriting manager.
Schinnerer's premium volume grew by less than 1% to $444 million in 1996 over the previous year. Premium volume during the first six months of this year, however, grew by 2.4% to $216 million from the same period in 1996.
"We're very pleased to be able to have premium growth in a market like this. The primary way we've done it is to have growth in our customer base. Also, we have expanded the coverages we're selling. Most started out as pure professional liability; now we're going on to such things as employment practices liability," said Homer Sandridge, executive vp.
Mr. Walk said Schinnerer's 8,000 or so broker customers have asked the underwriting manager to branch out beyond a limited number of professional liability programs. But the continuing consolidation among retail brokers has not had a major direct impact on Schinnerer, except in one instance, said Mr. Sandridge.
The merger of Schinnerer's ultimate parent, Marsh & McLennan, with Johnson & Higgins earlier this year brought Houston-based AMGRIP Inc. into The Schinnerer Group. Mr. Sandridge said AMGRIP's book of business specializing in public entities opens new opportunities for Schinnerer.
"We're excited because we have zero programs for public entities with the possible exception of public universities," he said.
AMGRIP will retain its name as part of The Schinnerer Group, he said.
Mr. Sandridge said "a bigger trend" is the "consolidation of carriers," which means that many small specialized brokers have had a difficult time finding markets. One reason behind Schinnerer's strategy of broadening its product offerings is to serve their needs, he said.
Among the new products offered by Schinnerer this year is employment practices liability coverage for architects and engineers and real estate professionals, with Schinnerer's existing professional liability programs for both groups, said Richard Walk, senior vp. The architects and engineers program, which already has been launched, is with CNA Insurance Cos. and has capacity of $5 million. The real estate professional program is slated for a late fall launch, he said.
Schinnerer also launched a package program-including general liability, property and non-owned auto-for its architect and engineer clients during the past year. It is also written by CNA. A similar program will be launched for real estate professionals late this fall.
In addition, Schinnerer added a new contractors' pollution liability program during the past year, within the architects and engineers program, which is underwritten by CNA and has standard limits of $15 million, though it can go higher.
Schinnerer has "struggled to find areas where there is expansion and growth," said Mr. Walk. Schinnerer is looking at "industries that are starting to boom where we don't feel that the insurance market is adequately serving them," he said.
Among the products formally launched in the past year is a security guard professional commercial general liability and errors and omissions policy with limits of up to $1 million per occurrence and an aggregate of $3 million. It is written by Zurich-American Insurance Group.
Another new errors and omissions program targets financial service professionals. The program, written by Executive Risk, provides limits of up to $3 million.
Schinnerer also is looking at the service industry in general, with miscellaneous errors and omissions coverage, said Mr. Sandridge.
"We're looking to provide a market for errors and omissions coverage for almost every range of non-medical" service industry, he said.
Brokers "have asked us to branch out," said Mr. Walk. That includes offering coverage for insurance agents and brokers as well. The new errors and omissions program, written by USF&G Corp., offers limits of up to $10 million.
"One of the real keys to Schinnerer is we try to add value beyond the insurance product," said Mr. Sandridge.
This has meant shifting from risk management to practice management, helping clients with such matters as communications skills and strategic business planning through seminars conducted by Schinnerer employees and others, he said. He noted, however, that "there is almost always a tie-back to the risk management side."
Among the additional services Schinnerer has been supplying for its clients are a quarterly newsletter for real estate professionals and a program on satellite television that real estate agents can tape and study. Ms. Parsons noted that Schinnerer also has an interactive World Wide Web site on the Internet for architects and engineers.
For Schinnerer, doing more for the client can have international aspects. Mr. Sandridge noted, for example, that most large design firms export their services. "We now have the capacity to provide local assistance in the foreign jurisdictions for U.S. design firms that encounter unusual circumstances. A prime example of what we've done in the past year is issue local paper in Malaysia, in Oman, in Greece, in Venezuela."
Schinnerer's flagship program for architects and engineers is now 40 years old. The program, underwritten by CNA since it began in 1957, has a standard capacity of $15 million, though it can go higher under certain circumstances. Schinnerer also has the ability to participate in quota-share packages for the largest firms, said Mr. Sandridge. The program continued to grow in 1996, with the policy count up 13%, he said. Mr. Sandridge noted, however, that many of the new accounts were smaller firms.
United Educators Risk Retention Group, a Vermont-domiciled risk retention group for which Schinnerer acts as underwriting manager, had a "great year," said Mr. Walk. Both policy count and premium volume grew about 10%, he said. He also pointed out that the growth is made even more impressive by the fact that the market is a limited one, consisting of colleges and universities.
The program's educators legal liability and excess liability coverage both carry limits of $25 million in excess of $1 million. Wausau Insurance Cos. reinsures United Educators on a primary layer of $1 million. But another mainstay of the Schinnerer book-real estate professional liability-suffered a "really tough year," said Mr. Walk. Policy count dropped by about 15% after Schinnerer raised rates by double digits throughout the country and by as much as 40% in Texas and California, he said. "Partially as a result of the constricted real estate market of the past several years, we have seen a dramatic increase in the number and severity of claims against real estate agents particularly in California and Texas," said Mr. Walk.
The program is underwritten by CNA and offers limits of up to $2 million but can go higher, he said.
A fourth core business, non-profit D&O, had a "flat year" with an 85% retention rate, said Mr. Walk. The program, underwritten by CNA, focuses on trade associations and offers limits of up to $10 million, he said.
Although Schinnerer no longer is placing emphasis on hospital excess liability coverages, its ENCON Underwriting Agency Inc. unit-also based in Chevy Chase-is writing a health care professional liability program-including D&O, E&O, and fiduciary liability-program, with limits of up to $25 million for profit and non-profit hospital and managed care organizations. Executive Risk is the insurer.
The Schinnerer Group consists of Victor O. Schinnerer & Co. and ENCON Underwriting Agency Inc., both in Chevy Chase; AMGRIP in Houston; ENCON Insurance Managers, Inc. in Ottawa, Ontario, and Schinnerer & Co. Ltd. in London.
The company also has offices in Chicago, San Francisco and Toronto.
In addition to Ms. Parsons and Messrs. Sandridge and Walk, Schinnerer's top management includes Vincent C. Santorelli, president; and Paul L. Genecki, senior vp.