When Scott H. Smith took over a Hartford insurance company in 1982, one of the first things he did was to box up thousands of personal policies worth about $400,000 in premium and called his competitors to see if anyone was interested in taking the files off his hands — for free.
Smith had a vision of what he wanted his wholesale brokerage to be, and it didn’t include the $75 and $100 policies he gave away.
From there, he renamed his firm to S.H. Smith & Co. and focused his energy on building the professional liability division, one of four key areas that make up his business.
Giving away the small personal policies was a risky move. For Smith, it was the best move.
Today his privately owned company is one of the largest specialty brokers in the U.S., with more than $200 million in written premium and 100 employees in seven states. S.H. Smith & Co. has offices in Connecticut, Maryland, Massachusetts, Minnesota, New Jersey, New York, Ohio and Rhode Island.
The company has four different wholesale operations: professional liability brokerage; property and casualty brokerage; a managing general agency for small commercial accounts and select personal lines accounts; and a program unit.
S.H. Smith & Co. continues to achieve what most insurance brokerage firms can only hope for: grow earnings, keep premium volume up, and gain new clients while holding on to existing ones — all in a soft market rife with mergers and cutbacks.
Smith credits strong relationships, consistent communication and the firm’s proprietary software for the firm’s success.
“We have always paid attention to how we distinguish ourselves in the marketplace,” said Smith. “What makes us different from everyone else?”
For one, Smith has always hired insurance experts with vast knowledge in their specialties; then he expanded to regional offices, placing company leaders in close proximity to the retail agents that rely on S.H. Smith & Co.’s services.
“We listen carefully to our clients when they tell us what they need,” said Smith. “Our brokers don’t go out and match risks to just any market,” said Smith.
“We research the market, analyze the information and go out of our way to explain to our customers what the exposures and risks are,” he said. “It’s important that each risk be directed to the right insurer and the right product.”
Mark Mullarkey was recently promoted to executive vice president and will lead the specialty insurance broker’s new errors and omissions division, one of three professional liability units established in a restructuring of the company.
He has been with the firm for 16 years and was previously the senior vice president.
“Agents have come to expect more from their wholesale partners,” Mullarkey said. “Product specialization is just one way S.H. Smith & Co. is able to differentiate itself from the competition”
The restructure means “each person is solely dedicated to a specific area of expertise,” said Mullarkey. “But they are still part of a team.”
“S.H. Smith &. Co. really emphasizes the team approach, so that’s where we have the four divisions.”
The firm is recognized as a top agency in underwriting various risks, but one in particular — cyber insurance — has become a necessary area of coverage for the education, health care and financial sector.
Smith saw a need coming nearly a decade ago and began offering the coverage to all its commercial clients.
In 2011, the firm hired cyber, privacy and security expert Betty Shepherd to serve as the firm’s vice president of its professional and management liability department.
Smith said his firm, S.H. Smith & Co., writes more cyber liability than most carriers; and he says the notification costs alone are exorbitant.
When a vice president of a small, regional bank with fewer than 12 branches lost his laptop containing data on all the bank’s account-holders, the price tag to inform all customers of the incident and possible breach was steep: nearly $700,000.
“That was just to let the customers know about the incident,” said Smith.
For Smith, offering the right coverage directed to the best insurer is critical.
“I used to work as an underwriter before I was a broker,” said Smith. “One of the things that bothered me was that we often received submissions that weren’t appropriate for us.”
Smith says receiving submissions that are difficult to understand are equally frustrating.
Several years ago, Smith’s firm quoted a banking client for directors and officers liability coverage with a premium price tag of about $5 million. The client was in the process of acquiring another bank, he said.
The agent for the bank that was being acquired put together a policy quote that included a long string of confusing emails from another broker. It made little sense to Smith or his client.
“There were no formal quotes with terms and conditions outlined,” said Smith. “It read more like a he-said, he-said with email messages pasted in to validate the figures.”
Smith, who admits he was appalled by the experience, said every quote should include an analysis that explains clearly what each item.
“We make it easy to do business with us,” said Smith, who hired a pair of software engineers to develop a custom-designed, client-management system from scratch.
The proprietary system allows the firm’s brokers to handle “five to 10 times the amount of work” they had previously, said Smith.
All brokers have three screens on their desks that give them access to policies, endorsements, billing information, client correspondence, claims and other data.
