ProBuilders Risk Retention Group is Going Out Of Business

According to Insurance Journal (01/19/10), ProBuilders Risk Retention Group will no longer accept any new business and non renew all existing policy holders as of March 1, 2010. “According to Bill Tepe, chief financial officer for Nations Builder Insurance Services (NBIS), the exclusive manager of ProBuilders, the group program has not been able to remain competitive and has been losing revenue due to the collapse of the real estate market and increasing competition from traditional insurance carriers.”

ProBuilders was established in 2001 as a direct result of ‘A’ rated insurance carriers pulling out of the highly litigious market of residential construciton. Home builders and artisan contractors were faced with little-to-no options when it came to finding General Liability insurance for their operations by the end of the 1990’s due to large claim pay outs filed by homeowners primarily in California, Nevada and Arizona. These claims were spawned from the rapid expansion of the new home market where builders and contractors “cut corners” in order to meet demand and time schedules.

When a segment of the economy, notably the construciton market, is not being serviced by a large segment of the insurance industry, niche companies will fill that void. That is exactly what ProBuilders did. They filled a highly demanded gap in available general liability coverage for a segment of the economy that was fuel for entire cities such as San Diego, Sacramento, Las Vegas, and Phoenix. Because they were the “only player in town”, premium was not an issue for many of their insureds. If a home builder wanted to build homes, he needed insurance and ProBuilders was more than happy to be the “only player in town”.

With their coffers full of premium, ProBuilders expanded into Eastern U.S. Markets like New England attempting to take advantage of the lack of insurance carriers in those states. ProBuilders was willing to write all classifications of contractors while charging a rather high premium against the risk. Their aggressive expansion began catching up with them in 2007 when their year-end written premium was $62.7M and drastically slipped year-end 2008 to $25.6M and mid-year 2009 to $6.8M as ‘A’ rated carriers began re-entering the construction market with substantially lower premiums.

This is an unfortunate circumstance for contractors insured with ProBuilders. They now have to scramble to find a new carrier in times when construction has reached a Post WWII low. However, it is a good sign for carriers that have made a point to re-enter the construction market and establish strong relationships with retail agents and brokers focusing on that market segment. This allows retail agent’s access to carriers that can handle more than one specific niche market risk and gives high volume retail agencies and brokerages the ability to create market specific programs with competitive premiums for their clients. ProBuilders was only offering General Liability and Builder’s Risk policies while larger carriers like Travelers, CNA, Navigators and Scottsdale Indemnity can offer a full suite of products, such as Inland Marine, Property, and Commercial Auto, mid-large cap contractors require. BBT Insurance Commercial specializes in Arizona Contractor’s Insurance needs offering all insurance products needed by contractors at highly competitive premiums from a variety of carriers, including Risk Retention Groups, Admitted and Non-Admitted Carriers, with financial ratings ranging from ‘A+’ to ‘B’ as determined by A.M. Best.