MGA Focus

A SURPLUS OF LONGEVITY

Quaker Special Risk boasts a rich history of surplus

success, familial ties, and smart evolution

By Lori Widmer

From left: Liza Villanueva, Associate Producer; Ricardo Diaz, Director of Admitted Carriers Personal Lines; John Reid, Brokerage Division; Michael Walsh, President; Daniel Walsh, Director of Personal Lines; Tom Murphy, Senior Vice President; Chris Reid, Director of Marketing; Patricia McCully, Officer Manager; and Matthew Walsh, Brokerage Division.

Employees tend to stick around at Quaker Special Risk.

At the Eatontown, New Jersey, commercial and personal lines wholesaler, the average employee has been with the company for 10 to 15 years, and in the industry even longer.

The longevity, says Michael Walsh, president of Quaker Special Risk (QSR), is exactly what makes QSR a leader in the surplus lines arena. He says the employees have been in the industry long enough to develop specific expertise in the markets the company serves.

And they serve quite a few markets. From hard-to-place commercial construction to high-value personal lines, Walsh says the company has the breadth and depth of a large, national entity but delivers the small agency experience for clients. “We don’t have a lot of corporate red tape. We can get a high percentage of risks bound through in-house authority.”

That kind of underwriting authority has been present since the company’s founding in 1960. At the time, QSR was one of the first surplus lines wholesalers in the state of New Jersey, giving agents and brokers a market for placing their most challenging risks. That was the idea when Frank S. Walsh opened the first QSR office in Newark, New Jersey. It’s an idea that flourishes today, and the company still shares the same core values and the same familial ties—throughout the company’s history, subsequent generations of Walshes have been part of what is currently a three-location business with additional remote employees countrywide.

“From a growth point of view, we are well positioned, both as Quaker and under the Jencap brand, to expand and continue to do so in these tougher markets.”

—Michael Walsh

President

The evolution of surplus

From left: Chris Reid, Daniel Walsh, Liza Villanueva, and Ricardo Diaz.    

Over the years, QSR has evolved to provide specialized service over multiple industries. That evolution was in response to changes in the market, says Frank M. Walsh, chairman of the board. “Everything from hard-to-place habitational to asbestos contractors way back when, to [today’s] environmental types of risk.”

The company went through another evolution expansion of office locations—states Christopher Reid, director of marketing. In 1981, QSR opened a sister office in Worcester, Massachusetts, to provide agents and brokers with access to excess and surplus products. A Charlotte, North Carolina, office was opened in 1987 and then sold for a strategic profit in 2004. The West Palm Beach, Florida, office was opened in 1989. The company has developed a national presence and has established access to over 75 markets.

Even though the company’s focus is strongly excess and surplus, says Reid, the need arose for the company to provide personal lines appointments as well. “So, we became an MGA, placing admitted [business] strictly with the high-net-worth carriers for agents and customers who did not have access to those markets.”

Today, QSR’s personal lines division handles a 50/50 mix of admitted and non-admitted business. Reid says it was because the need was there, but also because the market had evolved. “Over the years, we found an opportunity where some of our agents, who may have been using us strictly for the excess and surplus and hard-to-place business, had a need” but could not get a carrier appointment in order to place the business. “They needed access to another good carrier that had a different appetite,” and Reid says that’s what QSR provides.

Daniel Walsh, director of personal lines, says the personal lines division’s focus is the needs of high-value clients—high profile, high-valued builders risk, physical damage for high-value automobiles, and of course high-valued homes countrywide. However, Daniel Walsh says he expects more than 25% of Quaker’s growth over the next five years will be from one area—private flood. Quaker has engaged with multiple primary and excess flood markets to fuel this fastest growing area for both commercial and personal lines business.

Key programs

Perhaps that is one of the great strengths that QSR has built its business from: the ability to meet market needs by working closely with carriers to develop niche commercial insurance products that address difficult-to-place risks. “We are known for construction,” says Tom Murphy, senior vice president. That is readily apparent in the company offerings along those lines: QSR provides specialty exclusive programs for construction managers, residential remodel paper general contractor (GC), luxury home builders, specialty trade contractors, owners interest and builders risk.

“Those specific unique niche programs really solve some challenging risk exposures for which our retail brokers need a consistent and specialized solution,” says Murphy. Whether it is a residential GC working in the boroughs of New York City or a project-specific construction risk in Florida, the QSR team dives deep to tailor an innovative solution. Independent agents countrywide rely on QSR’s deep carrier relationships, underwriting depth of experience, carrier exclusivity and superior customer service to bind tough-to-place non-admitted risks of all kinds.

QSR writes coverage for a wide variety of commercial risks. “We handle vacant properties; professional, environmental, coastal commercial packages; habitational; tough imported products and home healthcare—just to name a few,” says Murphy. QSR has the in-house industry-specific expertise to solve many “tough-to-place” commercial risks.

“[S]pecific unique niche programs really solve some challenging risk exposures for which our retail brokers need a consistent and specialized solution.”

—Tom Murphy

Senior Vice President

“While Quaker Special Risk writes coverage for a wide variety of commercial risks, the firm is “known for construction.”

Demand for non-admitted products

Whether it’s commercial or personal lines, Reid says the demand for surplus lines coverage has been accelerating. “We’ve seen a major thrust, thanks to the hard market, on both sides of the house. We’ve seen a major move towards the non-admitted carriers.” That, he says, is putting pressure on the surplus market to get solutions from carrier to buyer in a timely fashion. “We have been able to deliver because we have broad binding authority with major non-admitted carriers, like our Lloyd’s of London facilities and others,” says Reid. “Given our selective underwriting and historically low loss ratios, we still have aggregate available in hard-to-place areas.”

That became a key part of the company’s offerings thanks to COVID-19, says Reid. Because of the lockdowns, he says the uptick in secondary locations—and the need to insure those locations—has been significant, and has contributed to QSR’s ability to grow. “People are buying that secondary home in coastal areas and buying it maybe earlier than they wanted to because of the shifts in the COVID pandemic.”

Those shifts, he says, came from people and relocating to the coast in areas that standard carriers were pulling away from due to flood and wind damage exposures. “That’s really what fueled a lot of our growth and helped our agents make those placements when they were not able to get them done in their direct markets.”

And make no mistake—the agent is the main focus of QSR’s efforts, says Reid. “As a wholesaler, we remember our customer. And our customer is the retailer. Our main goal is to help them fill a void when all of the direct markets have said ‘no.’ That’s really where we try and come in and put our best foot forward.”

It’s an approach that QSR applies to any retailer looking for surplus products. “We can do business with agents all over the country.” However, he is quick to point out QSR’s strategy on opening up new agents: “We’re look-ing for new relationships, not one transaction. Relationships are key for our business. It’s how we were founded, it’s how we started, and it’s how we grew. And it’s how we will continue to grow.”

Reid realizes that other organizations claim the same focus, but as he puts it, “it’s all in the execution.” It’s in how well the company has been able to serve and service agents and brokers in an efficient, effective way. “We’re in a hands-on business. We still do business face-to-face and while we utilize technology to stay with the times, our engagement is in person.” Pre-COVID, of course.

“As a wholesaler, we remember our customer. Our main goal is to help them fill a void when all of the direct markets have said ‘no.’ That’s really where we try and come in and put our best foot forward.”

—Christopher Reid

Director, Marketing

These days, that face-to-face interaction often comes via videoconferencing, but whenever possible, Reid says, the company still prefers meeting with customers and helping them understand the changes in the market and how that might impact their policyholders. That educational piece of the relationship is where QSR excels, says Reid. And the market has been experiencing pockets of chaos that he says have caused upheaval for many customers and their clients. “Certain areas have been hit harder than others, such as California and Colorado with wildfires and brush concerns. That has really made a huge impact on what standard carriers are able to write.”

The same can be said for Florida, says Reid, where he says a number of larger carriers have limited exposures and are non-renewing risks to mitigate their own exposures. That’s where QSR excels, he says. “We’ve been able to adapt and underwrite those exposures within our guidelines and, in many cases, find a suitable solution for those risks.”

Acquisition at the right time

Part of QSR’s ability to respond to market challenges is now augmented. The company was acquired in June 2020 by Jencap, Inc., a large national wholesale intermediary that offers wholesale brokerage, binding authority, and program management.

Jencap, Michael Walsh says, was not the first company to offer an acquisition. “The Jencap relationship really fits us well at QSR. We are able to continue to deepen our relationships with the best markets available in our top classes of business while partnering together with sister Jencap entities for areas of specialization that we traditionally have not pursued, including agribusiness, oil and gas, national property, workers comp and transportation/garage.”

“We are in a service industry, and we need a strong team who represent our core values and understand the importance of the relationships this business has been built on.”

—Patricia McCully

Office Manager

Now under the Jencap umbrella, Walsh says, QSR has an even stronger position in a tough market. “From a growth point of view, we are well positioned, both as Quaker and under the Jencap brand, to expand and continue to do so in these tougher markets.” With growth and the additional opportunities, the current market brings, QSR is looking to add to their team. “We are in a service industry, and we need a strong team who represent our core values and understand the importance of the relationships this business has been built on,” says Patricia McCully, office manager. During a period of time when many businesses have had to scale down or close, QSR is continuing to evolve in order to be there for their customers and the insureds they represent.

As a business built to handle the tough markets, QSR has certainly had plenty of experience developing a strong presence that serves its core customers well. Part of that service is the continuity of staff as well as bringing on new staff to perpetuate QSR’s core philosophy of promoting and nurturing relationships. As Michael Walsh says, “We’re still going to be there for our clients. I think the future holds more opportunity for excess and surplus.”

The author

Lori Widmer is a Philadelphia-based writer and editor who specializes in insurance and risk management.