Vermont insurance companies serve the local cause

Homegrown Vermont companies command only a relatively small share of the state's overall life insurance and property and casualty insurance markets. But the few insurers rooted in the Green Mountains do dominate the market segments where many Vermont families are to be found.

Cooperative Insurance Companies, for example. has written the active policies for almost nine of every 10 insured farmsteads in the state. The Middlebury firm also ranks second in overall Vermont homeowners' insurance, right behind the Montpelier-based Vermont Mutual Group.

What accounts for the enduring appeal of the 50-yearold Co-op venture? "We know the territory, we know the people," says President Jim Sullivan. "We have a strong regional presence that's hard for the nationals to break."

The Co-op Companies, which also operates in parts of New Hampshire, has 35 agencies sprinkled around Vermont. It services a large share of the nearly 50,000 active policies the firm has written. Premiums paid to the Co-op Companies in 1998 amounted to $26 million.

Local identity is the firm's defining element as well as its guiding principle, Sullivan explains.

"Part of our culture is that we want knowledgeable local insurance representatives out in the field doing a good job of writing the policies and not trying to nickel and dime you," he says.

The Co-op group was formed in the aftermath of the 1950 hunting-season hurricane that destroyed hundreds of barns up and down the Champlain Valley. The ensuing claims threatened to sink three Addison County insurance firms that together insured about half of all the farms in the state. The cooperative association the three companies formed following the hurricane rescued them financially, while allowing most of the farmers' losses to be covered.

Despite the Co-op Companies' currently strong position in the Vermont homeowners' insurance sector, the Middlebury firm holds only a 3.8 percent share of the total property and casualty insurance market in the state. Similar circumstances prevail in the case of National Life Insurance Company.

Prominently situated on a Montpelier hilltop, National Life of Vermont is one of the more familiar corporate names in the state. It employs about 700 Vermonters, and serves 250,000 policyholders nationwide, who pay nearly $500 million in premiums and fees annually. National Life posted big gains in 1998, with sales increasing 8 percent.

The company also made news that year as state regulators approved its plan to convert from a mutual entity owned by its policyholders into a holding company with a subsidiary that can sell stock to outside investors. National Life accounts for, however, a relatively small share of the group and individual life insurance market-in Vermont. It ranks fifth in that category with a 6 percent share. New York-based Metropolitan Life holds the top spot with a 10.7 percent share in 1998, followed respectively by Massachusetts Mutual (9.6 percent), General American Life (9.2 percent) and Prudential (7 percent).

Out-of-state insurance firms also occupy the top slots in the overall property and casualty market in Vermont.

Allstate ranked first in this league in 1997, the latest year for which statistics are available from the Vermont Department of Banking, Insurance, Securities and Health Care Administration.

Concord Group, based in New Hampshire, was a close second, holding a 6.4 percent market share in Vermont in comparison with Allstate's 6.6 percent. Next came State Farm, a neighbor of Allstate in Illinois, followed by Nationwide, American International and International Needer Group. Seventh place in the 1997 Vermont for all lines of property and casualty insurance belonged to Vermont Mutual Group, which held a 4 percent market share.

The major national insurance companies dominate commercial lines of property and casualty in Vermont and many other states, notes Ken McGuckin, director of company licensing for the state Insurance Division in Montpelier. Coverage of large commercial enterprises entails relatively greater risks for insurers than does a typical homeowner policy, McGuckin notes. He cites the example of fire insurance for a multimillion-dollar shopping center in comparison to a $ 100,000 home.

Even big insurers often seek to reduce their exposure in the commercial lines through reinsurance. Under this arrangement, an insurer gets other companies to share in the risk involved in a particular policy in exchange for paying them portions of the premium.

The out-of-state insurance companies do maintain a local presence in Vermont, often through the independent agencies that do business all over the state.

About 130 of these agencies belong to a statewide independents' association based in Montpelier and headed by Robert Coyle. He estimates that member agencies employ about 1,100 people in Vermont, and range in size from one- or two-person operations to much larger entities such as Smith Bell & Thompson and Hickok & Boardman, both based in Burlington.

"The value of independent agencies is that they bring choice to clients," Coyle says. "They don't represent one company but a stable of companies. And the more carriers you have, the more you can tailor policies to individual needs."