MGU CEO on a winning business model

MGU CEO on a winning business model | Insurance Business America

MGU CEO on a winning business model

Deep expertise and “best-in-class underwriting talent” is what Rokstone Construction Risk Underwriters (Rokstone CRU) CEO Mike Pilla (pictured) is on the lookout for at the construction-focused managing general underwriter (MGU).

Rokstone CRU specializes in casualty and builder’s risk insurance, and is part of Rokstone, the Aventum Group’s international (re)insurance MGA. It recently secured capacity for a new following form lead excess insurance program on a non-admitted basis nationwide with R&Q Accredited America – a brand-new partnership for the firm.

Pilla, who’s been in the insurance business since 1975 and has an impressive track record of building start-up MGAs into market-leading businesses, said Rokstone CRU’s partnerships derive from the MGU’s underlying model, which is built around construction expertise and commitment to engineering and underwriting.

“Over the last two years, we’ve attracted a lot more interest from a broader range of carriers,” he said. “We’re already in business with some of the best in the world. We work with Allianz on the builder’s risk side, with HDI on the primary general liability side, and now with R&Q Accredited on the excess side.

“During that journey, while we were building out those products, we’ve met a number of other carriers that really understand the depth of our expertise, our commitment to underwriting and engineering – and that interest has really spurred on a lot of discussions around us helping other carriers grow their footprint in the United States. And we’re doing that by … adding to our organization with a focus on best-in-class underwriting talent.”

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Rokstone CRU is the first business that the Aventum Group launched in the US, and Pilla said “there’s a very strong commitment” from Aventum to support Rokstone’s expansion in the world’s largest insurance market. As such, Rokstone CRU is looking at a handful of opportunities with outside underwriting talent and different carriers in order to grow its portfolio.

“The MGA space in the United States is very rich with talent and interesting carriers and capital and capacity,” Pilla told Insurance Business. “We feel like we’ll very soon be in the top echelons of that market. Right now, we believe we are the best construction MGU out there, with what we can bring from a product standpoint, from an expertise standpoint, from an engineering and from a legal standpoint. We’ve certainly attracted the best capital partners.

“And we’re looking at some other industries right now to expand in, where we’ll have a similar business model. Our model really is attracting best-in-class underwriting talent, marrying that up with best-in-class capacity providers and providing a better all-round experience in niche areas. We’re not in the commodity businesses; we’re focused on areas where underwriting specialty makes a difference, and where there is some dislocation in the market or just a need … for more capacity, innovation, loss prevention, outside engineering, or better procurement experiences.”

Global insurance brokerage Marsh recently released a report, entitled ‘Future of Construction: A Global Forecast for Construction to 2030,’ which predicts that global construction output will grow by 42%, or $4.5 trillion, between 2020 and 2030, driven largely by government stimuli and the demand for residential construction.

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The United States construction market looks set to follow that global trend, with Pilla describing it as “robust” and continuing to “expand and grow”. While Rokstone CRU is poised to take advantage of the plentiful growth opportunities, the CEO said the MGU remains very selective in who it deals with.

“Growth in the construction marketplace always creates opportunities for our competitors, whether they be carriers or other MGAs, to enter into the space,” he commented, “but there’s always enough room for more capacity. Again, I think our focus is more about being innovators and entrepreneurs in how we approach the business.

“Both Mike Simone [president of Rokstone CRU] and I have been doing this for many decades, and we’ve got deep relationships both at the client level and at the retail broker level. And I think that’s always where we win the day - our years of developing great relationships and goodwill with clients and brokers and people that understand what they get when they pick up the phone and contact us.”

In order to take advantage of opportunities in the US marketplace, Rokstone CRU needs specialized talent – and like all insurance companies, it’s looking for talent from a shrinking pool. But unlike other insurance leaders, Pilla is not phased by the competitive talent market.

“There’s a lot of MGAs looking for talent right now,” he said. “But what’s happened to us over the last couple of years is that talent is finding us. I don’t think a week goes by where someone’s doesn’t contact us … directly saying: ‘Hey, this is who I am, this is what I do. I’m interested in talking to you.’ Really the difference on the MGA side in terms of attracting talent is what you’re willing to do for that talent. Our model is one that, we bring in talent, and it’s really more of an equity situation. You come into our business, and you get to eat what you kill.

“And of course, the diligence process for us is very lengthy, and a lot of these people we already know. I’ve been doing this since 1975, Mike Simone’s got about 30 years in the business, so between the two of us, we’ve got close to 80-years of experience. So, we know a lot of people not just in construction, but across a lot of areas. The Rokstone model is, if we are interested in an individual or team of people, I don’t think there’s another MGA out there that has the same value proposition for those individuals, to get them on board with us and get them up and running in a business very quickly.”