‘Outside-the-box’ Protection

This insurance firm’s clients are independent agents

by Will Lindner

s_and_h_underwriters1118 Betty Sikora, her husband, Patrick Sikora (right), and her brother, John Hull, founded S&H Underwriters in 1998. S&H is an MGA (managing general agent), one of the fastest growing segments of the insurance industry.

The human instinct for invention presents a constant challenge for one of society’s most important financial mechanisms: its capacity, through insurance, to protect people from losing their shirts if a good idea backfires once in a while. As Patrick Sikora explains, the insurance industry continually evolves and adapts, creating avenues to provide coverage when standard, traditional carriers shy away.

Finding those resources for hard-to-insure enterprises in New England and the mid-Atlantic states is one of the functions of S&H Underwriters. S&H is a Barre-based MGA (managing general agent) and wholesale broker that Patrick Sikora owns and operates in partnership with his wife, Betty, and her brother, John Hull.

“We have an entrepreneurial spirit in this country,” says Patrick, whose pedigree extends back to the 1980s when he served as an insurance examiner for what is now known as the Department of Financial Regulation. “There’s always people coming up with new business ideas, and as people create something, it might not fit into a conventional insurance policy, requiring a carrier to come up with a specialized insurance product.” An MGA will underwrite and manage that product.

He cites two examples with growing cultural familiarity in our region: new breweries that don’t meet experience requirements (or might warehouse and transport their own, high-value goods or conduct on-site tastings and tours) and cannabis.

“We write cannabis exposures where it’s legal,” Betty Sikora explains. “We’ll write for a manufacturer, for people that are making edibles, we’ll write the cultivation of it … all kinds of exposures.

“Our purpose,” she summarizes, “is to provide access to insurance for people or businesses who may have a situation where the standard markets won’t write it. Our business sounds confusing, but it’s basically that simple. We’re here to give those people a place to have insurance coverage to protect their assets — their businesses and their homes.”

The reason it sounds confusing — “I avoid talking about it at parties,” Betty quips — is that S&H Underwriters occupies a very particular niche in the industry’s structure, shared by just two other companies in Vermont. Evolving industries are a small fraction of S&H’s business.

Yesterday’s evolving industries — and, importantly, professions — now have well-established “exposures” that put them at financial risk, whether to an injured party or through loss or damage to their own assets. Engineers and architects, for example, might make an error in their calculations resulting in a building’s being unsafe or a mechanism’s malfunctioning. Commercial waste haulers run a risk of inadvertently spreading waste and pollution. An old underground oil tank, or a previous enterprise on the property like a long-defunct dry cleaning service, can take them out of the “box” of the easily, routinely, insured.

Then there are homeowners. Owning the wrong kind of dog — a Rottweiler, perhaps, instead of a golden retriever — can increase exposure to a lawsuit for personal injury.

Such risks are documented and quantifiable by actuarial tables. Using those data, insurance carriers and the agents who represent them know when to say no.

But even when no is the answer, the agency often hopes to do business with the customer.

“So they come to us and say, ‘Betty, can you write this homeowner’s [policy] that has a Rottweiler,’ to use that example. And I’ll say ‘Yes, I can do that for you,’” Betty explains. “So they send the business to me, I quote it back to them, and if the client elects to buy the coverage, we bind and issue the policy and send it back to the agent on behalf of the carrier. The insured doesn’t necessarily even know who we are. We only do business with agents.”

Those policies are accessible to S&H through “surplus lines” carriers. One benefit of these policies is that they enable the insurance carrier to exclude particular exposures — pollution and higher-risk dog breeds, for example — that state regulations prohibit carriers licensed and domiciled within Vermont to exclude.

“We’re approved to transact business in Vermont because our carriers meet all the financial criteria and our products fill a need,” Patrick explains.

Sometimes that need is temporary. Betty describes a “seasoning requirement” faced often by new businesses and artisans. Actuarial data document a higher likelihood of claims during the first three years in business, so they may be denied insurance. Through surplus lines, S&H can write policies that are more costly but see the entrepreneur through those early years, after which he or she can move to the standard market.

Another of its many services is providing “excess” coverage over an insured’s primary policy, which might be required by contract, but that standard carriers are reluctant to do.

During its 20 years in business, S&H Underwriters has accumulated a roster of A and A+ rated carriers throughout the country, as well as Lloyd’s of London. Its success has depended on being thoroughly well-versed in those companies’ forms and policies and providing profitable contracts. S&H is paid by commission from the carriers they represent.

The Sikoras put in a lot of travel time for conferences and visits to their carriers far and wide. “This is absolutely a relationship-based business,” Patrick points out.

The relationship factor applies no less to the retail agents who call on S&H for those surplus-lines policies. Tim Ayer, president of the Montpelier agency Noyle Johnson Group, has turned to H&S frequently to write insurance for vacant properties, bars and taverns, and “businesses that operate at higher-risk exposure. We do a lot of professional liability, people whose operations might have an environmental exposure. Not,” he summarizes, “your basic convenience store.”

There may only be three MGAs in Vermont, but it’s a practice that crosses state lines, and, Ayer says, “There are some good competitors. But they [S&H] really strive to meet our needs in terms of turnaround and customer service, and show that what differentiates them is being responsive.”

Ayer has known the Sikoras for years. Betty worked for him part time when she and Patrick were getting S&H started. In fact, the Noyle Johnson agency brokered their very first policy. And when Ayer’s children were young, Patrick Sikora coached them in a local football league.

“They’re good members of the community,” he says.

Sue Bourdon, owner of Bourdon Insurance in Middlebury, says, “We work with four or five [surplus lines brokers], but they’re probably our number-one.”

She calls on S&H for manufacturers who need business liability and product liability insurance. “Or professional liability or product-recall coverage,” she says. “Oddball things that standard carriers don’t write.”

Their services often help her “round out” a client’s account, finding coverage for the hard-to-insure elements to go along with standard coverage she can easily provide. It helps her keep customers. “If you can only place certain lines,” she says, “they’ll go somewhere else.”

Betty has been in the insurance business her entire working life. Raised in Montpelier, in 1984 she took a part-time job with a local independent insurance agency while still in high school, switching to full time after graduation. Five years later she took a job with another Vermont MGA, staying there for nine years before launching S&H Underwriters Inc. in 1998 in partnership with Patrick and John.

“Patrick and John said, ‘You should start your own business,’” she recalls, “and I said “No, I can’t!’ They said ‘Yes, you can!’”

“And here we are, 20 years later,” says Patrick, who left his state job at the same time. They set up shop in the Sikoras’ home in East Montpelier, expanding to larger spaces as the business grew, first to a building in East Montpelier, and in November 2017, buying the former Brookside School on the outskirts of Barre. The staff now numbers 15.

Patrick, born in 1964, is the company’s vice president. He and Betty (president), have known each other since high school, and have been married for 30 years.

Hull was also involved from the outset, but he came from outside the insurance industry. Six years older than his sister, he went to work for his father, a plumber, after graduating from Montpelier High School, but soon took a job with Blue Flame Gas, where he worked for 18 years, becoming operations manager for the company.

“He brought the management and human resources experience we needed,” says Betty.

Hull left Blue Flame two years after helping launch S&H, assuming the title of treasurer. S&H remains a family enterprise, employing a second generation of Hulls and Sikoras — Hull’s twin sons, Christopher and Craig Hull, and Patrick and Betty’s daughters, Caitlyn Hurren and Gabrielle Roberts. (Hurren lives with her family in Connecticut and is one of three S&H underwriters who work remotely.)

Family ties run deep. Hull and the Sikoras stress the importance of their grandchildren in their lives. The outdoors also beckons. At home, and in their business travels, Patrick and Betty find time for golf, while Hull’s favorite form of recreation is snowmobiling. He and his wife, Sheryl, own a camp in far north Averill.

“It’s a place we absolutely love going to,” says Hull. “I’m president of the homeowners association there and of the local snowmobile club. Last year I did a four-day trip from my cabin up there up into Canada and back.”

At the end of each trip, however, civilization calls, and Hull returns to work with his sister and brother-in-law, finding ways for people whose interests and enterprises fall “outside the box” to stay whole in a world filled with risks. •