A Clear Vision: USPlate Glass Insurance Co. covers windows for commercial buildings with speedy, personal service--meaning curtains for its mostly uninterested competition. (Market Competition: The Big Picture).

USPlate Glass Insurance Co. is in the business of covering windows, but not with shades or curtains.

Billing itself as "America's largest monoline glass insurer," USPlate Glass writes insurance to cover the plateglass windows of commercial properties--ranging from "mom and pop" grocery stores to notels--plus condominium buildings and units in California, Florida, Illinois, Massachusetts, New Jersey, New York and Texas. Soon, the company will be licensed in Georgia.

"You think initially--glass insurance? What can you do with it? But it really is complex in different markets. It's really interesting," said Joel B. Cohen, first vice president and chief operating officer of the Westchester, Ill.-based company.

Most commercial policies offer some coverage for glass damage, but the amount is limited, Cohen said. According to the standard commercial policy language drafted by the Insurance Services Office in 2000, the amount of glass coverage is limited to $100 per plate of glass up to $500 total. Under ISO's language for 2002, glass is considered part of the building, which means a larger coverage, but also a larger deductible.

"Package policies work really well for large losses, like an explosion or fire. It covers everything," Cohen said. "But when it comes to vandalism or a smash-and-grab, people have a dilemma: Do you want to declare a glass loss that might barely meet the deductible, and then face higher rates or nonrenewal? A separate glass policy becomes a relatively inexpensive insurance policy for your insurance policy."

USPlate Glass's average commercial policy is $300 annually for a storefront, and $1,000 and up for a condo, depending on the building. One very expensive condo building in Florida that has glass from floor to ceiling, 3 including glass railings on the balcony, has a premium of $45,000, but that's not typical for most policyholders.

Also, the company offers first-dollar coverage for hurricane damage, which is popular in hurricane-prone states, such as Florida and Texas. "Their hurricane deductibles there can be $1 million... and we're covering them from the first dollar. It's almost a deductible buy-back," Cohen said.

Texas, which USPlate entered in October, is "the perfect state for us," said Deanna Mitchel, the company s chairman and president and the widow of Lawrence T Mitchel, USPlate's founder. "It's got hurricanes, tornados, sand storms, hail. That's good for us;' she said.

And the company knows its business. Founded in 1991 by Mitchel, a glazier, the company prides itself not only on paying claims for broken glass, but on handling the arrangements to get the glass fixed. Customers can call a toll-free number day or night--877-SHATTER--and that single phone call to the insurer results in an immediate temporary board-up and even security, if necessary, until the window is replaced. USPlate Glass contacts a local glazier to replace the broken glass, and most claims are resolved within 24 hours.

Mitchel also ran a sister company that provides glass service to businesses, and through that operation, USPlate Glass has cultivated a vast network of glaziers who work for the company around the country. USPlate Glass relies on those glaziers to inspect every property before the company writes a policy on it. That's helped USPlate Glass to pay out just 80 cents in claims and expenses for every $1 of premium received for the past five years--an enviable combined ratio that consistently has beat the property/casualty industry's average.

"You can pay now or pay later. We pay now," Cohen said. He said the company doesn't write policies on buildings that aren't a good risk, because of the age of the windows or settings.

Mitchel, who died in 2000, started in insurance by buying a managing general agent, Massachusetts Plate Glass Insurance Agency, which writes business in 14 states. The affiliated agency which writes business for USPlate, originally wrote business for Gryphon Insurance Co., which was acquired by Markel Corp. Today, the agency writes business for USPlate in seven states, and for Markel's subsidiary Essex in another seven states. The relationship between USPlate and Essex is strong, and Essex acts as a reinsurer for USPlate. In fact, when USPlate entered Florida at the end of 2000--and more than doubled its book of business--it did so by swapping existing Essex paper for USPlate paper.

"What they needed--and it's turned into a neat little partnership-is a partner that had the ability to enable them to issue policies in states where they aren't licensed," said Anthony F. Markel, president and chief operating officer of Markel. "In exchange for that, we take a piece of all coverages as a full-blown partner and act as a reinsurer."

"Markel has been very, very good to us. We've been good partners;' Cohen said. Markel's Essex provides excess-of loss reinsurance coverage of $6.5 million in excess of $750,000. USPlate Glass limits its maximum exposure on any single risk to $350,000.

Covering Terrorism

USPlate has never excluded terrorism coverage and still provides it today--without an additional premium. "Because of the way it was handled through the government, terrorism became an unofficial rate hike for some companies," Cohen said. "Companies that weren't necessarily charging for it, could if they wanted to take advantage of the system. But how do you determine what to charge for terrorism? We thought that wasn't really fair"

The company had no losses in the terrorist attacks of Sept. 11, 2001. But even with condos, the company couldn't see a potential terrorism act that would lead to increased risk exposure. "Other than condominiums, most of our commercial properties are on the first, second or at the most, third floor. We don't insure office buildings, because then you get into construction glass issues, which are much more involved. We couldn't see an event that would make a lot of glass loss...so why charge for it? That's not our way;' Cohen said.

USPlate Glass does exclude nuclear attacks. Condos are about 60% of the company's book of business, and about 40% are stores. Hotels are only about 1%, but it's a new market and growing.

"The plate-glass business is a niche business that they've been involved in for a long time. Over time, management has clearly demonstrated that they understand the characteristics of plate-glass insurance," said Anang Majmudar, a senior financial analyst for A.M. Best Co.

As a small company, with about 12 employees, USPlate Glass relies on the expertise of industry groups, including the American Association of Insurance Services, for policy language and rate setting. USPlate Glass' underwriters focus on whether or not to take the risk, and what, if any, discounts or credits to give the policyholder for the risk, Cohen said.

USPlate Glass has its headquarters--or "secret lair," as Cohen jokingly calls it--on the third floor of an office building in a corporate center in suburban Chicago. Employees dress casually, and the company eschews even voice mail.

"We're not too big to talk to anybody," Cohen said. "Maybe that's one of the advantages of being a small company. We try to answer the phone by the third ring. It's very simple stuff."

The privately held company keeps all of its investments in government bonds. "We are very conservative. We know we're not going to lose money. And because we are profitable on the underwriting side, it's not much of a problem," Cohen said.

One of the company's biggest challenges is to sell the idea of glass insurance to the agents and agencies that will eventually sell the policies to customers. "If you are selling auto insurance, if you sell homeowners insurance, people know what that is. But you tell people you do glass insurance, you see their eyes glass over. What the heck is glass insurance?" Cohen said.

But unlike other, bigger companies, USPlate Glass not only doesn't have a complaint department--it's never had a complaint filed, its leaders said.

Louis B. Gideon III, vice president of sales, joined the company last year after working for Allstate for 27 years. "As the company grew, and the farther I moved up the ladder, the more restrictive it became," Gideon said of Allstate. "I was managing the managers who managed agents, and they had to go through their manager to talk to me. I walked in the door here, and got the sense it was a very close-knit group of people. I was very comfortable talking to everyone. People come to work here, and they don't leave."

Deanna Mitchel summed up the company's philosophy: "We fix people's windows. No one is dying, getting maimed or hurt. We are the good guys. It's really a niche that no one else is interested in."

RELATED ARTICLE: USPlate Glass Insurance Co.

* Headquarters: Westchester, Ill.

* Chairman and President: Deanna Mitchel

* Products: Plate-glass insurance for commercial storefronts, condominium associations and hotels.

* Licensed: California, Florida, Illinois, Massachusetts, New Jersey, New York and Texas. Scheduled to enter Georgia in 2003.

* Incorporation: Dec.19, 1991, in Illinois; began doing business in February 1992.

* Financials (2002): Net premiums written--$5.2 million; direct premiums written--$5.7 million; pretax operating income--$649,000.

* Principal Reinsurer: Essex Insurance Co.

* Web site: www.usplate.com