Insurance Adjusters Adapt to Industry That is Changing

Navigating the insurance marketplace as a consumer or business owner can be difficult, but there are challenges facing Arkansas-based insurance companies that many may not be aware of.

“Insurance is weird,” said Matt Cashion, president of the Cashion Co. Insurance and Bonds in Little Rock. “This particular sector, on the surety bonds, has been extremely profitable over the past 15 years.”

That has created an environment in which companies have saturated the market, making it very easy for contractors to obtain surety bonds. Cashion said in 1935, the Miller Act passed, protecting tax dollars from contractor failure and ensuring that those working on a project or supplying the project with resources get paid. The act fills a legal loophole created by the fact that individuals cannot file a lien against themselves. That means that a subcontractor cannot file a lien against a government institution such as a post office or a school because that entity, as a taxpayer, is the owner.

“All the public construction that cities do, counties do, school districts do, states do, the federal government does are all using our tax dollars,” Cashion said.

The Cashion Co. leadership team includes owner Matt Cashion, center, and Lee Jackson, from left, Cash McMillen, Andrew Davie and Michael Dornblaser. (Photos provided)

Payment bonds are designed so everyone who contributes materials or labor for a project gets paid for their services, which acts in place of their lien right.

Cashion said in the case of contractor failure, consumers can instead turn to the bonding company, which is oftentimes an insurance company. The insurance company is then responsible for having the project completed per the original contract. Since 1935, most states have come up with language that mirrors the Miller Act, he added.

“It’s important for having a federal deficit,” Cashion said. “I mean, it’s all we hear about anymore. Deficit, taxes are going to have to go up. If we don’t have enough money to pay for something once, we sure don’t have enough money to pay for it twice.”

The laws essentially serve as a credit function, a guarantee. Guarantees have not really changed over the years, he said, but how public owners go about procuring services has changed as laws, rules and regulations have changed.

Having taken over the company his father founded in 1975, Cashion deals mostly with local and state taxing authorities and provides property and casualty insurance for contractors, as well as surety bonds. He has a few clients that deal with the federal government through projects at the Little Rock Air Force Base in Jacksonville, at the Ebbing Air National Guard Base in Fort Smith and with other federal organizations.

“With the work that’s going on up there right now, there’s going to be close to $700 million worth of new federal construction projects in the Fort Smith area within the next 24 to 36 months,” he said.

Last year, Ebbing was chosen by the Air Force as the site for the federal Foreign Military Sales Program Pilot Training Center. Eleven NATO countries will send their pilots to the base to be trained to fly F-35 and F-16 fighter jets.

That means infrastructure projects to support the influx of soldiers and their families.

“That’s a lot of work, and so every bit of it has to have a bond on it to protect our tax dollars,” Cashion said. “Whether we can afford it, I don’t know, but the federal government is spending a lot of money on infrastructure. Whether it’s water and sewer, bridges, defense work, things of that nature, they’ve kind of turned the fire hose on in releasing a lot of federal dollars that the construction community is trying to absorb.”

While the center will further contribute to growth in the Fort Smith region, the rapid growth of northwest Arkansas in general has led to rising rates, one industry leader said. Marty Clark, president of BHC Insurance, which is headquartered in Fort Smith and has an office in Lowell, said northwest Arkansas has become the “biggest growth engine” for the firm.

Marty Clark

Clark said BHC is the second-largest privately held insurance agency in the state, and its work is made up of roughly 65 percent commercial property and casualty and about 35 percent employee benefits for companies ranging from 25 to 500-plus employees. Those companies often fall in the space of manufacturing, construction, distribution and service industries.

With 30 years in the industry, Clark said the biggest change he has seen is technology.

“Insurance outlets now use tools that once were unavailable to evaluate risk, assessing the litigation environment across states, weather patterns and more,” he said.

Seemingly no industry can escape the societal upheaval caused by artificial intelligence. Currently, insurance companies can use AI to get rid of large volumes of clerical work, improve day-to-day processes, complete repetitive tasks and fulfill other time-consuming aspects of the job. As AI tools become more advanced and new applications are discovered, insurance companies can expect to use AI to predict risk more accurately using past data and figures.

Clark said BHC does not need a bot for those functions since the company acts as a broker. BHC is on the other end of the transaction and represents clients in front of carriers to get the best rates. It does, however, use technology to prove clients are safety-oriented, resulting in lower rates.

“If one of our companies that has a fleet of 100 trucks is using telematics to evaluate their drivers’ behavior and to be able to correct driver error in real time with the use of telematics, that’s a client who cares about themselves, and we sell that to the insurance marketplace to get them the best price we can,” he said.

Clark said GPS can help track a driver’s speed and course, allowing a safety manager elsewhere to see if the driver is speeding, braking hard or marking sudden sharp turns and to make corrections. When companies use tools like that, they become more attractive to providers, he said.

Other uses include analyzing weather risks. According to the Federal Emergency Management Agency, several counties in Arkansas are ranked a “relatively moderate” risk for hail, and Pulaski and Washington counties are listed as “relatively high” risk. That translates to higher rates for property insurance and more restrictive terms, as well as limited availability in the marketplace.

“I think that, clearly, in the last five years, the biggest change by far in Arkansas has been the property market,” Clark said.

Insurance, of course, entails taking the good with the bad. Clark said policies for cyber liability and cyberattacks are becoming more important as digital threats continue to evolve.

With the changing digital landscape, companies must adjust, and BHC has seen many changes since it was founded in 1915. Clark and his partner, Shannon Schmidly, bought back the company from First National Bank Holdings in 2023 after 20 years as a subsidiary.

“To make an insurance agency successful, to make an insurance agency be able to perpetuate generationally, you’ve got to have young equity holders within your organization,” Clark said.

Clark, who sat on the bank’s board for the entirety of the 20-year relationship, said the “unprecedented move” came at a time when other insurance companies are selling to private equity. One of the motivations behind the decision was to lay a groundwork for his son, Paxton, to have an opportunity at ownership. The previous arrangement made it hard to attract and retain young workers and stay independent, he said.

Paxton is the third generation of Clarks at the company, which was formerly named Brown-Hiller-Clark & Associates Insurance. Marty Clark’s late father, Larry, joined in the early 1970s, followed by Marty’s brother in 1990 and Marty himself in 1993. Schmidly’s son, Graves, has also joined the team.

“When Paxton came in, there was not any potential ownership in his future because of the way we were structured with the bank,” Clark said. “Within a year and a half or so of him being here, I realized that he could be really good with this and I just couldn’t have a situation where he didn’t have ownership opportunities like I had ownership within the bank.”

The company now has 15 shareholders. Coming on in 2020, Larry Clark was able to see the family legacy continue because Larry knew Paxton was about to take a job at BHC before Larry died. Paxton started in the role a month later.

During a video chat ahead of the firm’s centennial anniversary in 2014, Larry was asked if his grandchildren might carry on the family business, and he responded, “there’s always possibilities.”

“Frankly, I thought the chances of having one son in the business was pretty remote,” he said, “so yeah, it’s been real rewarding, and I hope it goes another hundred years, you know, personally.”

The company plans to double in size in the next 10 years to manage more than 150 employees and become the dominant locally owned agency in the state and a market leader in the areas it serves. Its current footprint includes a 120-mile radius around Fort Smith that extends into northwest Arkansas, and there are plans to expand to Little Rock.

“In our business, everything is relationships, and it’s very critical that you build those personal relationships in the insurance business,” Clark said.