As Published in Agent & Broker's January 2008 "Review and Outlook"

Torrence W. Brownyard

Program Insurers and Administrators:
Torrence W. Brownyard, CPCU, President
W.H. Brownyard Corp. • Bay Shore, N.Y.

Q:  How would you characterize 2007 as a year for program business?

The current year for program business would best be described as uneventful in the classes of business we underwrite.  While we have seen a decrease in new business for our programs, our renewal retention rates have increased. It appears that many program administrators have gone into a defensive mode. They are comfortable with their current books of business and the results those books are producing. Consequently, they are concentrating on retaining these accounts, maintaining rate adequacy and adding additional lines of business for these clients to round out the accounts.

Q:  What have been the key developments at your organization this year in regard to program business?

After living through the late 90’s and the resulting crisis in the insurance industry, we have been very diligent in monitoring our results and making sure we know where we stand at all times. We are well aware of the balance we must strike in providing a profitable program to our insurers, while remaining competitive in the industries we service.  Our insurers have been giving us the opportunity to handle claims for our programs. One benefit is that we know how our programs are performing much sooner than we did years ago, so we can be more proactive. 

We commissioned an outside firm to provide us with our own actuarial reports, so we can monitor rate adequacy. That allows us to note any adverse trends and identify additional opportunities in the programs we write. For example, we underwrite a national program for pest-control operators. After reviewing the loss experience on smaller accounts last year, we realized they were very profitable and were able to work with our insurer to lower the minimum premiums on this class. As a result, we increased our volume of such business.

In another national program, for security guards, we had been concerned about providing some coverage enhancements, fearing they could cause our results to deteriorate. After doing a thorough review with our claims department and examining many years of results, however, we found our concerns unwarranted and were able to offer some coverage enhancements to our insureds, in lieu of rate reductions.

Q:  What are your goals for program business next year?

With markets softening, we are placing emphasis on finding new ways to market our programs and on rounding out accounts. We also will continue to monitor our results closely and avoid the temptation to meet unwarranted pricing for borderline accounts.

As always, we will continue to be on the lookout for new programs to diversify our business and help insulate us from the effects of a downturn in any of the industries we service. We also continue to look for regional brokers with which we can align ourselves to market our programs in different parts of the country.  We find that with the classes of business we write, many brokers have placed only one client with us. But if we can educate them about he nuances of the industry, they can become a valuable resource to us in marketing our programs to other potential clients in their area, which creates a win-win situation for both of us.

Q: What do you expect from program insurers in 2008?

There continues to be a strong demand from the insurance industry for programs with proven track records; but given such factors as insurers’ increased accountability under the  Sarbanes-Oxley Act, it is harder for programs with weak results or without a significant track record to pass muster with carriers. As for the coming year, if rates continue to soften, we would not be surprised to see more companies looking to the program market to increase their volume and profitability.