Brendan Brownyard

Program Insurers and Administrators:
Brendan Brownyard, CEO
W.H. Brownyard Corp. • Bay Shore, N.Y.

Q: How has the soft market affected the programs business?

For any program, an individual risk that may have been acceptable 5 years ago may not be acceptable at today’s pricing. It’s also possible that a previously desirable risk may, for its own competitive purposes, accept work that we would consider unreasonably hazardous from an underwriting standpoint. Experienced program managers know that after 5 years of shrinking rates, the effort to maintain underwriting standards is critical to a program’s success; they also know they must compete not just by price but also in service and expertise. For example, our efficiency in handling complex claims through our in-house claims facility (Brownyard Claims Management, Inc.) and extensive knowledge of the industries we service have proven to be invaluable tools.

Q: What impact has the recession had on your own business in 2009?

Regarding our security guard program, in previous recessions we found that when buyers of security guard services were faced with harsh budget constraints they didn’t hesitate to cut or reduce the level of security services before they reduced their own workforce or applied other cost saving measures. In the current recession, purchasing efficiency is important, but security services are more highly valued than they had been in the past and not just viewed as a commodity. As a result, while payroll growth is not as great as it had been earlier this decade, it is still healthy considering the economic climate. In addition, for several of our programs that would be considered labor intensive, one interesting by-product of today’s higher unemployment rate is that there is a more qualified employment pool to draw from. This is an underwriting benefit.

Q: Are you finding that carriers are more interested in developing program business to gain a competitive edge in a soft market?

In the face of shrinking income from their everyday business, some insurers are suddenly interested in program business, and program managers are exploring new classes. Some insurers merely copy information and sample policy forms from the Web sites of established programs and consider this sufficient due diligence. We do not. Rates are currently the lowest they have been in almost 10 years, and knowledge of an industry has never been more important to the success of a program. The classes we specialize in have proven to be volatile from an underwriting standpoint, and a broker must consider carefully the prudence of placing a risk with a new “program” or market that can’t guarantee a long-term commitment to that class or offer adequate expertise and knowledgeable claim administration.

Q: What do you see as your top 3 most critical issues in 2010?

1. Continuing to deliver the high level of innovation and service expected from us by the marketplace
2. In today’s prolonged soft market, to maintain competitiveness we must be aware of the actuarial status of each program
3. As rates continue to decline, it may be prudent to convince some insureds that further premium reductions can lead to sudden and damaging pricing corrections in the near future.

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