Brown & Brown Insurance: Competition & Culture | In Practise

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Brown & Brown Insurance: Competition & Culture

Former VP of Business Development at Brown & Brown

Why is this interview interesting?

  • Shifting competitive dynamics in the mid-market market due to technology
  • Trends in coverage & premiums
  • Growth opportunities for major players in the market
  • B&B culture and how they manage decentralisation
  • Pros and cons of sales oriented culture at B&B

Executive Bio

Former VP of Business Development at Brown & Brown

This executive was over two decades experience in the insurance industry, eight of which were at Brown & Brown, where spent the majority of his time in the programmes division focusing on niche markets. His core responsibilities included onboarding & leading producers, negotiating with carriers, understanding capacity of markets, identifying new opportunities and how these could be served by the B&B value proposition.Read more

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Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Can you share your experience, how you got to Brown & Brown and what your responsibilities were when you were there and why you left?

I went to Brown & Brown in 2012, as part of a transaction between Zurich Insurance and Brown & Brown. The platform that we were on went through what we called a lift out, so we took our specific unique program at Zurich and we lifted out the business unit and transferred it over to Brown & Brown for them to manage it as a program administrator, so it wasn't really a sale. It was literally just a transfer of a book of business concept and employees. There was about 150 of us that were in that unit. We worked for Zurich one day and we worked for Brown & Brown the next but the discipline in the vertical market remained the same. That was my introduction to Brown & Brown.

It allowed us to have a little bit more of an aggressive stance in the market and better efficiency as an MGA. My role there was sales leadership. I had a team, over the course of the years, of producers throughout the North East part of the United States and I ran in that space for about four years. I then went to a smaller profit center within Brown & Brown but I was able to take on a larger role within the profit center, again also in the program space, based out of New York. It was also a national program and that allowed me to wear a few different hats, such as sales leadership, production capacity for myself and then help with the agency operations.

Then earlier this year I made the transition out of Brown & Brown because that particular business unit was going to be absolved or absorbed by another profit center and so there were going to be significant changes coming about to staff and so on. I decided, at that time, that I would try something different and jumped over to where I am now.

Can I get a better understanding of some of the broader trends that are going on now and the dynamics you’ve seen? Can you speak more to the idea of specializing?

As you probably know, within Brown & Brown, there's a large company called Arrowhead Insurance and they're a program administrator of significant size and scope. Everything they do is in the program administration space and it's all specialization, in terms of catering to particular markets or with particular concepts or services that are provided in a very vertical scope. The two roles that I described to you earlier were within that concept or division of Brown & Brown, where we were program specialists, so we got very intimate with our clients and our markets and our brokers and it allowed us to tailor our services and our products to a limited number of markets, as opposed to being broad brushed and trying to be all things to everyone. I felt we were a little bit stronger in that capacity because we were specialists.

Are you talking about specialists in particular industries, geographies? How are they specialized?

Predominantly by industry, at least from my experience, but within Arrowhead/Brown & Brown there's also a profit centers there that do specialize by product offering, so there's a big underwriting unit that specializes in earthquake coverage and they do really, really well and that's their specialization and they partner with certain carriers; they know how to stack coverage, they know how to underwrite properly. Another organization there specializes in flood – probably the largest flood underwriting unit in the country – and they know the market well; so well that they're able to make really smart decisions and maintain good growth and profitability numbers.

In the business units that I was in, we were catering more to specific markets. My first market was the automotive industry, so we would provide coverage for automotive related businesses, such as car dealerships, repair facilities and garages. Zurich was our carrier partner and they gave us underwriting authority as a program administrator would be set up, typically. We could then specialize in that one industry and become very intimate with the risks associated and the mindset of the business owner and bring in a suite of products and solutions and services that was really applicable to that one industry and we didn't have to worry too much about being generalists.

In the automotive industry, what would the competitive dynamics look like there? Did you run into more regional brokers?

In terms of regional brokers today, as we speak, that industry, to the best of my knowledge, does have some program administration competitors in it where somebody would start up an MGA and then partner with various carriers for the product solutions, but again the same concept of being a specialist in the industry. I would say, from a car dealership perspective, that's probably more predominant in the competitive landscape than the general retail agent position; even though that does exist I don't think it's as much of a threat or as predominant as the MGAs that are in that space today.

I’m trying to understand how you would differentiate yourself? Say you were there running that group and they were focusing on dealership coverage, what would be some key areas where you would be different?

We would tout ourselves that, because we specialized just in the one industry, we understood the risks of their business better than the average agent would and therefore we would be able to tailor our coverage to their unique risks and find better solutions. For example, with a car dealership, you drive by a dealer and there's a sea of brand-new cars sitting outside exposed to the elements. If a natural disaster came in or a storm or something along those lines, adequate coverage on those vehicles would be really important and there are various solutions that the dealer can find for that level of coverage but it's got to be affordable and it's got to make sense and there's a convenience to the dealer if they can combine what we call open lot coverage with the rest of their property and casualty program, as opposed to having to go find it elsewhere because it's a unique offering.

How do the relationships fit in there? How important is that? If you know someone and they’ve done business with you for a couple of years, how does that work?

It's really important and it’s a good point. We tried to build on those relationships by joining the national and regional associations and becoming contributors and supporters there, going to those functions, getting to know the dealers. It’s part of your branding that, if you are a specialist, then you're participating in their business functions and you're supporting their associations through sponsorship etc. That was a big part of it so we had a presence at those functions and they got to know us and we got to know them. So when you knocked on their door six months later, you had a little bit of credibility because they understand that you're in and around their industry.

For a specialist business like that do you have a sense for the turnover of accounts? Do they typically stay with a broker for a long time or is it something that you see a lot of turnover every couple of years or something like that?

Just to circle back to coming out of the carrier mode, we were a specialty unit in the car dealership business, in the automotive business, when we were the carrier and we were fortunate enough to keep 90%+ retention rates with our clients. When we moved over to the MGA space within Brown & Brown, we maintained those rates and we added a greater degree of flexibility because we're an MGA now and even though we specialized in partnering with the carrier, we had the flexibility to go seek other solutions if necessary. If there was a pending rate increase from our partner carrier and we wanted to shop that coverage with another company, we could; or if there was coverage that was not available when we were the carrier as an MGA, we could go out to market and find alternative solutions for the dealers. I would say the stickiness as you mentioned was really important to us and it remained very high.

One of the other things I’m interested in is how technology comes in and plays more of a role here in the insurance brokerage industry? I’m wondering if you can speak to what trends you’ve seen over the years and, particularly, more as a threat or opportunity or how you think of it?

I'm going to say opportunity and the reason I say that is Brown & Brown is a very decentralized organization, as I'm sure you know. With hundreds of profit centers, you have hundreds of decision-makers and everybody kind of wants to do their own thing and apply their own technology and they should maintain a degree of autonomy in that respect. But I did see a trend within the organization to try to bring some symmetry to that; maybe narrow the scope of technological vendors and therefore get some economy of scale on purchasing. For example, in one of the units I was in, we needed a CRM for the agency and it didn't exist so one of my tasks was to go out and shop and I looked at companies like Salesforce and some of the competitors as a technology partner to make us more efficient.

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