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Hard-charging programs in a soft market

B&B Programs brings skill and savvy to key industry sectors

By Elisabeth Boone, CPCU

In a perennially soft market that's awash in capacity even for tough classes, how can a program administrator set itself apart from hordes of competitors?

At B&B Programs, a wholesale brokerage and program administrator division of Barney & Barney, LLC, the answer is simple: product, stability, and integrity.

Established in 1909 in San Diego, Barney & Barney has been administering professional liability, property/casualty, and employee benefits programs since the 1940s. B&B Programs was created in 1998 as the formal program administration and underwriting division of Barney & Barney, and its multi-generational leadership team is driving impressive growth in carefully selected niche markets.

Heading up the team is Terry Douglass Moore, a principal of Barney & Barney and director of the small business and programs divisions of the firm. He also helps manage Barney & Barney's captive insurance placements and acts as a resource on alternative market issues. Moore began his insurance career in 1972 and before joining Barney & Barney in 1998 was senior vice president of Zenith Insurance Company.

Jim O'Connell is a principal of Barney & Barney and is director of program development for B&B Programs. He joined Barney & Barney in 2007 and has 20 years' experience in both the private and public entity sectors in the insurance, reinsurance, and London markets. O'Connell previously held program management responsibilities at Alliant Specialty Insurance Services, Inc.

Target sectors

Under the experienced leadership of Moore and O'Connell, B&B Programs provides insurance programs and risk management services to industry sectors that include:

• Elite Comp—A national program for low-hazard professional organizations such as law firms, CPA firms, tech firms, and life science entities

• Dealership Advantage—A proprietary program for franchised new car dealerships that is available in California, Oregon, Washington, Arizona, Utah, Nevada, and Colorado

• Metals Advantage Plus—A proprietary program for metals service centers and metal recyclers that is available nationwide

• AIX Metalworkers—A limited distribution program for precision machinery operations administered by B&B Programs in California, Arizona, and Nevada

• Art Elite—A national program for art galleries, private art museums, small and mid-sized publicly administered art museums, individual high-value collectors, and art service operations

• Pacific Hospitality—A program for lodging facilities that is available in California, Arizona, New Mexico, Colorado, Nevada, and Wyoming

In addition, B&B Programs provides group and individual captive products and alternative risk transfer programs to a wide array of industry sectors. As a licensed MGA for Zenith, B&B offers retail agents and brokers access to the A rated carrier's workers compensation coverage and services for a broad range of classes. B&B also participates in a partnership with AIX Group, Inc., a specialty insurer and subsidiary of The Hanover Insurance Group, under which AIX underwrites B&B's Elite Comp, Metalworkers, Metals Advantage Plus, and Dealership Advantage programs.

To a considerable extent, successful program administration depends on a firm's ability to identify sectors where it can leverage its particular strengths to build a profitable book of business. In the free-for-all of a prolonged soft market, program administrators are challenged to differentiate themselves from the players who offer capacity but may be short on underwriting expertise.

At B&B Programs, Moore says, "We look to identify opportunities in areas that are underserved by the market as a whole. A good example is the auto dealership sector, which is served by a relative handful of specialty carriers. This has created a great opportunity for us to drill down and really understand the needs of the segment and then design a program that is tailored to meet those needs. In collaboration with key members of the industry, we created our Dealership Advantage program, which is a stable, competitive, high-quality product that we can market through good times and bad," Moore says. "One of the advantages of focusing on underserved sectors is that they're not as vulnerable to the dramatic swings that we see in the overall market."

At B&B Programs, Moore says, "We can offer competitive pricing based on our in-depth knowledge of the sectors we serve—but we bring much more to the table. An example is our Elite Comp program, which is our largest program. California work comp is a very challenging area for a lot of carriers, and many of them are starting to raise rates. We've zeroed in on certain segments of that market that we are particularly interested in insuring. We offer a very competitive product, and we've also taken great pains to provide first-rate loss prevention and risk management services. The Risk and Loss Advisors Division of Barney & Barney is contracted to provide risk management services in the Elite Comp program," Moore explains.

"We've also selected a third-party claims administrator for that program," he adds. "TRISTAR Risk Management is a leading national work comp adjusting firm that delivers top-tier service to our program participants. I think the combination of attractive pricing and outstanding services definitely gives us an edge in an extremely competitive market."

Affinity group partners

In creating programs for specific industry sectors, the B&B Programs team understands the mutual advantage to be gained by partnering with affinity groups.

"When we put together a program, we always look to work with whatever affinity group, trade association, or purchasing group exists in that sector," O'Connell says. "We also look to work with retail brokers who are experts in that class and are committed to it in terms of working closely with affinity and trade groups."

Starting this month, O'Connell says, "We'll be underwriting a program that is endorsed by the National Tool and Machining Association. We're taking over an existing book of business and will be managing it in California, Arizona, and Nevada, where most of the volume of that program is concentrated. Our carrier is AIX Group, which also underwrites our Elite Comp and Dealership Advantage programs," O'Connell explains.

"With all of our programs, we're committed to being around year after year," O'Connell asserts. "While a lot of players are moving in and out of the marketplace, we want to be a consistent, stable provider of solutions in our sectors. That's the message we deliver when we talk with our partners in associations and educate them about B&B."

Adds Moore: "I think that the members of these groups understand the value of what we provide. They've been through underwriting cycles before, and although they may be able to get a short-term deal that costs less than what a specialist might offer, they know that consistent long-term favorable performance, in terms of stabilizing their net insurance costs, is more likely to be achieved with a specialty player."

Alternative market options

As noted earlier, B&B Programs provides captive and other alternative market solutions to select industry sectors.

"We're a believer in the appropriate use of alternative risk mechanisms, whether it's captives or self-insured pools," O'Connell declares. "A number of brokers we work with are very active in the captive space, and Terry and I all have experience in putting together captives for a variety of uses. Captive structures increasingly are being used in the middle market, and we believe that trend will continue for the foreseeable future," he says.

"Some captive structures are extremely complex and, while they often work well, we tend to prefer simpler approaches that are broker friendly, with streamlined sharing of information with the captive owners and members," O'Connell says. "We like to make sure that the retailer has a good understanding of the structure and the participants. We strive to create a three-way partnership among the captive members, the retail broker, and us as the provider of services."

In choosing captive domiciles, O'Connell says, "We look to use domiciles that have experience, offer low costs, and fit the buyer's needs. In some cases, we use Bermuda or the Cayman Islands; we're also open to working in Vermont and in the District of Columbia where segregated cells are permitted."

Partnering with retailers

Because it serves a small number of highly specialized industry sectors, the B&B Programs team is extremely selective in choosing its retail partners. "We currently have under contract approximately 100 broker partners," Moore says. "Most of those are appointments that date back to the formation of our program for the California Hotel and Lodging Association in the late 1990s.

"In line with the 80/20 rule, most of our business comes from a small number of our brokers," Moore observes. "As we move forward in areas like the auto dealer space, the metals service and recycling space, and other projects we're developing, our focus will be on working with a limited number of new specialty broker partners. These brokers will be experienced in the areas in which we're eager to write business, and they'll have substantial existing books of business. We can bring some real franchise value to those specialists so they won't be butting heads with other facilities offering the same carriers. That's a strategy that we'll extend not only through California and the West but also nationally as we scale our programs up," Moore declares. "We're in the process now of expanding to a national broker network."

As a member of the Target Markets Program Administrators Association, B&B Programs and Barney & Barney are firmly committed to TMPAA best practices and to achieving the highest standards in program development and administration.

"We credit our growth and success to our strong background in program administration and to our underwriting discipline, history of profitability, and willingness to take and manage risk," O'Connell says. "Also key to our success is our ongoing attention to analytics, which allows us to observe, orient, decide, and act to make quick decisions and transitions."

For more information:

B&B Programs

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