Andrew Watts, Executive Vice President, CFO, Brown & Brown (NYSE: BRO)
Andrew Watts is executive vice president and chief financial officer at Daytona Beach based Brown & Brown (NYSE:BRO). Earlier, he worked at Thomson Reuters in managing customer relations. He was also a senior vice president at Thomson Financial. Prior to that, he was a co-founder and CFO at Textera.
In this 2,786 word interview, exclusively in the Wall Street Transcript, Mr. Watts details his company’s strategy for navigating through the COVID 19 business wreckage in the insurance sector.
“We are an insurance broker. We are the sixth largest in the world. We’ve been in operation since 1939. We’re based here in Daytona Beach, Florida, but we’ve got operations in 43 different states around the U.S.
We also have operations up in Canada, over in Ireland, the United Kingdom, as well as down in Bermuda.
We primarily focus on property/casualty and employee benefits, as well as personal lines. We have four different divisions within the organization. Our largest is retail, where we come out in a direct sales model to talk with the buyer of insurance.
We also have a national programs division, which is our managing general agent — MGA — division, where we really operate as a virtual insurance company, providing risk solutions to retail brokers, either B&B retail or independents.
Then we have a wholesale division, which is focused on the excess and surplus markets, for higher-risk type assets that need to be insured. We support B&B retail and independents. Finally, we have a specialty services division, which processes workers’ compensation and property claims as well as advocacy claims for Medicare or Social Security set aside. Generally, these businesses are linked to one of our MGAs.”
Daytona Beach certainly was impacted by the Colonial Pipeline extortion that led to long gas lines throughout the southeastern US. Thfule Brown & Brown take on this issue is insightful:
“The topic around cyber exposure, cyber coverage, has been front and center for a lot of organizations over the past few years. We wouldn’t say that it has increased exponentially during COVID.
It was a big topic prior to COVID. The threat actors that are out there, or those individuals or firms or whoever is trying to have some sort of malicious actions or intentions, were there before. They’re here now and they’re going to be here in the future.
If anything, the risk is probably going to increase.
One of the things that has probably challenged some companies is the increase in remote workers. If you had all of your workforce in your building, maybe you were a little more comfortable that you knew how the threat actors might try to get into your infrastructure.
As you have a more deployed workforce, and definitely over the last 12 to 15 months, it is about making sure you’ve got the right level of security on all of your computers, especially if you’ve got people working remotely.
The actual coverage itself is still fairly limited in nature. That’s one of the challenges in the space — knowing how to fully underwrite the exposure without knowing how large it could be. Normally, these policies are fairly prescriptive regarding what is covered.
Will this evolve in the future? Probably, as the collective industry gets a better feel for what the exposures are…
There’s a lot of discussion about this topic. They call them the gig workers. Are they considered an employee of the firm they work for? Are they truly an independent agent?
Historically, the view has been that if you’re an employee of the company, then all the applicable coverages are there.
However, when you’re an independent worker, the relationship has to be evaluated very thoroughly. There’s different scenarios in the marketplace where the employee or contractor line is becoming blurred.
It does require us to have more conversations about what exactly the independent contractors are doing to help ensure we get the proper guidance on coverages and related risks.”
The future strategy of Brown & Brown (NYSE:BRO) will be supportive of the local Daytona Beach economy for years to come:
“We’re going to continue to invest in our capabilities. Our capabilities can be anything from proprietary product, to the teammates that we have as an organization, the niches we are able to serve and our utilization of technology and data.
As a result, we can support a customer at any size in their maturation from a smaller company that’s just getting going to a large multinational.
We feel really good about our company, and that we’re going to be able to continue to make sure that we’ve got great capabilities. We’ve been making a lot of investments in technology over the past few years.
We started with infrastructure and our core operating systems, so we can scale even better. These programs are substantially done and we are seeing the benefits.
From an innovation standpoint, we acquired a business last year called CoverHound. That was really our ability to offer what we call a curated quote.
This ties back to our discussion earlier about technology. We do think there’s a segment of the market that we can support in a more automated fashion than what we do today.
What we’re going to be able to do with this technology is allow a buyer of insurance to go online, provide us with their information, and then we will get quotes for different lines of coverage from multiple insurance carriers and provide this back to the customer in what we call a curated quote.
We think we’ve got something that’s unique and differentiated in the space, and are pleased to have the CoverHound team join the Brown & Brown (NYSE:BRO) team.
We will continue to look for additional areas to invest in as an organization that will help further enhance the overall experience for our customers and make our teammates as efficient and effective as possible.
We will continue to invest in our data and analytics initiatives. We want to ensure we’re utilizing our data to help win more customers, retain more customers and help our customers get the best coverage at the best price.
These are some of the important areas we’re thinking about today and into the future.”
Andrew Watts
Chief Financial Officer & Executive Vice President
Brown & Brown, Inc.
220 South Ridgewood Avenue
Daytona Beach, FL 32114
(386) 252-9601
www.bbinsurance.com
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