The next challenge for this business could come from just about anywhere, but property-casualty insurers will respond to it and adapt just as the industry always has, NAPSLO’s newest board member confidently predicts.
David Leonard, who was recently named by the National Association of Professional Surplus Lines Offices Ltd. to fill an open spot on its board of directors, has seen industry challenges come and go during the course of his 29-year career.
“We thought the millennium bug was going to be a big problem. Then we faced addressing terrorism exposures, and then [Hurricanes] Katrina and Rita showed us what the real cost of catastrophes can be. But the industry has responded to each challenge–given just a little time to let their imagination and technical ability work, and [for] capital to recover,” he said.
Mr. Leonard’s recent remarks in response to questions posed by National Underwriter about his career and industry challenges echoed those he delivered as a speaker during educational sessions of two NAPSLO meetings last year.
At those two events, insurance and reinsurance company representatives assembled to discuss potential fallout from Florida reforms that increased the size of the Hurricane Catastrophe Fund last year.
“It’s unfortunate when we have a public-sector solution put in front of a private- sector solution that was really beginning to work,” Mr. Leonard said during last year’s midyear educational conference, noting that capital and limits were flowing back to the state a year later.
Right after Katrina, “if you were a large commercial risk, you could probably get 10 percent of your limit,” he said, noting that the levels were back up to 50-to-60 percent by the time of NAPSLO’s February 2007 gathering.
Offering broader observations on industry responses recently, he told NU, “The interesting thing about insurance is that although it is a very old business, we usually don’t know what the next change or challenge will be, or how we will respond to it until it gets here.”
But the industry always does respond, he believes. Indeed, insurance “has done a good job of living up to the obligations of each challenge,” he said.
No stranger to challenges in his day-to-day work at RSUI Group, Mr. Leonard–chief strategic officer for Atlanta-based specialty insurer–told NU that the RSUI board recently elected him president. Mr. Leonard will assume his new position on April 1, and RSUI’s current president, E.G. Lassiter III, will advance to the role of chairman and chief executive officer on the same date, he said.
Mr. Leonard described his current position of chief strategic officer as “a dream job” that in large measure has him helping to solve difficult problems or meet the unusual challenges the company faces.
“That can be just about anything. I am never quite sure what issue is going to walk into my office each day,” he said, noting that while much of his time is devoted to buying treaty reinsurance for RSUI, he’s also heavily involved with planning and budgeting activities, rating agency relationships, and working with product line managers and executives to guide the overall strategy of his organization.
On top of all that, the finance and actuarial divisions of RSUI report to Mr. Leonard, and he said he also spends a good chunk of time communicating with executives of RSUI’s parent company, Alleghany Insurance Holdings.
“A big part of what I do is to act as a sounding board for people within RSUI,” Mr. Leonard said, summing up his role.
To Mr. Leonard, the “people part” of the insurance business is particularly appealing.
Asked to share insights he’d offer a young person considering a career in insurance, Mr. Leonard–a six-year member of NAPSLO’s Internship Committee–highlighted the “wonderful balance” between the analytical side of the business, complete with detailed legal contracts and complex statistics, and the substantial and equally important “people aspect.”
“You have to be able to communicate, listen, persuade and relate well with people in addition to having substantial technical ability and expertise to succeed,” he said.
Mr. Leonard began his own insurance career in 1979 as a casualty trainee with the Crum & Forster companies.
Having earned a degree in Business Administration focused on management, he said he intentionally sought a position at a large corporation with a formal, structured training program. “My older brother was in banking, so financial services interested me,” he added.
Before joining RSUI in 1999–initially as manager of RSUI’s program business segment–Mr. Leonard spent eight years at Employers Reinsurance Corp. underwriting property and casualty treaty reinsurance.
“I had always heard that reinsurance underwriters were ‘underwriter’s underwriters,’ meaning they’re the best of the best,” he said, explaining what prompted the move from standard primary insurance business to the reinsurance sector.
As for his next career move, he said, “E&S underwriters are the underwriters of business other underwriters can’t figure out how to insure….Procedures and manuals don’t limit what you can do; the only limits are your technical ability and imagination.”
Another draw to E&S is working with wholesale brokers. “They are ‘broker’s brokers’ and have substantial knowledge and skill. They are highly driven to find solutions for their customers, and many are characters–both of which I like in people,” he said.
Reflecting back on how each role prepared him for the next, Mr. Leonard recalled that he spent the last seven years of his stint at Crum & Forster underwriting a portfolio of large casualty accounts–providing the groundwork for underwriting large portfolios of insurance business in his reinsurance position.
His time at ERC, he said, not only expanded his technical background into the world of reinsurance but also gave him insights into many different types of “management styles and strategies for this business” at the insurance companies that were part of the ERC client base.
Mr. Leonard apparently has developed his own unique style to tackle another role he fills for NAPSLO–serving as an instructor for NAPSLO’s E&S School, where he teaches a basic course in insurance financials titled “Where’s The Money?”
“We begin the course with a walk through the graveyard of failed insurance companies,” Mr. Leonard reported, noting that this is his way of motivating students to pay attention to what might otherwise seem like a dry and technical topic.
“We try to help the students understand what it takes for an insurance company to live up to its promise to pay–and how it affects them and their customers if the company cannot fulfill that promise,” he added.
Mr. Leonard–who in addition to his Internship Committee assignment will take on the role of co-chair of NAPSLO’s Education Committee this year–said he looks forward to serving on NAPSLO’s board as it continues to work on developing new educational offerings for students.
Other challenges on the NAPSLO board agenda this year include working to educate federal lawmakers about the E&S industry.
“A key NAPSLO challenge is to assist legislators in understanding the benefits of the Nonadmitted and Reinsurance Reform Act to their constituents, and to work to get that legislation passed,” he said.
Although Mr. Leonard has only attended one board meeting so far, he’s already on board to tackle one of the newest agenda items–educating retail agents about the value of the wholesale distribution system.
“The wholesale broker’s expertise and ability to structure coverage for complex, unique and difficult-to-place risks, or risks that require large amounts of insurance capacity, is something all retailers can utilize to the benefit of their insureds,” he said.
“NAPSLO, as the representative of the wholesale market, hopes to help retail agents thoroughly understand the value added for their insurance clients that comes from working with wholesale brokers,” he added.