Cheshire cat: meet Dan J. Labrie. He runs a company in Cheshire, Conn., that insures public housing authorities. The Housing Authority Insurance Group is domiciled in Vermont and provides liability insurance for housing authorities in 43 states. Labrie continues to be a leader in the captive community

Risk & Insurance, April 15, 2005 by Thomas J. Slattery

Like thousands of junior insurance industry executives, Dan J. Labrie began his career at blue-chip firms, first as an account executive at The St. Paul Cos., and then as a captive program manager with Travelers.

But despite the good salary, the smart suits, the silk ties and the MBA in international management, life was turning into a harried blur as he found himself rushing from one airport gate to the next.

Labrie, now CEO of the Housing Authority Insurance Group of Cheshire, Conn., had reached the point where he even relished the pauses in the waiting lounges of J.F.K. International Airport. He overslept one day, after dozing for two hours, and found his gate empty. Maybe it was time to move on, he thought.

And move on he did, to the Housing Authority Insurance Group, in 1988, where life was different but no calmer. Back then, the organization was a single risk retention group. Today, it has spawned five subsidiaries.

"Our mission," says Labrie, who has been CEO for the past seven years, "is to serve the insurance and risk management needs of our members, who are housing authorities throughout the United States."

In the mid-'80s, he recalls, insurers took a dim view of public housing risks, as they did of so many others. "It was a class of business at that time that had a very difficult time Letting insurance," he says, "specifically liability insurance, at a reasonable cost."

Back then, it was common for carriers to cancel policies, cancel renewals or demand sky-high premiums.

VOLUMINOUS GROWTH

"I think, from the point of view of the insurance industry, public housing is a class of business that has a high frequency of claims," says Labrie. "I think a lot of underwriters, based upon that, felt the class or the risk, because of that high frequency, was difficult to price."

In addition to the frequency of claims, the severity potential of many housing claims further alienated underwriters.

In a bind, 26 housing authorities banded together, each agreeing they had a large market, wanted control over their destiny, and yearned to escape the misery of insurance cycles. In 1985, the industry decided to take matters of insurance into its own hands.

In 1985, the Council of Large Public Housing Authorities held a meeting in Chicago to find a solution. Two years later, that solution emerged: the Housing Authority Risk Retention Group. The group found a home ill Vermont, and eventually grew to provide liability insurance for housing authorities in 43 states.

Today, that company is one of Housing Authority Insurance Group's five subsidiaries. The others are Housing Authority Insurance Inc.; Housing Authority Property insurance, now a mutual insurance company; Housing Enterprise Risk Services Inc., a so-called rent-a-captive, or sponsored captive; and Housing Insurance Services Inc., an insurance agency licensed in 44 states. All are incorporated and domiciled in Vermont, but operate out of Cheshire, Conn.

HAIG currently operates in 43 states and represents close to 800 public housing authorities.

The group began in 1987 with $6 million in assets. Today, the assets of the combined companies are worth $350 million. Surplus exceeds $80 million, up from $3 million when the company started.

"We started with roughly $6 million in annualized premiums, and today we're at $110 million," he says. "We have a staff of 97 today in-house; we started with one."

Labrie says that in 1987, an association captive handled product lines a risk retention group is forbidden from handling: property, workers' comp, fidelity and boiler. Two years ago, the captive was converted to a licensed mutual insurance company, the Housing Authority Property Insurance Co. Inc.

Housing Enterprise Risk Services, or HERS, is a sponsored captive. It provides property and liability insurance to housing entities in the mixed-income housing market.

Why did Labrie choose a Vermont domicile?

"We decided back in 1987 to incorporate the first company there, which was the risk retention group," he says. "We felt they had the infrastructure and the regulatory experience to meet our needs. It made more sense to us long term. So we decided to go to Vermont, not offshore." And so it was that they invested $3 million and started the risk retention group with 26 housing-authority members.

HAIG's mission, he says, is to meet the needs of policyholders and member housing authorities at a reasonable price.

He reads off a list of products and services HAIG provides: accident incident training, risk management videos and presentations to housing groups, interactive training sessions broadcast throughout the country via an in-house satellite television network.

"We have an extensive and global way of providing risk management services here," says Labrie. "The level of products and services we provide in the risk management area is very broad and very extensive."

Additionally, there are blueprint and coverage reviews, safety code consultations, loss reviews and analyses, risk control audits, NFPA code assistance, risk control program audits, site inspections and risk management work plant support.