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Close-up: Andrew Barile

Industry veteran, outsourcing consultant stays one step ahead

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Andrew Barile moved to Rancho Santa Fe from the Big Apple in 1997, but has retained his New York accent, his cache of entertaining insider stories and an irreverent attitude that springs from having been in the insurance industry since 1960, traveling in the same circles as the movers and shakers and advising them on key issues.

He has two consulting companies -- Fairbanks Consulting Group focuses on consulting services for business process outsourcing (BPO), both for insurance carriers here in the United States and for outsourcing vendors in Asia; Andrew Barile Consulting offers expertise to law firms and insurance carriers that retain Barile as a "hired gun" for insurance-related court cases.

"I was born in the Bronx, right next to Colin Powell, but we never met when we were young," said Barile, who began his career in the insurance industry at the age of 17, as an underwriter for Commercial Union Insurance, writing insurance for clients such as Brinks, the armored truck company.

Andrew Barile

He went to night school and received his B.B.A. in insurance and later an M.B.A. in international finance from New York University, where he was taught by the likes of management guru Peter Drucker.

"Back then, to make more money, I moved every two to three years from one insurance company to another. Then I received a fellowship to Lloyds of London, to learn about their underwriting. This was an enormous awakening for me, when I realized that there was far more to insurance than just homeowners' policies," Barile said.

This opportunity opened up a whole new world for Barile, who learned about international insurance issues, terrorism, political risk, financial guarantees and more. Following this stint, he was hired by the Swiss Reinsurance Co., which sent him to Zurich and then to Paris.

He was still under 30 when Howden Reinsurance Co., which was Lloyds' largest broker, recruited him as president and made him a director. The company asked him to set up its U.S. operations.

"They provided the capital and I provided the intellectual capital," Barile explained.

He built up the company, but five years later received a severe blow when the top brass told him to sell it and run another company they were looking to start.

"That's when I decided to start my own company, because you can break your back building up a firm and then the next morning the board decides to sell out. You have to own your own firm if you want control," Barile said.

With investment support from the former general counsel of CV Starr & Co., Barile started a reinsurance brokerage firm in 1977. A year later, he got the idea to create a Bermuda reinsurance company.

For the insurance carriers, Bermuda provides a tax haven, a place to raise capital, accumulate income and defer taxes. Many real estate developers and big corporations have captive insurance companies that specialize in covering the risks of their non-insurance parent companies.

From the policy holders' stand point, Bermuda offers the opportunity to reduce insurance costs and provides broader coverage, according to Barile.

He and his partners did a public offering of the very first Bermuda reinsurance company, ANECO, which would help these captive companies comply with IRS requirements to insure clients other than their parent companies.

"The prospectus was worth $6 but the information in the prospectus was worth $250. As Warren Buffet said, ideas are worth money, so don't be too free with them," said Barile, explaining how new the concept was back then. Today, with experience, he knows he should have placed a higher value on it.

"So we showed everybody how to start a Bermuda reinsurance company. Then the smart people take your idea and improve on it. Today, a lot of companies have utilized the information in that prospectus to build some of the biggest reinsurance companies. Bermuda has become (a mecca) for reinsurance companies -- there are over a thousand there," Barile said.

He parted ways with this company within a year, when his investors decided to buy him out, and moved on to working for insurance agencies.

He moved to San Diego in 1997 to consult for the Arrowhead General Insurance Agency, which retained him as a behind-the-scenes consultant. The company sold nearly a billion dollars in premiums before it was sold to a private equity firm.

In 2001, he formed Andrew Barile Consulting and appeared in court as an insurance expert for his clients. Finding him through his Web site, outsourcing companies in India who wanted to offer BPO services for insurers began calling him. This led him to form Fairbanks Consulting Group as a strategic firm that helps outsourcing vendors identify target companies here, and domestic insurance carriers to find vendors abroad.

Services include educating offshore vendors and bringing them up to speed with how the insurance industry works. Barile did not disclose client names, citing the nondisclosure agreements he has with both vendors and carriers.

Vendors from Australia, China and even Dubai have approached him for help. Consulting for both sides, Barile is able to see the deficiencies in the system and offer strategies to correct course.

"The weakest part of the vendor's system is that they don't have a budget for marketing and they underestimate the magnitude of our industry. California alone has a thousand insurance companies and over 15,000 insurance agencies. But the question comes up, which of these will outsource and which (areas will the vendor serve) -- claims or billing or customer service," Barile said.

Speaking on industry trends, he said he thinks the industry will grow much faster, thanks to better technology. He also believes the industry is heading in the direction of completely outsourced firms.

"I sit on the board of a New York company that has outsourced everything -- from selling the policies to writing them, as well as billing and other functions. Clients who think out of the box like this are usually very young entrepreneurs," he said.

Barile is frequently called upon for input by the press for insurance-related issues. He writes for industry Web sites and publications about the intricacies of complex issues. With a lifetime of knowledge to share, he is interested in teaching in San Diego.

"I've tried to teach here, I've always been interested, but nobody retained me," he said. The reason, he jokingly speculates, may be that he's too impatient to deal with the preliminary vetting process.

Nagappan is a San Diego-based freelance business writer.

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