2015 Insurance Executives to Watch
Downward pressure on pricing, increased capacity in the market and the continuing inadequacy of returns on investments are some of the challenges that must be navigated by insurance industry executives in 2015.
Such difficulties are exacerbated by the still-fragile economies of the United States and worldwide, and the continuing threats of political turmoil and climate change in many parts of the globe.
Some of the business leaders we have selected for this annual feature — such as Tom Lawson at FM Global, Ben Walter at Hiscox USA and Peter Hancock at AIG — are taking on responsibility for their entire company.
Other senior insurance executives we’ll be watching in the coming year are taking on significant new responsibilities or have key leadership roles to play in lines of business or business sectors such as cyber, property, specialty or micro-business.
As we all know, along with any challenge comes the opportunity for growth. These insurance executives will bear watching not only for the aplomb with which they will handle their new responsibilities, but for the paths they pave to broader industry opportunities.
A Brand That Resonates
Nationwide has embarked on the daring venture of an organizational strategy shift — and Mark Berven will be the executive to make sure it works.
In addition to a rebranding campaign, the company has restructured — with Berven overseeing one of three corporate divisions: the Nationwide Property & Casualty Operations business unit.
The shift puts all P&C and personal and commercial lines operations under the Nationwide brand, from a half-dozen operations including Harleysville Insurance, Allied Insurance, Scottsdale Insurance, Crestbrook Insurance and Titan Insurance.
“You have to have a brand that resonates,” he said. “With all of the noise in the system, consumers look for those trusted brands. … We have also heard loud and clear from our distribution partners their desire for a brand they can stand behind.”
The change is designed to “operationalize a unique brand;” streamline operations and efficiencies so customers see more competitive products and pricing, innovation and support services; and deliver enterprise solutions to customers encompassing the insurer’s diverse portfolio of offerings that ranges from property & casualty and the well-known personal auto, homeowners and commercial coverage to banking, specialty health and farm insurance.
Berven, who started with the company 22 years ago on the independent distribution side, said his new role gets him back into the field listening to partners and “sharing a vision of where we are going.”
“It’s been really well received,” Berven said of the rebranding effort, and it leaves the company well-positioned to provide growth and positive returns in a softening market.
“If the barometer of our success is the reaction of our distribution force in regard to their excitement about this, we have some really good times ahead,” he said.
Small is Beautiful
Everyone is busy, it seems, but ACE’s Dave Charlton just might be busier than most. ACE tapped Charlton for his small business and specialty lines expertise in March to head up a new division that will focus on micro-business, which the carrier defines as businesses under $2 million in revenue with less than 50 — in most cases less than 25 — employees.
Since joining ACE, Charlton has been aggressively hiring staff with both admitted and nonadmitted experience. He is also taking advantage of an equally aggressive push by ACE to bring technology to bear in ways that will help insureds better understand their risks and coverage options.
ACE’s approach will at the same time take into account the different ways brokers will want to look at and bind business.
“We are putting in a whole new IT system and I have had a lot of support from the infrastructure ACE has from legal to filing,” Charlton said during a November interview with Risk & Insurance® at ACE North America’s headquarters in Philadelphia.
“That is one of the reasons I signed on,” Charlton said.
A key approach for ACE is offering small business owners a business owners policy or BOP — typically comprising general liability and property coverage — and a second phase of coverage, errors and omissions or D&O, for example, all under one policy.
In the past, micro-business owners had to go to the trouble of understanding and buying two different policies if they wanted or needed that much coverage.
“On a $2,000 transaction, do you really want to go to two places with that?” Charlton asked.
Look for Charlton’s division to be coming out in the first quarter of 2015 with a “standard” BOP, specialty commercial lines coverage, coverage for stand-alone bars and restaurants, and coverage for nonprofits including nonprofit D&O coverage.
“It’s been fun to bring this team together,” Charlton said.
Making Cyber Risk a Global Priority
Tracie Grella, global head of professional liability, has taken cyber coverage to a new level.
She and a team of actuaries, underwriters and claims managers developed CyberEdge PC, a cyber risk product that covers property damage and bodily harm caused by a cyber attack.
AIG first developed coverage for cyber risk back in the 1990s, but with each and every day bringing news of a new data breach, Grella has worked aggressively on ways to protect insureds.
Released earlier this year and already offered in 47 countries, the coverage has garnered a “great deal of interest” from brokers, she said, because it addresses an exposure often overlooked by traditional cyber, general liability or property policies.
“The need is growing, but organizations still don’t understand what their exposure is, how to evaluate it, and how much they want to transfer to insurance,” she said.
She also strives to raise awareness about cyber security through speaking at events around the globe, and through the creation of the CyberEdge mobile app, which provides the latest news regarding cyber threats and regulatory changes, as well as a global cyber breach map and a breach cost calculator.
Promoting the product globally has been a challenge because it reaches across multiple disciplines and addresses an exposure that can be hard to identify.
Grella embraced that test by calling on the expertise of over 200 underwriters worldwide, vendor partnerships, and the support of various industry groups to educate company leaders and brokers about the product — a goal she will continue to pursue in 2015.
Room to Run
Specialty insurer Allied World was in a period of accelerated growth, led by Gordon Knight, then-president of the company’s North American division, when Lou Iglesias joined the company as president of the P&C division in 2012.
In 2014, Knight retired, having doubled the size of the company’s U.S. operations during his brief tenure.
That left some rather large shoes to fill for Iglesias, who was tapped to succeed Knight. Iglesias is energized by the challenge, though, and has no intention of allowing the company’s momentum to slow.
“We’re in a really fun and interesting phase in the growth of our company,” said Iglesias. “We have a tremendous amount of room to run.”
Allied World’s gross premiums written were $707.9 million for the third quarter of 2014, a 22 percent increase, compared to the third quarter of 2013. The U.S. insurance segment grew by 25 percent, led by nearly 43 percent growth in general casualty.
In October, Allied World announced a significant realignment of its two insurance business segments, giving Iglesias responsibility for all insurance lines of business of the Bermuda operation, while continuing to oversee production and profitability for Canada and all U.S. branch offices.
Iglesias said that getting the company’s underwriting expertise out into the field — “closer to our clients and closer to our brokers” — remains a key focus.
He also wants to identify and develop that expertise, he said.
“I believe in empowering people and giving them enough room to succeed,” he said. “I think that’s how you get the best people and keep the best people.”
A Unifying Mission
Peter Hancock took over as CEO of AIG on Sept. 1, and has already made strides in steering the course of AIG’s future. Hancock’s vision is an ambitious one, reshaping management to drive unification, on a mission to create “One AIG.”
“My goal was to create a simpler organization where we will most effectively embrace the diversity of skills across our organization, and then put those skills to work for the good of our customers,” said Hancock. The new structure, he said, will allow the company to tap into opportunities that might be overlooked under a more siloed approach.
Hancock previously served AIG as CEO of its property/casualty division and as executive vice president of finance, risk and investments. Building on that experience, Hancock is emphasizing the use of data in all decisions, whether in product development, marketing, pricing, customer selection, behavior analysis or overall optimization of portfolios. He’s investing heavily in science and engineering with the idea that the carrier can cut out fraud and waste, increasing profits.
“I see innovation and an embrace of technology as being integral to the development of AIG and the industry going forward,” said Hancock. “The tepid recovery following the Great Recession in advanced economies has pushed insurers, including AIG, to focus on innovation, with nimble operating models and growth strategies; big data to seek effective pricing strategies; and shifts in trends, be it consumer behavior or business models.”
AIG recorded total revenues of $16.65 billion for the three months ended Sept. 30 this year, compared to $15.94 billion for the comparable period last year. Premiums for the quarter were $9.45 billion, up from $9.35 billion in Q3 2013.
To continue driving performance upward, the CEO’s mantra for the property/casualty business is value over volume, and he plans a broader implementation of value-based metrics at AIG.
Explained Hancock, “We want to keep focusing on our true north: where the value is greatest to our customers.”
Stability and Success
Tom Lawson began 35 years ago at commercial and industrial property insurer FM Global as a loss prevention engineer, his first job out of college. In January, he takes the helm as CEO.
And how appropriate is it that a property risk engineer is the new leader of a mutual organization so well known for its scientific and engineering advancements in the area of property loss prevention?
Under retiring CEO Shivan Subramaniam, the insurer grew from $1 billion in annual revenue in 1999 to $5.6 billion in 2014.
“I do have big shoes to fill,” Lawson said. “Luckily for me, I have a great role model.”
He has no giant steps planned for those shoes at the moment.
“We have a long tradition of stability and success,” Lawson said. “Going forward, that won’t change. Our vision and values are going to remain the same.”
While downward pressure on pricing will keep the market competitive, the company’s focus on using predictive analytics, addressing emerging risks and its “highest client retention rate in the industry” put the company in good stead, he said.
“We are focused on making sure we deliver competitive products and services,” he said. “Through a research and engineering focus, we always aim to come up with solutions to property risk questions before clients ask.”
One “good example of where we are heading with analytics,” he said, is the FM Global Resilience Index, which provides a drilled-down look at supply chain disruption risk and resilience in nearly 130 countries.
“I am extremely excited about the future. Next year will mark our 180th year serving clients. FM Global has a great history of success and I am looking forward to making sure that continues.”
Specialty lines, especially management liability, financial institutions, professional services and health care, are becoming more in demand as insureds see increased regulatory pressure due to such disparate reasons as the Affordable Care Act, SEC investigations and legal M&As, just to name a few.
It is in this atmosphere that Chris Leisz has taken on a new and significant leadership position at CNA, with the responsibility for the underwriting strategy for the specialty lines of business.
“I am not trying to effect a major change,” he said. “I just want to help tweak and refine the things they are doing.”
But putting the bulk of underwriting authority at the branch level might be considered more than a tweak.
Since he started at the company in February, Leisz has worked to empower a decentralized underwriting structure that has a strong customer segment focus. As a whole, CNA has streamlined into a more specialized business insurer that focuses on specific industries, which it calls “customer segments.”
Leisz said the decentralized approach not only strengthens relationships and gives customers faster responses, but it also aids cross-selling of products.
“I am committed to getting authority out to the field,” he said. “It’s an evolution,” requiring new tools, a training curriculum and consensus-building.
“I enjoy getting everybody on board,” Leisz said. “When it’s everyone sharing it, it becomes part of your DNA. When it’s one person doing it, it raises a big disconnect.
“You have to understand the strategic and cultural changes so you can maintain focus and move the decisions forward,” he said.
Even with overcapacity in the market, insurers will see exposure growth due to a strengthening economy, he said.
“We bid in some of the more volatile parts of the industry when it comes to specialty lines,” Leisz said. “It’s an extremely competitive environment.”
Bringing Value to Clients
Michele Sansone has made her mark at XL for the past three years, serving as chief underwriting officer and helping XL’s North America Property business more than double its book of business.
She was appointed in May as president of XL’s North America property insurance business, and now directs XL Group’s property underwriting activities, including general property and energy property business across the U.S., Canada and Bermuda.
Sansone has also been appointed head of global risk engineering (XL GAPS), overseeing a global network of risk engineers who provide on-site property risk analysis and support clients’ property loss prevention programs.
“Our risk engineering, especially, brings a lot of value to the table,” said Sansone. “It’s not just about writing a property policy. We’re really trying to help our clients stave off loss but also keep their operations safe and reliable.
“Going forward, we want to help more clients reap benefits of our risk analysis legwork. The information is too valuable just to be left alone until the next renewal.”
While increased capacity presents an ongoing challenge across the property/casualty market, Sansone said, XL’s competitive edge will continue to fuel growth, backing up its capacity with industry experience and the property risk management guidance clients need.
“It’s not all about the financial protection offered by the insurance contract,” she said. “It’s also about other ways we help our clients avoid loss and quite simply, run safer operations that put their equipment, their employees and their customers at less risk.”
Achieving Growth Through Team Building
Since becoming president of XL Group’s global excess casualty business three years ago, Lorraine Seib has been tasked not only with growing the business, but also molding its three access points — Dublin, Bermuda and North America — into one unified team.
“Before I came on board, they kind of operated in silos, and even competed against each other for the same North America base of customers,” she said. “You have to have a cohesive team to be successful.”
Seib held all-employee meetings to bring her roughly 60 team members together, allowing them to bond and form the collaborative relationships that have been so vital to XL’s growth.
The excess casualty business is currently one of the company’s most profitable, with about $380 million in gross written premium. Seib plans to bring that up to $500 million within a few years, focusing on the upper middle market in North America.
“There’s a huge growth opportunity there, because historically we haven’t played there before,” Seib said.
For the coming year, she will focus on adding local talent to existing teams in Dallas; Kansas City, Mo.; Atlanta; and Exton, Pa.
In addition to technical capabilities, Seib wants her team to have strong local relationships.
“Brokers want to deal with a person they know who has handled their account for years,” she said. “I don’t have one person on my team who isn’t running on all cylinders, and I’m very proud of that.”
Ben Walter is proving that you don’t need decades of experience in the insurance business to make an impact.
Walter, a Kellogg School of Management MBA and a former managing director of BlackRock, joined Hiscox in 2012, and is engineering a rapid expansion in the United States for the Bermuda-based specialty insurer.
Revenue for Hiscox USA is up 25 percent year over year, and the company is continuing to hire, growing from 175 employees when Walter took over to more than 300 currently.
The company made a bold move in 2010, becoming the first in the U.S. to offer insurance to small business directly through Internet sales. Hiscox USA is now licensed to sell insurance directly to small businesses in 40 states and plans to be completely national in that regard in a couple of years.
The company already operates in all 50 states through more standard channels.
“We’ve focused on the states with the most opportunity and our products are now available to nearly 90 percent of all U.S. small businesses,” Walter said to Risk & Insurance® in November.
“I really believe we punch above our weight on the marketing side,” Walter said, in responding to the observation that Hiscox was a relative unknown here five years ago.
“Three years ago we produced a web series about small business that had over 11 million views across two seasons.”
A big initiative for Walter and Hiscox USA in 2015 will be the launch of its new tag line “Encourage Courage” which will build on the existing company values of “Courage, Integrity, Quality, Excellence in Execution and being a Human Organization.”
Scientists Look to Protect Workers From Climate Change
“Climate change may result in not only the increasing prevalence and severity of known occupational hazards and exposures, but also the emergence of new ones,” states a blog post. “Workers are often the first to be exposed to the effects of climate change and may be affected for longer durations and at greater intensities. Recently, workers were referred to as ‘the canaries in the coal mine of climate change impacts.”’
But the article on the National Institute for Occupational Safety and Health’s website also notes that while there has been much research and planning on public health from the environmental aspects of climate change, little has been done on the effects on workers.
Those particularly at risk include outdoor workers, emergency responders, commercial fishermen, health care workers, farmers, certain indoor workers, and transportation and utility workers. “For worker populations such as migrant workers and day laborers who may have inadequate housing or other social and economic constraints, the health effects of climate change may be additive from exposures both at work and at home,” according to the post.
The potential effects of climate change on workers include:
Direct effects such as increased ambient temperatures, air pollution, ultraviolet radiation, extreme weather, vector-borne diseases, and expanded vector ranges.
Indirect effects, such as hazards from new and emerging industries such as renewable energy, carbon sequestration, and “green industries,” and changes in how structures and communities are built and maintained.
“There is strong evidence that climate change is and will continue presenting risks of job-related injury, illness, and death …” — National Institute for Occupational Safety and Health
“Climate change can contribute to decreasing the ozone layer and affect UV radiation levels at the surface of the earth. Outdoor workers will have more frequent, intense, and longer exposure to UV radiation, resulting in increased risk of adverse eye effects, skin cancer, and possibly immune dysfunction,” the article states. “Extreme weather events or natural disasters, such as floods, landslides, storms, lightning, droughts, and wildfires, are becoming more frequent and intense. Weather disasters may cause deaths, injuries, diseases, and mental stress.”
The post notes that an executive order signed by President Obama last year made a commitment to prepare the nation for the potential impacts of climate change. “The challenge is to characterize how these climate events may influence worker health and safety and to establish plans for mitigating, responding, and adapting to the current and anticipated impacts.”
NIOSH has created a team of scientists to investigate the implications of climate change for worker health and safety and to develop an action plan. Called the NIOSH Climate Change Occupational Safety and Health Work Group, the team is charged with determining relevant issues, identifying gaps in worker protection, and making recommendations for worker safety and health improvements.
“There is strong evidence that climate change is and will continue presenting risks of job-related injury, illness, and death, so numerous critical research questions need to be resolved regarding specific hazards, sentinel events, risk assessment, and preventive actions,” the post says. “Additional research needs include susceptible populations, surveillance, and indicators relevant to climate change and workers. A strategic research plan will provide the roadmap for a broad approach to meeting these needs. As a result, the health consequences of climate change and how to lessen them will be widely understood.”
From Coast to Coast
The 3,920-ton Left Coast Lifter, originally built by Fluor Construction to help build the new Bay Bridge in San Francisco, will be integral in rebuilding the Tappan Zee Bridge by 2018.
The Lifter and the Statue of Liberty
When he got the news, Scot Burford could see it as clearly as if somebody handed him an 8 by 11 color photograph.
On January 30, the Left Coast Lifter, a massive crane originally built by Fluor Construction to help build the new Bay Bridge in San Francisco, steamed past the Statue of Liberty. Excited observers, who saw the crane entering New York Harbor, dubbed it the “The Hudson River Hoister,” honoring its new role in rebuilding the Tappan Zee Bridge over the Hudson River.
Powered by two stout-hearted tug boats, the Lauren Foss and the Iver Foss, it took more than five weeks for the huge crane to complete the 6,000 mile ocean journey from San Francisco to New York via the Panama Canal.
Scot took a deep breath and reflected on all the work needed to plan every aspect of the crane’s complicated journey.
A risk engineer at Liberty International Underwriters (LIU), Burford worked with a specialized team of marine insurance and risk management professionals which included John Phillips, LIU’s Hull Product Line Leader, Sean Dollahon, an LIU Marine underwriter, and Rick Falcinelli, LIU’s Marine Risk Engineering Manager, to complete a detailed analysis of the crane’s proposed route. Based on a multitude of factors, the LIU team confirmed the safety of the route, produced clear guidelines for the tug captains that included weather restrictions, predetermined ports of refuge in the case of bad weather as well as specifying the ballast conditions and rigging of tow gear on the tugs.
Of equal importance, the deep expertise and extensive experience of the LIU team ensured that the most knowledgeable local surveyors and tugboat captains with the best safety records were selected for the project. After all, the most careful of plans will only be as effective as the people who execute them.
The tremendous size of the Left Coast Lifter presented some unique challenges in preparing for its voyage.
The original intention was to dry tow the crane by loading and securing it on a semi-submersible vessel. However, the lack of an American-flagged vessel that could accommodate the Left Coast Lifter created many logistical complexities and it was decided that the crane would be towed on its own barge.
At first, the LIU team was concerned since the barge was not intended for ocean travel and therefore lacked towing skegs and other structural components typically found on oceangoing barges.
But a detailed review of the plan with the client and contractors gave the LIU team confidence. In this instance, the sheer weight and size of the crane provided sufficient stability, and with the addition of a second tug on the barge’s stern, the LIU team, with its knowledge of barges and tugs, was confident the configuration was seaworthy and the barge would travel in a straight line. The team approved the plan and the crane began its successful voyage.
As impressive as the crane and its voyage were, it was just one piece in hundreds that needed to be underwritten and put in place for the Tappan Zee Bridge project to come off.
The rebuilding of the Tappan Zee Bridge, due to be completed in 2018, is the largest bridge construction project in the modern history of New York. The bridge is 3.1 miles long and will cost more than $3 billion to construct. The twin-span, cable-stayed bridge will be anchored to four mid-river towers.
When veteran contractors American Bridge, Fluor Corp., Granite Construction Northeast and Traylor Bros. formed a joint venture and won the contract to rebuild the Tappan Zee, one of the first things the consortium needed to do was find an insurance partner with the right coverages and technical expertise.
The Marsh broker, Ali Rizvi, Senior Vice President, working with the consortium, was well known to the LIU underwriting and engineering teams. In addition, Burford and the broker had worked on many projects in the past and had a strong relationship. These existing relationships were vital in facilitating efficient communication and data gathering, particularly given the scope and complexity of a project like the Tappan Zee.
And the scope of the project was indeed immense – more than 200 vessels, coming from all over the United States, would be moving construction equipment up the Hudson River.
An integrated team of LIU underwriters and risk engineers (including Burford, Phillips, Dollahon and Falcinelli) got to work evaluating the risk and the proper controls that the project required. Given the global scope of the project, the team’s ability to tap into their tight-knit global network of fellow LIU marine underwriters and engineers with deep industry relationships and expertise was invaluable.
In addition to the large number of vessels, the underwriting process was further complicated by many aspects of the project still being finalized.
“Because the consortium had just won this account, they were still working on contracts and contractors to finalize the deal and were unsure as to where most of the equipment and materials would be coming from,” Burford said.
Despite the massive size of the project and large number of stakeholders, LIU quickly turned around a quote involving three lines of marine coverage, Marine Liability, Project Cargo and Marine Hull & Machinery.
How could LIU produce such a complicated quote in a short period of time? It comes down to integrating risk engineers into the underwriting process, possessing deep industry experience on a global scale and having strong relationships that facilitate communication and trust.
Photo Credit: New York State Thruway Authority
When completed in 2018, the Tappan Zee will be eight lanes, with four emergency pullover lanes. Commuters sailing across it in their sedans and SUVs might appreciate the view of the Hudson, but they might never grasp the complexity of insuring three marine lines, covering the movements of hundreds of marine vessels carrying very expensive cargo.
Not to mention ferrying a 3,920-ton crane from coast to coast without a hitch.
But that’s what insurance does, in its quiet profundity.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty International Underwriters. The editorial staff of Risk & Insurance had no role in its preparation.