The property and casualty industry is vast and prevented by competitive urges and law from working in concert. Yet, it is an industry that spends a great deal of time watching one another. Since a large share of the industry requires filings of rates and forms with regulators there is a high level of transparency. The following are fourteen property and casualty insurance company influencers are shaping the industry today.
Shaping is the process of incremental movement toward an approximation of an ultimate goal. It is hard work and often frustrating because of the immense inertia in a largely empirical insurance industry.
Two of the people on this list, John Ward and George Nordhaus, are old acquaintances. I’ve met Curt Pearsall once when he was in my office visiting the Minnesota Professional Agents’ Association, who rented space from me. I once sued Peter Lewis’ company for something one of his employees did, but never met him. Most of the people I’m listing are only names tied to my long awareness of their deeds and actions. Inclusion in this list is not a personal endorsement.
Peter Lewis – Former CEO Progressive Insurance Company
Peter Lewis gave his first industry speech in the late 1960s as CEO of Progressive, shortly after his mother and he purchased the company in a leveraged buyout. He spoke of agents having only a few more years of existence. He died in 2013 with the American Agency System as vibrant as ever. It was one of the few things this visionary got wrong. Unfortunately, that misguided belief seemingly colored much of what he accomplished.
Known for an exotic lifestyle Lewis, the ultimate shaker, pushed the industry toward technological advancement much more than any other industry leader. By doing so, his company has been one of the technologically easiest to work with for years. Since ease of doing business is normally a major consideration in where business is placed by agency personnel, Progressive has profited greatly by removing “difficulties” from the process.
His company was one of the first to embrace credit scoring as a proxy variable for a responsible insured. What motivated Progressive to first test this hypothesis is a matter of conjecture. It has been suggested that frustration with insurance “redlining” laws may have played a part. Others have speculated that using credit as a tool to examine risk diminishes the role of the agent as a risk-selector, which fits his over-riding philosophy.
Much of what Progressive has done under Peter Lewis has been copied by other companies seeking similar profits and growth.
Warren Buffett – Berkshire/Hathaway (GEICO)
The “Oracle of Omaha” is one of the richest businessmen in the world. His view of insurance is different than most in that he thinks of his insurance companies as a means to amass capital for efficient investment. Buffett is believed to have successfully changed market opinion through the weight of his investments, due to the large amount of capital his insurance companies provide.
Buffett’s interest in insurance goes back long before his purchase of GEICO in 1996. In fact, his company (Berkshire/Hathaway) purchased National Indemnity Insurance Company in 1967. Buffett said in 2004, “. . . had we not made this acquisition [National Indemnity Company], Berkshire would be lucky to be worth half of what it is today.”
While most of his companies are involved in exotic risk, it is through GEICO, an insurer of ordinary auto insurance, that Buffett has imposed his vision of marketing. He has often commented in his annual report to shareholders that he is unconcerned about the high price his company pays for acquisition. He simply looks at the bottom line and smiles while spending seven percent of written premium on advertising, which is two to three times the industry average.
His frugality is seemingly reflected in GEICO’s tendency to sell low liability limits.
John Ward – Founder of Ward 50
Although many in our industry would have a hard time picking this executive out of a photo lineup, the industry has benefited greatly from his influence.
Ward runs a Cincinnati-based private equity firm specializing in the insurance industry, but it was his work in 1990s that greatly shaped our industry.
He created the Ward 50, which analyzes insurance companies and rewards excellence. Companies take this award very seriously and are better corporate citizens because of it. The best practices studies conducted by the Ward 50 group allows companies to measure results, optimize performance, and improve profitability.
Ward is often quoted. His opinion rings true as a reflection of years working as a senior partner, insurance industry consultant for Deloitte and Touche before starting the Ward Group, which he sold eight years later.
Hank Greenberg – Former CEO of AIG
Maurice “Hank” Greenberg is one of the great innovators of our industry. If he had his way the personal lines industry would sell an individual one policy that would cover all personal financial loss, with limited exclusions. That idea exemplifies his ability to think outside the box.
He took over the management of a highly-troubled, small company in 1968 and built it over the next thirty-seven years into the largest insurance company in the United States. His value to that company might have been most easily defined by what happened shortly after he left, with mistakes occurring that led to the government bailout that many feel now defines AIG.
Although Greenberg is often villainized for his tight-fisted negotiating, I believe he was basically fair. In the late 1990s an industry newsletter published a list of questionably ethical moves made by an unidentified insurance executive. The newsletter asked the reader to pick out those items which had been done by Greenberg and which had been done by Warren Buffett. The point of the article was that Warren Buffett had done all of the things listed, whereas most readers would blame Greenberg.
Jay Fishman – CEO of Travelers
Jay Fishman is a very personal pick for me.
My agency has been a top producer for Travelers for quite some time. Travelers brings their top agencies together at an annual conference, which we’ve attended for the last five years. At one of those meetings we were honored as the Midwest Agent of the Year.
Analyzing what Fishman stated four years ago led directly to the formation of this website.
He’s not your average insurance executive. His leadership toward a reduced federal deficit has placed him in a controversial arena for someone in his position.
Those of us in the Midwest are beholding to him for creating a soft landing for the St. Paul Companies.
The hardest thing for a company to be is “consistent”. Travelers has been the poster child for consistency in my agency. In the time he has run Travelers I’ve rarely disagreed with his direction.
There are many insurance leaders who mouth platitudes about keeping all the stakeholders in mind when making decisions, while actually focusing only on their stock price. Fishman has given every indication he truly understands his customer and his distribution system.
Steve Anderson – Editor of the The Anderson Agency Report (TAAR)
Steve Anderson has been dragging those of us in the insurance industry toward the future for a long, long time. He must feel like Sisyphus.
As his website says, he is an authority on Insurance technology, productivity, and profitability. He uses his over thirty years of insurance experience to speak to agents about what they need to do to stay current, or, in many instances, make a quantum leap into the present.
He has the unique background of insurance underwriting and computer science that allows him to have a foot in both worlds.
Most insurance companies and insurance agents have paid a tremendously high price to computer snake-oil salesmen, at one time of other. Anderson has saved people who listen to his advice a great deal of angst and $millions.
“The insurance industry — and especially insurance agents — are bombarded with new technology tools and processes virtually every day,” Anderson said. “It really is my passion to sift through the marketing hype and help insurance agents better understand what technology they need to pay attention to and at the same time how to implement and use it effectively within their organizations. Consumers’ expectations — both individuals and businesses — of what it means to have a great customer experience are changing rapidly. The industry needs to adopt new ways of thinking and new processes so that they can continue to deliver excellent customer service.”
Curt Pearsall – Columnist, E&O Expert
Our industry is all about establishing and meeting reasonable expectations. Curt Pearsall has for years helped us all understand the arcane insurance contracts in a way that makes what we sell less mysterious.
His simple message of consistently doing the right thing for the insureds and the companies is great advice that can’t be stated too often.
I haven’t always agreed with his positions on certain subjects, but he leaves little doubt where he stands. He has a keen sense of ethics and standards.
George Nordhaus – Chairman AgenciesOnline, LLC
I first met George in the early 1990s when he interviewed me for a monthly cassette he sent to thousands of agents throughout the United States and Canada. He actually interviewed me twice, on two quite dissimilar projects. He is the king of disseminating information and has a high level of enthusiasm that is contagious.
George was kind enough to provide a comment for us regarding current market trends. “I was fortunate to enter the independent agency system at exactly the right time…when it was still a very personal business but was facing the growing pressures of the direct writers such as State Farm and Allstate. Over the years, communications tools kept advancing in complexity, from printed information to cassette tapes, to CDs then to the Internet. So for a communicator at heart, I always faced enjoyable challenges on how to help keep the agency force ahead of the game. And now, of course, commodization is making it a whole new ballgame…again. That means more fun for people like me.”
When asked about Agencies Online he added, “AgenciesOnline is a service organization that essentially becomes the marketing arm for its independent agency clients. Creating a highly interactive Website as the agency’s basic communications tool, (including providing over 100 videos, chat lines, news magazines, social networking, and search engine optimization, as well as “Client Resources” so agency customers can access much of their service needs directly from the website), AO then leads agency management into individualized marketing activities for practically any business type or personal lines specialties the agency chooses. Prospects for any type of marketing campaign are furnished by AO. Each month the entire marketing activities are reviewed with appropriate agency staff members by AO Marketing Specialists.”
There’s very little about marketing insurance that he hasn’t dissected and analyzed long before most of us have heard about that particular new trend. Prior to creating Insurance Marketing and Management Services in 1972, George was an executive for two Big I agents’ associations in Tennessee and Indiana. He understands agencies, companies, agents, and marketeers.
His current company is a power-house for online production for agencies.
George has been delivering on his promises for over five decades and still has a remarkable eye for what’s new and important.
He also has been at the forefront of agency hiring for three decades.
Deb Smallwood – Founder Strategy Meets Action
Deb Smallwood is a Very Important Person.
In my experience more insurance companies have failed over the last three decades because of IT problems than companies who failed due to inept underwriting. One of the companies I represented spent $50 million on IT over a two-year period and got absolutely nothing but frustration for their money, while losing ground in the race for efficiency and ease of doing business. That expense had to be passed through to their insureds, which hurt the company’s competitiveness, which hurt their production, which led to a decision to sell.
In the 1970s I was an underwriter for a Midwestern company. The company was attempting to automate its underwriting and policy issuance. At that time the industry was based around MAG card typewriters and paper files. It wasn’t at all odd for that company to take five to six months to process a simple, auto change endorsement. I spent nearly four weeks talking to IT experts in an attempt to teach them the industry vocabulary so they could communicate with our company properly. Smallwood knows our industry and speaks IT fluently.
Smallwood has spent years implementing IT solutions in various roles. She represents the expertise needed by every company and possessed by few.
When asked for a comment for this article Smallwood responded. “Never before have the opportunities for the insurance industry been so phenomenal and the challenges so great. It’s about creating a culture of innovation – and a plan to address the modernization, optimization, and innovation of the business of insurance through enabling technologies investments. My personal goal is to help our clients shape a clear and focused strategy and plan of action – and to help them make informed technology decisions.”
Robert Hartwig – President Insurance Information Institute
When Robert Hartwig talks, people listen.
Hartwig is an economist who has an apparent love of numbers. Insurance is all about numbers. Sometimes the numbers are overwhelming, which is when Hartwig is most valuable to our industry.
He seems to have a knack for finding relevant numbers and interpreting them in a way that is easily understood.
When he says there’s a crisis, you can believe him.
Unfortunately, he has had to say that quite often lately.
J. Robert Hunter – Consumer Federation of America
In 1980 J. Robert Hunter and Ralph Nader formed the National Insurance Consumer Organization.
Former National Association of Insurance Commissioner President and Congressman Earl Pomeroy called him “provocateur extraordinaire.” That title fits someone who has captured headlines successfully for decades while often taking a “ready, shoot, aim” approach to scolding the insurance industry.
He strives to be the conscience of an industry, whether he is needed or not.
In 2008 Hunter published a paper titled, “PROPERTY/CASUALTY INSURANCE IN 2008: OVERPRICED INSURANCE AND UNDERPAID CLAIMS RESULT IN UNJUSTIFIED PROFITS, PADDED RESERVES, AND EXCESSIVE CAPITALIZATION.” His logic flies in the face of an industry that is highly competitive and currently straining the boundaries of what happens when Supply outstrips Demand.
His specious logic, such as stating that since so many people don’t purchase auto insurance it must be over-priced, leaves people shaking their heads and fists. Some are angry at Hunter, while the others are incensed at his targets.
His organization offers out-of-the-box solutions to problems that he uniquely has identified as important. For example; he suggests that states should reduce minimum required auto liability limits for the poor, even though most state required limits are ridiculously low already. Florida, for example requires $10,000 per person bodily injury and $20,000 per occurrence bodily injury, and $10,000 property damage. Consider how even a minor traffic accident would blow by those limits. The average new car in 2013 cost $31,252.
William R. Berkley CEO W.R. Berkley Corporation
Over the years, three close friends have run companies for “Bill” Berkley. He has a management style that can be described as “unique” and also has to be described as “profitable”.
His companies mainly write excess and surplus lines business. Having been an E&S underwriter and a general agent I’m aware that many, many people in Berkley’s position have failed because they let the perfume of the premium mask the stench of the risk.
He has been the CEO of his company since its inception in 1967. He’s managed to stick to his mantra of “Keep it small. Keep it Local. Stay in immediate touch with the customer.” by running small, regional, autonomous companies.
His Berkley Center for Religion, Peace, and World Affairs, may be his most lasting and important accomplishment (although it’s not part of the insurance industry).
Mark Geoghegan – Editor Insurance Insider
Who writes about the people who insure the insurers? Why should we care?
Mark Geoghegan is one of the most followed scribes in our industry on Twitter. His cryptic posts are jammed with the arcane language of high-end backside deals between the major insurance company players.
In the early 1970s I was introduced to the world of reinsurance as part of my training in fire underwriting. We used a combination of facultative and treaty reinsurance to allow us to write large fire accounts. My head would spin as I began to realize the layers of insurance agreements that spread the risk. At that time I worked for The Continental, which was the largest fire insurance company in the US. We would place a lot of facultative reinsurance (individually placed reinsurance) with a reinsurance company that was owned by The Continental. It didn’t seem to make much sense to me. It was explained to me that reinsurance would be placed and replaced many times before ultimately “put to bed”, sometimes long after the risk had been bound.
Two very good friends who I talked into going to work for The Continental went up the ladder to run regional offices for the company in Glen Falls and Dallas. They were upper level execs and both told me later that The Continental’s demise was due largely to improperly placed reinsurance.
Few people can understand the complex financial matters Geoghegan has become an expert at analyzing, but his work is very important. London is still the base for insurance in many ways. Although powerhouses like Munich Re dominate from a capital standpoint, London still points the way. Geoghegan’s knowledge gained as a broker allows him to speak in a language that is understandable.
We contacted Geoghegan on his election to this list. He replied, “I’m absolutely delighted, but feel unworthy to be placed in such illustrious company. We’ll carry on striving to keep The Insurance Insider true to the high values our readers set for us in the months and years ahead.”
The Independent Insurance Agent
The independent insurance agent is the ultimate industry influencer.
The insurance industry consists of hundreds of large corporations who make mistakes on a daily basis. That is what humans do. Employees, through naivete or over-zealousness, create problems. Without the mitigating force of the local, independent agent this industry would suffer.
Insurance agents hold themselves out as someone you can hold accountable. They try their level best to bring an ounce of sanity to the system which otherwise would fall to the level of all corporations, where everyone is a master at self-preservation by covering their heads and not making waves. That is why when you ask the average person who they’re insured with they will most often give you the name of their agent, not the company. The majority of people don’t know their insurance company’s name.
I favor independent agents because the big corporations have to at least try to please the agent, or the agent will simply move on to favor another market. The agents’ stock-in-trade is their relationship with their customers. Companies tap into this knowledge through agent advisory panels and daily communication. The companies are smart to realize the value of making agents happy, because that, in turn, usually is what makes their ultimate client happy.
Other Enhanced Insurance articles related to agents:
Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.
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