A Formula for Success in the Insurance Industry
Greg Hendrick, Chief Executive of XL Group’s Insurance Operations, was the Keynote Speaker at a recent Advisen’s 2013 State of the P-C Job Market Conference, sponsored by St. John’s University School of Risk Management (SRM). Greg discussed three specific skills that he thinks are critical to success in the insurance business.
- Ability to understand, analyze and utilize data
- Exceptional communications skills
- Global perspective on people and businesses
Hindsight, Insight and Foresight
Predicting the future or, more accurately, future scenarios is critical to underwriters, actuaries and senior insurance executives. “At XL, we collect considerable amounts of data. When this data is properly structured, we can build predictive models to help us identify patterns, trends and future scenarios more accurately. Today, we can draw on large datasets, ample modeling and IT resources. In addition, we have third-party data and modeling resources available that allow us to compete more effectively.”
Modeling and predictive analytics allows insurance carriers to make data-driven decisions consistently across the company. “Instead of relying solely on an underwriter’s intuition or judgment to assess risk, we can use evidence-based decision-making. Underwriters and actuaries in particular thrive when they have reliable information to aid their expertise. In addition, the more accurate the models become, underwriters and actuaries can outperform the traditional decision-making techniques. In the end, predicting future performance increases profits and analytics helps us know what we insure. We’re using hindsight, insight and foresight to help us make decisions that lead to better risk selection, pricing and claims handling. By using Big Data, we can assert more control over our portfolio’s performance and gain a competitive advantage. ”
In insurance it’s still who you know
While data is important, Greg says that the insurance business itself is “still a personal business. You need to have the ability to pick up the phone and communicate with your clients or brokers. One of the most important skills an insurance executive must have is the ability to communicate clearly and concisely about the reasons why certain risks are priced as they are.”
One of Greg’s concerns is that the underwriter or actuary of 2038 might spend more time on data analytics and less time talking to clients, customers and brokers. “Many of the younger executives coming into the insurance business today are extremely comfortable with data and analytics. They are used to communicating via text messages and aren’t as comfortable with face-to-face communications. If you can’t explain how you made the decision you made, you won’t be able to convince a client or broker to follow you. A text message isn’t sufficient. Often an email isn’t enough – and if the email is filled with errors – typing, grammatical, etc. – you’ve lost the sale. We all need to become better writers and better communicators.”
Global perspective and cultural sensitivity
The world has become a smaller place. Daily, we receive news bulletins, emails and phone calls about what is happening in Asia, South America and Africa. The workforce itself is much more diverse. “When I first entered the insurance business, it was a fairly homogeneous place to work. Everyone looked like me. Today, I’m proud to say that 40% of the executive team at XL consists of women. My next goal is to encourage more racial diversity in the company. XL is a global company. It is important for all of us to be culturally sensitive and to bring a global perspective to what we do.”
Portrait of an Underwriter in 2038
At the conclusion of his remarks, a student at SRM asked Greg to describe what he thinks the insurance business will look like in 25 years.
Greg thought the business would be much more data driven than it is today. “The Harvard Business Review recently cited ‘data scientist’ as the sexiest job of the future. I think underwriting in particular will change dramatically. Underwriters will need to understand, analyze and utilize data in real-time. They will also need collaborative skills and demonstrate the ability to work across cultures and around the world. Instead of underwriting a single line of business, underwriters will be looking at portfolios of products, services.”
Hiring the best
Mike McGavick, CEO of XL Group, says that XL’s goal at XL is to hire the best. Over time, that will result in more and more change in our employee base. Greg concurs, “We want XL to be known as an organization that flourishes because of the talent of its employees. Talent, plus our ability to harness technology, data and analytics helps us provide our clients with solutions to the challenges facing them. The bottom line? We want the face of XL to represent that of the peoples of the world.”
Greg’s formula for success in the insurance business is simple. Talent plus the combined resources of data and analytics results in consistent and effective performance long-term.