Current leadership issues reviewed during Mid-Year Panel

More than 175 people attended the special Mid-Year Executive Session panel discussion featuring top leaders of the industry and an industry consultant examine leadership issues and challenges facing the industry during the special program at the 2010 NAPSLO Mid-Year Leadership Forum in Scottsdale in early March.

The moderator of the program was Stephen Harvill, President, Creative Ventures and the panelists were Neal Abernathy, President & CEO, Swett & Crawford; E.G. Lassiter, Chairman & CEO, RSUI Group; Matt Power, Executive Vice President, Lexington Insurance Company; and John Latham, President, Southeast Region, Markel Corporation.

Each panel member discussed their experiences with challenges in the workplace and Stephen Harvill gave an overall view of trends in the world today. Mr. Abernathy touched on two areas: how to utilize technology and make the changes in business without disenfranchising the prior generation, and his thoughts on younger people coming along in the industry.

“Today we are paperless, files are stored in a computer, Fedex has been replaced by the Internet. Face to face has gone to video conferencing. Our challenge is how do we use that technology to make sure we maximize the opportunities for us as a business,” said Abernathy.

He also discussed that a whole new group of younger people is coming into the business.  “They have less social skills than the older generation. Texting and e-mailing are not communicating,” said Abernathy.  He expressed that when the younger generation comes into the business environment, they are not going to know how to get along socially. Abernathy said the younger generation needs to learn empathy and be better informed. “You have to be rounded, know what’s going on in the industry, business and the world in general to be effective,” he said.

Mr. Lassiter explained the challenges his company is dealing with a highly professional customer base. “Wholesalers work at a fast pace. We have to be prepared to work at a high rate of speed and so do our customers, that makes us collectively more effective,” he said.  “Market cycles pressure these returns and the ROE and it challenges our capital deployment.  Another thing that pressures us is the standard for developing leverage was 3 to 1 premium. If we did that today, the rating agencies would just downgrade us. As a result of declining premium, we have expanding expense ratios, which are managed through attrition,” he said.  Mr. Lassiter also said that one of the weaknesses is that retailers test the market by using “your time and our time” and if employees aren’t qualifying the accounts, then everyone loses.

Mr. Latham touched on the fact that their company decided to be more serious about what they were doing internally to strategize for the future.  “We felt we had to position ourselves for the future. We needed to better serve our agents by being closer to them and providing broader access,” said Latham. He explained they set out major strategic objectives including having the ability to interact with more readily, provide access to more of our products, and the need to gain some efficiency.   “Finally, one of the key strategic goals at Markel has always been underwriting profitability. We began to recognize a company that isn’t growing wasn’t going to revitalize itself.  Culturally we had to change our way of thinking.  At a time following record profits, we were willing to examine ourselves and set about to reinvent Markel. At my age, change is not a lot of fun, but it is exciting,” said Latham.

Mr. Power discussed innovation and specialization.  Power says that one mistake made is tending to think of the industry in terms of historic market cycles. “We are really at this point in the industry where change ultimately has to come. Innovation is more than a hobby, it’s absolutely core to our earning income stream,” said Power.  He said it is important to have a process by which you create a sustainable competitive advantage through product innovation. He recommends looking at trends to understand how changes on the horizon are going to affect your constituents. “How you build your business and how you compete is something you should think about every day,” he said.

Mr. Harvill discussed 2010 trends in a shrinking world.  “Standard thinking is one of the great strengths and weaknesses of business communities.  By expanding the way you see things, you frame it differently.  The danger of consistently looking in the same frame all the time,” said Harvill.

Harvill noted that in today’s world, two billion emails are sent each day and employees will spend 10 years of their working life on e-mail. He also noted that teenagers primarily use texting as a means of communicating.    The world wide web gets 120 billion clicks per day, 65 trillion links are accessed per day and 3 million e-mails per second are sent.

There are three trends in the industry he discussed, including connections, leverage of knowledge and the client experience.  “The new truth is that it’s a constantly connected world. Leaders do three things, they identify current reality, need to know where you are. You need to know where you are going and how are you going to get there,” said Harvill.

“We are dying in a sea of complexity, don’t let it catch you. The world is much bigger than the insurance industry. These ideas are in play right now and are valid in companies around the planet. You have two choices. You can get on board or you can not. So let me recommend something as the world spins fast by you. Get on board,” said Harvill.