Industry the Jan/Feb 2024 issue

Keith Schuler Is Leading with the Long Game

Q&A with Keith Schuler, CEO of InterWest Insurance Services and 2024 Council Board Chair
By Sandy Laycox Posted on January 24, 2024

We’re going back to 2008, which is when you became CEO of InterWest. It was also during the financial crisis. So tell us, what did you learn from that experience that you still rely on today?

I was asked to take over as president and CEO of InterWest July 1, 2008. That was almost just in the beginning of the downturn. Fortunately for me, InterWest had a lot of diversity in its book of business at that point in time: we were big in the construction area, big in the agri space, in financial institutions, sport and leisure, human services. So we had a pretty wide portfolio. And, at that point, construction just took a huge dive. Thankfully, other areas within the organization were a little more stable.

But make no mistake, there were some really trying times. I think one of the things that we did right was get the leadership in the organization together and set a strategy. Then we communicated that strategy down deep into the organization. We tried to eliminate the fear factor of everything that was going on so people were focused on development and continuing to try to find new opportunities and grow the business in a really difficult time, which we did. We set a strategy, we got buy-in, and then it was about ongoing communication and really trying to bring a lot of transparency into the organization. And transparency wasn’t a hot buzzword back in that time.

If I learned one thing—and we utilize it to this day—that was don’t exhaust a lot of time trying to make the wrong decision right. Acknowledge those decisions and then move on. We do not have the time for trying to right-size the wrong decision.

You’ve been with InterWest for a long time. In today’s workforce, should leaders be expecting that kind of longevity, or should they be thinking differently about recruiting and retaining talent?

I’ve been with InterWest going on almost 36 years. I always joke with people that I’m a tad institutionalized. It’s what I know. I’ve been there for a very long time. For the longest time, the insurance industry was about hire, train, develop, build wealth over time, transfer…with strategic acquisition. That’s alive and well today. That’s the long-term play. That’s InterWest. And you see other regional firms across the country that have that same platform. You also see it in some of our publicly traded national brokers that still have that same embodiment. I’d say over the last decade or so the entrance of venture capital money and private equity money has started down a different path, and that is to acquire critical mass and then make a turn. That’s a short-term play.

The long-term play has a heavy investment side. The returns come much further down the road. So really, it is what is your vision, what’s your strategy, how well and how effectively can you communicate it to people. Then you need to actually do what you say you’re going to do.

One of the things that happened with me back in 1988, when I went to work for InterWest, promises and commitments were made on both sides. Both were honored. I did what I was supposed to do, and InterWest treated me the way that they said that they would. That’s something that I continue to embody within our organization. Every decision we make is about a long-term strategy, and that feeds our vision.

Your home state of California is a common topic in the property market conversation. You and your firm experienced a horrific fire in your area in 2018. What was that like?

It was the Carr Fire, the Tubbs Fire and the Camp Fire—they all came about in a very short timeline. The fires were devastating in terms of the scope and the scale. They impacted the communities in which we had offices as well as employees. So not only did we have over 400 clients that experienced total losses, we had roughly about 16 employees who lost everything other than what they came to work with that day.

The thing about events like that is we had claimants knocking on our door while their homes were still on fire. Within 10 to 12 hours, we had people wanting to know what was to be done. What we told our claims folks was we don’t have answers but just listen, be compassionate, because there’s an emotional component that goes well beyond the insurance component that we had to deal with.

A lot of funds were set up through Butte County and other areas. We ended up canceling all of our holiday events and taking all the monies that were to be allocated towards parties and whatnot and created our own internal funding to not only help our staff but to give back to those communities in which we live and work. What was amazing to me is we had clients in other parts of the state that knew what was going on and were reaching out to us ask to how they could help. Just the outreach and the humanitarian side of people really shows up at times of crisis.

Of our staff that lived in the Paradise area that lost their homes, I believe that only three of the 16 have returned to Paradise. It was a complete and utter displacement of 25,000 people in a matter of about 24 hours. The town of Paradise, while it’s kind of rebounded lightly, will never, I don’t think in my lifetime, be even close to the same.

Do you feel there are things that the insurance industry can be doing that it isn’t? Or that the government can? Or some sort of combination to help with risk mitigation or risk transfer in a different way?

I don’t think it’s necessarily an insurance solution, because I don’t believe there’s enough money for it to be a pure insurance solution. I think it needs to be a combination of some mitigation and best practices. I think our legislative arm in California needs to work with the insurance industry to come up with creative solutions, which we’re not doing right now. I think there’s winds of change, but it needs to happen much faster. I use the example that some of the fires that transpired in California, 30 years ago would have just been open, burnt land. But today [with] urban sprawl, where development has gone up into these beautiful canyons and you have one-way egress and high-value homes that are built in these areas, those are now areas that are at high risk, and those are the areas that are very difficult for us to place traditional insurance.

You have a lot of factors at play, and best practices mitigation has to be a part of it. I know that there’s a lot of work being done throughout California. But a lot of it is being done from a private standpoint, not from a public standpoint, and people need to take some responsibility for the areas in which they live and work and make sure that we’re providing the best ability to fight or even try to prevent the fires from occurring.

I know there are some specialized groups that do things like work with local fire departments and try to get them in there, but it seems like it is very small-group based.

There’s a lack of consistency. It’s really predicated upon the individuals, whether it be individual homeowners associations or certain areas that need to take the lead on how to mitigate. They do need to work with the governmental agencies and the fire departments and [California Department of Forestry] to find the best ways to minimize the impact when fires occur, early detection, and best practices around prevention.

We have such urban sprawl; it’s a massive issue. There are reasons why we have markets that are putting things on hold in terms of their willingness to take on additional exposure. The tens of billions of dollars that we’re experiencing for losses in such a short vacuum—there’s not enough money in the system to recoup that. There needs to be a multiparty solution.

And urban sprawl comes up in another issue that that we’ve talked about with you, which is water, water management and water rights. California is one of the states where this is a big issue. Talk to us about that from your perspective.

The last time we talked, we were probably in the throes of would have been a three-year drought. And then we had one of the wettest winters. So feast or famine. But the demand on drawn water throughout California has to do with our agri community, which is huge. Our industrial and the manufacturing side—there’s a lot of use of water that people just don’t even recognize. Then you look at where the populace is, and the majority of it is in areas that don’t have water. The majority of the water comes from Northern California. We’re behind in terms of storage facilities. There’s the re-advent of the Sites Reservoir, which should have been built 30-plus years ago. It was part of a multi-reservoir project. The water is really inconsistent in terms of how we get it.

I think that there just needs to be a much more concerted effort on how we use the water and not just from a domestic use standpoint but all across the board.

Thinking about the industry as a whole, what do you think needs to be addressed? First short term, one to two years, and then in the long term, what are we looking at for real sustainability in whatever area of insurance you see the need.

I think the industry does an amazing job branding within itself. I don’t necessarily believe that we brand our industry very well externally. We’re in an aging industry. One of my passions, and one of InterWest’s passions, is to get younger. It takes a concerted, long view. I think the industry needs to find newer ways to attract young talent to what is a global business. There are so many different ways you can go and build your career within it. But it does not have the curb appeal that it should have. Almost everybody, including myself, once they get into the industry and they’re here for two to three years, wishes that they’d come to it sooner. I think that, if we don’t take a concerted effort to draw upon good young talent early, we’ll always fight an uphill battle getting talent within the industry. When we talk about DE&I at InterWest, we’re looking for diversity of experience and diversity of thought beyond just the standard. In order to get that, we need younger people that have got different backgrounds that want to be a part of the business. I don’t think this is just a one- or two-year issue. This is a one to two, five to 10, 10 to 15 year issue because the industry is not going away, the opportunities are immense.

We are in year eight of our internship program, and we receive applications from all over the United States for our program that’s based out of California. We’re hiring at least 50% of our interns on an annualized basis. A number of them are ending up in the insurance industry with our carriers or vendors. I meet with our internship group every year. I want to know about their background, but I want to know why they applied for the internship program at InterWest. Also what have they learned or what has surprised them about it. It’s interesting the answers you get. The most consistent one is that they had no idea what InterWest really did, what the industry was about. Our internship program is very hands-on: they do a lot of different things, experience everything that we do as an organization. I think the breadth and scope of what we do is what catches them off guard. I would say that probably 80, 90% of them want to stay with InterWest or want to stay within the industry once they’ve come through that program. That to me is just a small example of how we need to really broaden the way we look and approach and where we look for new talent.

There’s really no shortage of learning if young interns are excited about discovering the breadth of what you’re doing.

You’re absolutely right. Closing in on 40 years in the business, I’m experiencing new things constantly. It’s what continues to keep me energized as a part of our organization, as well as being involved with The Council, which has just been tremendously impactful for our organization.

I preach loud and clear that I don’t care where the next great idea comes from—I just want to know about it. From there, where do we go with that? I think that’s a big part of diversity, those new ideas and those new thoughts. That, to me, is where I grab inspiration.

As board chair, you’re just starting your tenure. Is there anything specific that you’re focused on?

First, let me say that even to be considered as board chair for The Council was quite an honor. I look at the people I’ve watched over the last four to five years serve in this role, and I’m always amazed at the vision and thoughtfulness that they have. So my goal is to continue that. The Council is very widely known for some of its deep pillars, the advocacy and the strategic meetings that it holds. But I look at the breadth of its offerings and how it’s changed over the last 10 years. I watched the development of our academy and the alignment with universities relative to insurance-related degrees and promoting the business, the working groups and the depth and the knowledge that you can gain from those.

Then I look at the membership as a whole. If I could have a magic wand and change one thing, it would be driving the resources and tools and deliverables that The Council brings deeper into its membership. InterWest is a high-utilization organization of everything The Council does, and we’re far better for it. So I would like to try and help drive the message deeper into its membership, because the level and the quality of the programs and the knowledge base that resides at The Council can help any firm regardless of the scale that they have.

Besides insurance, what are you passionate about?

OK, this is gonna sound really cliché, but my wife Chelle is my best friend. We share an immense passion for the outdoors. We helicopter ski, we backcountry ski, we hike, we backpack, we spend time on our boat in the summertime, just being outdoors and engaging with friends and family. All of our children have followed those footsteps; they love the outdoors.

So my passion really resides around getting in areas that are quiet and being with people that I enjoy time with. That defines me. What I tell people is that InterWest and the insurance industry don’t define who Keith Schuler is. That’s not who and what I am. It’s what I do. But it’s the passion around the other things that the insurance industry has afforded me to do. Maybe it’s kind of goofy in terms of what are my passions, but that’s it. I am not a very complicated individual. I grew up in rural California. I like to keep it simple. At the same time, I think I have some vision on what InterWest could and should be, and if we stick to that moral fabric, that’s a big part of who and what I am.

Sandy Laycox Editor in Chief Read More

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