The Three-Legged Stool of Sustainable Industry Leadership
Today, the average lifespan of a company on Standard and Poor’s 500 Index is just over 21 years.
In 1965, it was 32 years. Now, more than ever, long-term viability as a company demands sustainable industry leadership. Leader’s Edge caught up with Sanders to discuss the three things he believes combine to ensure long-term success in the insurance industry.
At Markel, we have a pretty ambitious aspiration and that is to be the leading global specialty insurer. And to achieve a goal like that, it’s critical that your people are inspired. Our creed, what we call the Markel Style, was penned in 1986 and really forms the basis of our culture.
I can say firsthand that we rarely make any major decision without checking with each other and asking if it’s in keeping with the Markel Style. When the vision aligns, we move forward. Other times, we have to go back to the drawing board. Our people, products and technology are the three legs of the stool which grow from that culture and form the basis for everything we do.
It’s an accurate statement—I don’t know that we ever catch up to it. But we’re certainly invested in it. Technology and digitization are about two things, really—optimizing our efficiency for our customers and our trading partners, and growing our business.
Some of the digital approach that we have is client-facing, and that’s where we grow our business as a multi-distribution platform. Some of our technologies are focused on the insurtech sector, some of those are with trading partners, some of those are direct. We do a lot of business in the small commercial space, and digital technology, including API and portals, accounts for somewhere between 15% and 20% of our total premiums in this space. We’re excited about that, because that number was much lower five and 10 years ago.
As far as optimizing our efficiency, in a lot of instances when you’re a specialty insurer, speed is the key. And, many times for us, the sooner that we can offer terms and conditions and the sooner we can quote an opportunity that comes our way, we feel we are better suited to actually find that opportunity and get another customer as a result. And so, the efficiency on the front end of us getting those quotes to our trading partners or to our customers as quickly as we can, is critical. We really emphasize speed and service to our clients as best we can. So technology to the extent that it can move through our channels internally, and optimize those channels, is really a big key to our business.
Finding the right people, great people, is a challenge for every organization and frankly, in every industry. We’ve been talking about the talent gap for quite a few years. I think the pandemic really exacerbated it. And, let’s face it, insurance is a people-driven business. It’s hard to have a culture without people in it and it’s hard to have great relationships without the people.
At a time when the market had turned and there were a lot of needs in the marketplace, making sure that we had the best talent on board was essential to us. We have these profitable growth goals and so we really put an emphasis at first on recruiting talent, but equally on retaining talent. Because there’s been a lot of competition; it’s often referred to as the “war for talent.” And I can tell you that that’s real. You can add a lot of people but if you don’t retain them then you’re really just spinning your wheels.
We started an unofficial motto, “ABR” – Always Be Recruiting. And what that says to everybody is it’s all of our responsibilities to find individuals that will serve in the functions that we have available, that meet the Markel Style, that are talented individuals that will help us reach our goals. We work to create opportunities once someone is with us to further their own education through self-led training, training courses led by our staff, training courses led by underwriters. In 2021, we hired over 1,000 people, and we’re on pace this year to hire a similar number. We couldn’t be more pleased with the results that we’ve had thus far.
One of the things that has really helped us in the changing marketplace is a training program for our associates and underwriters that we launched a few years ago focused on what it’s like selling, underwriting and producing in a hard market versus a soft market. In a soft market so much is based on relationships and getting that last look at an opportunity; in a hard market it’s really about a flight to quality and a flight to solutions for really challenging problems during a tough time. We didn’t know it would have been as opportunistic as it turned out to be because I think we’re heading into what might be the most difficult of markets—a transitioning market. I think the industry has seen some moderation in rate increases, some moderation in terms and conditions. And transitioning out of a hard market may be the most challenging because you’re kind of one leg in and one leg out. And so we’ve now started training our underwriters again in things to be aware of and how to negotiate through that transitioning market.