Industry the September 2022 issue

The Three-Legged Stool of Sustainable Industry Leadership

Q&A with Bryan Sanders, President, Markel Specialty
Sponsored by Markel Posted on September 1, 2022

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.

Q
You’ve said that sustainable success in our industry is based on a three-legged stool: people, products and technology. Let’s start with what you identify as the foundation of the stool: culture. Why is culture the foundation, and how is the stool built up from there?
A

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.

Q
What advice would you give to leaders looking to both maintain the strong foundation that they’ve built yet evolve in today’s global environment?
A
Whether it’s in our industry or any industry, I think that you need to stay true to whatever the core values of your organization are, maintain those core values, and make sure as best you can that the people in your organization reflect those values. And I think you have to be flexible. Never has there been a time like now in requiring that you need to truly be flexible.
Q
Let’s talk about technology. Might the continually evolving digital advancements and client expectations of the technology leg of the stool make it less stable and/or more difficult to keep up with?
A

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.

Q
Attracting and retaining talent in any industry today is a major challenge. What is your approach to people as it relates to that leg of the stool?
A

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.

Q
What’s different about your retention efforts?
A

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.

Q
Regarding the products leg of the stool, what are you seeing out there in the industry? What are the challenges?
A
I think having relevant products in the marketplace and properly priced products in the marketplace, for any carrier, it’s an absolute must. If we have products that aren’t relevant to our customers, that don’t meet their needs, then we probably shouldn’t have that product. We think about products in a couple of different ways. Certainly the products themselves, and the means that they meet, but we are organizing now more than ever around industry verticals. If you want to be relevant to your customers and your trading partners, then you really need to have teams that are dedicated with expertise and the proper products. Probably our largest industry vertical at this point is our construction vertical. We’ve recently launched a complex construction unit with underwriters throughout the country that are dedicated to solving some of the unique needs that are going on in the construction industry, particularly with the infrastructure bill. To have relevant products means you have to have the expertise to underwrite them.
Q
How are you preparing your clients when it comes to some of today’s increasingly complex specialty risks like agriculture or cyber or D&O or trade credit?
A
I think the first definition of a specialty insurer is to be a problem solver. And so, what’s top of mind for all of our teams is to make sure that we are solving problems. Every opportunity that comes through the door may not be solved. But we’re going to try our level best to provide an alternative. Being able to get terms and conditions in some of these lines is critically important. I’ll use cyber as an example. We are in the cyber market. We may not be in the cyber market in as large a way as some of our competitors, but we are in it to provide terms and conditions. And a lot of times, what we’re doing there is just providing additional capacity. And that capacity for certain risks in the marketplace is what they need. Not every risk that comes our way is insurable. But we certainly try to meet the needs as best we can.
Q
In your opinion, what is the industry’s biggest challenge today?
A
I think talent is always a challenge but I think for our industry, the biggest challenge facing us right now is probably inflation. Economic inflation and social inflation. Social inflation has been with us longer than the economic inflation. And I think that’s where we go back to culture—being consistent in the way that we approach things. We have a duty to be responsible to our associates, our shareholders, our customers, and it comes through in that consistency. Social inflation is real. And we all know that economic inflation is real right now. And so I think the key to managing through that is, the consistency in your core values.

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