Earlier this year, Risk & Insurance editor-in-chief Dan Reynolds connected with Mike Karmilowicz, the president and CEO of Everest Insurance.
What follows is an edited version of the transcript of that conversation.Advertisement
Risk & Insurance: Congratulations on the promotion. What’s exciting to you right now as you take on this role and look ahead to the future?
Mike Karmilowicz: I’ve been at Everest for about five and a half years. As part of that experience, we really focused on a couple things.
Besides having a 27-year history in the insurance side, we actually really started investing about six years ago. We hired more than 900 people across the globe on the insurance side and really built out our capabilities. So we have now a deep set of 150 specialty products, all geographies, all over the world, with capabilities from Bermuda to Ireland to Lloyd’s. You name it, we can touch it and do anything for new statutory companies.
So as we’ve progressed — we’ve been one of the fastest growing, specially diversified companies over the last few years — that comes with a lot of rigor as well as making sure we’re driving the right things. But what I’m excited about is that we’ve built an incredible franchise on top of a really strong balance sheet and a company that is well-known, particularly on the reinsurance side.
We took advantage of an untapped platform to drive opportunities. So we feel like we put ourselves in a great position, with plenty of capital to deploy, a wide swath of products and really being able to operate off our front foot.
Where we differentiate from a lot of our peers is we’re very flat. We focus on speed to market and solving problems. I think as part of that, we’ve hired and established some really strong talent. If you think back to all the consolidation that was happening in the industry, whether it was Chubb and ACE, whether it was some of the things happening with just the dislocation with AIG and the problems other large insurance companies, we were the beneficiaries of some really strong talent movement.
When these operators come to a platform like this, we’re able to execute and drive. We don’t have a lot of the legacy or impediments that some of our peers do. So with the market dislocation that’s happening, this gives us a great opportunity to really drive our distribution and our relationships, solve problems for customers and do things that quite frankly, a lot of people can’t do.
We can do it anywhere globally, because we can move very, very fast.
That agility gives us the ability to solve problems anywhere in the world. We have a lot of lines that we can do that with and do it pretty quickly. So we’re excited about what’s happening in the market, just because there’s so much dislocation, but we’re also actually just really excited about things that are coming up and evolving for us.
R&I: Growth like that is always exciting. I’m sure as a leader, it’s got its challenges, and I’m not going to assume that’s your top challenge. But, if you think about that side of things, what are some of your key challenges?
MK: If you look back at the last year, with the pandemic and a historic winter storm, you see just some of the challenges we’re facing.
Risk is evolving quickly, so the challenge is not simply keeping pace to make sure you can meet the customer’s demands, but really thinking through how this applies to your business, how it will impact your ability to solve some of these problems.
Some of this we’re learning as we go. I think the hard part of that is, how do you continue to adapt? How do you continue to evolve? From the challenges I’ve seen, I’ve never seen risk moving at such a rate.
As a result of that, we are constantly having conversations. What does this mean for our modeling? What does this mean to how we actually connect? We look at some of our products and ask how do they apply to the real needs of the customer and can they adapt to solve the customer’s problems?
“I think the federal government and particularly the states need to think hard about how they’re trying to get people back on their feet. The second thing I’d say to you is I’m encouraged by the new administration around climate change awareness. Climate change is a very big deal.” — Mike Karmilowicz, president and CEO, Everest Insurance
I think that’s a continuation for the industry. It’s not just us.
But those are the things that we really struggle with at times, to say, “Man, this is moving so quickly. Are we thinking ahead enough to do this? Or are we reacting to it?” That’s going to be determined as we go, but I think that pace of risk evolution is the number one challenge for us as an industry.
R&I: It sounds like you’re happy about your talent acquisition, some of the people you brought on board, are there two or three people you’d point to and say, “Wow, I’m so glad we hired that person.”
MK: We want to empower people and want to get people that can drive change and solve problems.
As I mentioned, we offer more than 150 specialty products. There are quite a number of people who we rely on to do that. The reason I don’t want to be too specific is because there are so many good people in our group that I don’t think it’s fair to point to one or the other.
Talent is our oxygen. It’s the thing that differentiates us in the marketplace. We look at each of our folks with the skillsets they have, because good people bring in good people, and for us, we want to create environment that not just empowers, but also gives them the ability to drive the things that they need to do.
R&I: Without giving away your secret sauce, and we’re not asking you to give it away, but do you have a philosophy around talent acquisition and how you evaluate talent?
MK: We pride ourselves on our culture. We developed a very specific culture, and it wasn’t something that we just made up overnight.
We brought together our leadership team and thought really hard about it. Then we got feedback from all of our employees. And that to us is something that we pride ourselves on.
Our culture is not for everybody, but for those it is, it really connects and drives what we do.
So one thing we do very, very well is around humility, execution and collaboration. Those are the things that we have to actually think about every day and live by every day. As we build that talent out, that’s the first and foremost thing we focus on. Then the rest of it’s about finding the talent and expertise that comes with it, but that’s the one thing that’s our litmus test, so to speak.
R&I: We appreciate that response. Do you think the situation with talent in insurance as dire as some would describe it?
MK: I don’t think we do a good job as an industry in explaining to people what we do. It’s a complicated business. Everybody thinks I’m a personal lines insurance person. I always struggle with it at parties to say, “Hey, no, I don’t know what that means on the auto.”
But when I think about us as an industry, we’ve started to make inroads. But I have to be honest with you, we clearly have lacked a lot of focus on what we’ve done and how we’ve done it.
As an example of that, I think about diversity, equity and inclusion, and that’s one area that has come to mind for us. It’s certainly a focus of ours. We have a council. We’ve actually pinpointed specific projects to make sure we evolve better. And it’s certainly core to us of what we’re trying to drive around the organization.
But I think in the industry as a whole, you’re going to see that start to play out. It’s actually hurt us, because I don’t think we cast the net wide enough in how we connect with schools and how we actually promote ourselves as an industry.
“Talent is our oxygen. It’s the thing that differentiates us in the marketplace. We look at each of our folks with the skillsets they have, because good people bring in good people, and for us, we want to create environment that not just empowers, but gives them the ability to drive the things that they need to do.” — Mike Karmilowicz, president and CEO, Everest Insurance
From our perspective, we’ve got a lot of work to do, but we’ve taken a lot of great steps, a lot of great programs, and we’re very actually excited about the opportunity to continue to build out a very diversified workforce.
R&I: Mike, you mentioned the pace of change is just dizzying for what’s going on for underwriters. The hope in a lot of quarters is that technology really is going to help here. How do you view technology’s role in your company, how you’re using it?
MK: I think technology is an opportunity that can have a positive impact on us, particularly in the commercial space.
It’s changed the way we underwrite. It’s changed the way we think about exposure.
We certainly think that there’s a whole bunch of things that can help us mitigate not just the problems for our customers and trading partners, but it’s certainly an opportunity for us to drive outcomes faster.
With data and analytics, we invest in a lot of different platforms. I personally think digitization, because of what’s happened with the pandemic, is going to have a huge impact at a much more accelerated pace over the next five years than we ever even thought.
It certainly has been moving, but honestly, I think you’ll see that pace, not just for our industry, but across the board, pick up dramatically. So the transformation for Everest and for the industry is going to be paramount if you’re going to be a player in the going forward marketplace.
R&I: As you’re watching your business and you’re watching your producers, where is the need? Where are the risks that are really, for lack of better word, frightening your customers or getting their attention?
MK: Without a doubt, cyber is front and center right now. With the work-from-home environment, ransomware claims are up dramatically on top of what cyber was already having from a frequency perspective across a whole spectrum of different risks. But we hear it every day.Advertisement
That market, to be honest, is going through a massive transformation, and just like the rest of the accelerating pace of rate that’s happening in property and management liability, cyber’s one that’s always been a concern, just because of the potential exposure and the potential significance of what it could create for companies.
I see cyber as first and foremost, probably on everybody’s mind. You’ve heard it talked about so many times for so many years. I think it’s become more real, and I think it’s going to get a lot more problematic, particularly if you’re not out in front of it. The SolarWinds incident is an example of what’s happening with the ransomware attacks, to what’s potentially out there. The coverage may be there in this case, but the industry doesn’t have the ability to cover a number of catastrophic events.
I think there’s going to have to be a public/private connectivity to that. There needs to be more thought around how this ultimately — if there is a situation that occurs — that we can actually respond to make sure that we can do what’s necessary to keep things moving forward.
R&I: It seems like four or five years ago there was a pretty robust coverage appetite. There was a lot of talk about, “Oh my gosh, we’re willing to put the capital down. We’re interested.” And now people are saying, “Whoa, the losses are really, really coming.”
MK: You’re seeing a lot of people pull back. You’ve seen the headlines. It’s been written about. I think you’re going to see more of that.
The industry has an abundance of capital, but if you think of the totality of some of the different scenarios that have been put out there, it’s a significant risk. Not just for governments and companies; it’s a really wide net that’s really difficult to capture and understand that totality.
R&I: You mentioned the public-private connection or partnership. As we know, insurance, in many cases, is legislated or regulated on a state-by-state basis. There seems to be a lack of coordination nationally in regulating the industry. How do you view that? If you could make the call, what would you say to regulators? What would you have them do?
MK: I’d look at it two ways. I’d say what’s in front of us today would be really about trying to implement some stimulus to get some of these small businesses and industries that have been heavily impacted by the pandemic. I think that’s absolutely necessary and there needs to be certain guidelines put out there to create and actually inject opportunity for people to get back on their feet.
So from our perspective, how do you figure out a way to partner or do things that we can do to help facilitate that? When the pandemic first hit, we have a lot of different businesses and small accounts that were hugely impacted.
I think the federal government and particularly the states need to think hard about how they’re trying to get people back on their feet. The second thing I’d say to you is, I’m encouraged by the new administration around climate change awareness. Climate change is a very big deal.
I think that’s something we have to invest heavily on and think more about. The U.S. getting back involved with the Paris Accord is something I think has to be front and center, because, clearly, just look at the storm activity in the last five years and what’s happening. It’s a problem and it needs to have some focused attention and support to figure out how to best help out when we can and drive the change that’s necessary.
R&I: Looking back on your career with The Hartford and other places that you’ve worked, were there people or events or circumstances you feel really helped you move forward?
MK: I was very fortunate. I started at Reliance National, which will date myself. I think it’s one of the only insurance companies to go insolvent, but it wasn’t because of us. I started Imagine Liability for a guy who now is involved with general liability at AIG. He was a big influence on me in teaching me the basics of a lot of things. He wouldn’t want his name published, I can tell you that.
“We always say, collaboration is not something that happens to you, you have to go out and do it.” — Mike Karmilowicz, president and CEO, Everest Insurance
The things that were important to me were one, getting the right mentor and people around me who give me the right basic understanding of how to think about things and how to think about solving problems and more evolving in the industry and really giving back to the industry as well as what it’s given me. And the second part is about just actually getting involved and trying to do different things.
I was fortunate enough to get involved in different projects and also different portfolios and different lines of business throughout my career through different companies, not just domestically, but internationally. I think the more exposure you get and the more opportunity to give you a different view and perspective really help to build different opinions.
I guess the short of it would be, the more I learned the less I know, because there’s just so much to learn. I just felt like the opportunity, I always tried different things and experimented to do that, gave me a lot of wisdom of things to think about.
R&I: We noticed there’s the management liability background, which is deep. You also worked with nonprofits, I believe?
MK: Nonprofits for sure. I worked in professional lines, and I worked on credit lines. I’ve worked in transactional risk. I feel like I’ve tried a lot of things, but mostly around specialty lines outside your traditional P&C.Advertisement
But the one thing that’s always great, is particularly at Everest, we really get a lot of exposure to a lot of different teams and experience of being connected on the leadership team. What that does for us is it gives us views and helps us stay aligned on how we drive things, not just for the customers overall but it also gives us a lot of experience and expertise in the things we normally wouldn’t get.
We try not to have all these fiefdoms; we want to be connected and be able to pivot and move and solve. So that’s turned to our advantage, and we’ve been using that through our distribution to really drive bigger solutions for our customers and just more operating on a silo-type approach.
R&I: That’s got to be a significant area of focus for you as a leader. If you’re bringing on talent, you’ve got operations across the globe, how do you keep everybody talking to everybody? Because fiefdoms, they do develop. It’s just human nature, right?
MK: It is. You knock those silos down and you connect people by making sure they understand what the priorities are and how to stay connected.
And again, that’s all about collaboration.
Like I mentioned, that’s part of our DNA. What we really try to do is make sure that that communication happens at a regular frequency. Because we always say, collaboration is not something that happens to you, you have to go out and do it.
And so for us, we really take pride in making sure we stay connected. That is a hard thing to do. We push it very hard around communication. We talk about communication and measurement and we talk about execution. Those are the three things that are paramount to our success, because we have to relentlessly go after all of them every day.
It’s an all-the-time thing, not a sometime thing.
R&I: Any last thoughts Mike?
MK: Just one last thing: I think digitization is one area that’s going to pick up with a lot of pace. I think people are currently underwhelmed by it, but soon they’ll be overwhelmed by it.
Source: Risk & Insurance
