The CEO Challenge: The Future and a Look Back

By Dennis B. Sullivan

It has been more than 15 years since the Interpreter first began interviewing insurance company CEOs. What started out as an idea in the late 1980s to bring a fresh perspective to the magazine has continued to supply unique and timely insights from corner offices all over the industry. I’ve had the pleasure of interviewing CEOs of insurance companies large and small in order to provide readers with an insider’s look into the vision and strategies used by senior executives. Through the Interpreter’s “Executive Corner” feature, our readers have learned how each CEO navigates the turbulent waters of the financial services industry – which includes insurance companies, banks, investment houses and the burgeoning healthcare sector.

The financial services industry has gone through significant change and hardship in the last two decades. In the late ‘80s and early ‘90s, brisk merger and acquisition activity and devastating hurricanes taxed the ability of insurers to provide relief and timely service to policy holders. CEOs from some financial giants fell hard under scandal, misused funds or focused on things other than their core business. Enron-like mismanagement led to CEOs becoming punch lines for late-night television hosts. The integration of banking and insurance resulted in top-level executives moving between industries. Most recently, the meltdown of the financial services environment has caused all of us to take pause.

Finding the right men and women to lead the way in stabilizing the industry can be difficult. However, the driven, successful and impactful individuals coming into the insurance industry far outnumber the few bad apples that will always be there. It has been heartening to observe that, in the insurance industry, the talent seems to rise to the top.

Whatever their industry backgrounds, new CEOs face additional challenges, and they bring fresh energy to meet those challenges head-on. Having gone back through past interviews the Interpreter has shared with readers, it is clear that the newest generation of insurance CEOs possess some of the same traits and skills of their predecessors. They have a personal commitment to the success of their organizations, a dedication to the development of their employees and openness to change. Core values such as employee participation, customer involvement, a focus on financial stability and focused leadership still are keys to success. I’ve spent much of my career in the financial services sector, and I continue to be impressed with the caliber of people leading today’s organizations.

A few years ago, the Harvard Business Review dedicated an issue to “The Tests of a Leader.”  It talked about how success means being in for the long haul — a CEO’s so-called second act. Many come in with a bang but slow down, and, after all the fanfare, things stay the same. There also is discussion about the attribute of courage and how real leaders must be able to make difficult decisions about personnel, technology and new products in the midst of business crises.

Chief Executive recently featured an article about how leaders in the U.S. Army - arguably the most complex organization in the free world - are dealing with change. Army Chief of Staff General George W. Casey discussed what it takes to modernize a 1.1 million-person organization and implement change. When asked what single experience proved to be his toughest leadership challenge, General Casey said “trying to organize and develop three Iraqi governments in a two-year period.” He did this while fighting an insurgency and coordinating with a growing Iraqi security force. What he learned is there are many ways to do one thing, it is important to listen to input from many sources, and, in the end, you must have the courage to implement the plan.

“Listen” and “courage” are two words that come up often when CEOs talk about their job and the ingredients of success. Winston Churchill once said, “Courage is being able to stand up and speak, but it is also knowing when to sit down and listen.” Great leaders know how to draw from personal experience and are confident enough to evaluate input that might help fine-tune the plan of action. Having the resolve to make the call ultimately falls on CEOs; they need to be decisive.

Through the interviews published in the Interpreter, I found that certain markers on the road to success don’t change for CEOs. There isn’t a single game plan to follow, nor is there a silver bullet or effective consulting/business theory that is going to solve all problems. Rather, it is CEOs’ commitments to their employees, policy-owners and stockholders that separates them from the rest and makes them a defining force in their companies. Consistently, the best CEOs in our industry have been extraordinary men and women with a vision of how to compete in the future, the enthusiasm to stay engaged with employees and customers and an appetite for innovation - especially in technology. Being CEO is often a thankless job. It amazes me how these same themes always are addressed by CEOs in interviews with the Interpreter.

In 2003, Unum CEO Tom Watjen talked about having his employees “more closely aligned with the marketplace to listen for opportunities to improve service and provide greater value to customers.” His idea of staying close to the marketplace was to better understand what customers were seeking and how Unum could meet that need. He also discussed the need to “better manage expenses and to be able to leverage technology.” These concepts still are critical and continue to require focus.

Watjen also discussed Unum’s desire to address rising medical costs through innovation and streamlining as a way of keeping premiums down for disability products. This topic continues to challenge us in the healthcare environment. Building the technical capabilities of the staff was a priority as Unum sought to develop a workforce consisting of competitive, talented employees. Watjen is still CEO at Unum today.

In our article featuring Heidi Hutter, president and CEO of Swiss Reinsurance America, she honed in on two important leadership skills: communication and managing change. Hutter was a newcomer to an old organization and culture. Company rumors ran rampant and misinformation often was circulated, so she instituted a session called “Rumors and Truths.” A small team of direct reports and front-line managers compiled a list of all the known business rumors, such as organization changes, people changes and competition, circulating around the office. She reviewed the list, sorted the fact from the fiction and published the results. She also asked employees to keep the dialogue alive and to speak up about other rumors that might need clarification. This effort became a regular forum, and slowly but surely, people’s questions got answered, the rumor mill subsided and the communication channels were opened.

Ben Cutler, former CEO at Fortis Health, stressed his constant challenge to make Fortis “a fun place to work.” Although this interview took place back in 1998, his comments are timely today. Finding solutions that allow employees to balance work and home still can be found at the top of every HR director’s to-do list. Telecommuting is no longer a hot topic for business articles; for many companies, it has become a way of life. In a recent discussion with a Nationwide Financial executive, we learned that a third of his underwriters worked from home and the approach was spreading to other parts of the organization. The work-at-home concept is no longer a case study. It is a reality driven by the need to secure the best talent, not be limited by geography and one made possible by advances in technology.

In early interviews, we often asked CEOs to look into the future and project out five years. Some of their views described a different world, and some of those predictions have materialized. A common theme then was expense management, and it continues to be on top of every CEO’s mind. Expense management revolves around getting better, leveraging new technology and getting smarter about delivering value to the customer. Our very first interview was with Lon Smith, president and COO of Hartford Life Insurance, in 1994. Discussing the economics of the business, he said, “This is going to be a much leaner industry in the future, and the costs of delivery and processing are going to become competitive differentiators that are very important.”

What new challenges will be faced by our next generation of CEOs?  Will changes resulting from the political involvement in healthcare reform require new products and new delivery systems? There certainly will be change!  Will new technologies help us to better provide care and support to policyowners suffering after the next catastrophic event? The answers to these questions and many more will be answered by the next generation of leaders. These CEOs may come from different industries and different backgrounds, but they will possess leadership ability, communication skills and the innovative and creative talents to shape the future.

We will rely on these new men and women to lead us through challenging, turbulent business environments so that we can improve and rebuild the trust and confidence needed in today’s financial services organizations. Please stay tuned as the Interpreter continues to bring you the thoughts and insights of new, innovative and exciting insurance CEOs.

Dennis B. Sullivan is the CEO of The Robert E. Nolan Company and a long-standing member of IASA’s Interpreter Committee.  He can be reached via email at dennis_sullivan@renolan.com.