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Transcript

Excellence in Product Development

Welcome to the Insurance Leadership Podcast, the podcast designed to bring you perspectives and principles from leaders in the life and health insurance industry. We trust you will enjoy today's episode.

Ryan Eaton: Welcome back to the Insurance Leadership Podcast, today and over the next few months, we're going to be bringing you some of the best speakers in the insurance industry. We are down here at the annual ICMG conference, and we're going to be hitting on topics with key leaders about distribution, about leadership, about product development. And these are going to be episodes you do not want to miss. On today's episode we have Marc Flood and Bryan Krul here to help speak about product development with an insurance company. What goes into it? What's due diligence look like? What's the expectations look like, and how you take a product to market. So with that, let's go ahead and jump straight into today's episode.

Guys, thank y'all for being here today, I know ICMG, 2024 Miami, Florida. We've got a thousand meetings over the next few days, some golf, dinners, breakfasts, lunches, everything so thank y'all first of all, for taking some time. 

Guests: Thanks for having us.

Ryan Eaton: That's it, look Mark, once you get started, give us a little overview. What brought you into the industry? How long you've been in the industry and all that good information.

Marc Flood: Sure. So Marc Flood, I'm senior vice president with Crum and Forster. I've been in the Insurance business probably about 25 years now. I started out. In an ad agency, and I only say that because that's where I met my wife, but transitioned from there to actually one of our clients, which was a large TPA up in Syracuse, New York, that we did all large self funded medical and workers comp plans, so I was there for probably about 12, 13 years, and then took a leap of faith and went to work for another TPA in Connecticut, which was Travel Insured International. And that's where I got exposure to Crum and Forster. They were our paper for how many years, a long time. And then Crum and Forster acquired travel insured international about probably about eight or nine years ago now. And then most recently in the last couple of years, I actually jumped over to the E and H side to run business development, so been in the industry quite a long time, mainly on the TPA MGU world. So it's a nice fit

Ryan Eaton: That's right. Awesome. Yep. Bryan, how about you? What brought you into the business?

Bryan Krul: Wow. I'm only 25 years old, so it's amazing to say I've actually been in this business for 25 years. It's been a great ride. I started my career. I honestly couldn't spell insurance. It's like a job as an administrative marketing assistant for a local TPA. So we were doing self funded groups and me was, and that kind of programs and we transitioned quickly, into ancillary lines of business so voluntary benefit worksite type programs, and we ultimately built out a technology platform, which was state of the art it was one of its kind. It was the first ever quote by print quoting and enrollment tool in the insurance market for individual health insurance plans. So it was really exciting to be like the pioneers and bring in technology into the insurance world. Big lift. Post that we were part of New York Stock Exchange acquired us. They owned about 17 MGUs. We're in the small group space, large group space, international medical, ancillary lines of business. Give me an opportunity to get an understanding of the breadth of the portfolio, just the vast types of programs that are in the insurance industry so we've got really good education on the various types of programs and again a focus in technology, but technology was getting so advanced so quickly. There was a group of us, we left that organization, we formed a startup in 2009 and we were real excited about that and in three years we grew so much, we took it public onto the NASDAQ over the next three years we were number one fastest growing company on the fortune 100. So that was exciting times, our focus was primarily ancillary products, but utilizing our technology platform and we were a full service TPA. And then I exited there and came to work at Crum and Forster where, now I'm vice president of growth and strategy, working on new product designs, working with bringing in new distribution and new opportunities. But it's been a great ride and what's interesting is throughout that 25 years, Crum and Forster was always a carrier partner of mine. So I've always had that relationship and ability to work with Crum and Forster on product innovation and bring a new product to market, so it was really exciting for me to be able to take the opportunity to work at Crum.

Ryan Eaton: Oh, that's awesome. I have always liked the people at Crum. You guys, all different partners you have, everyone's always first class blast to work with Mark, we've had dinners for years now, and Bryan, I remember the first time I actually met you was here at this ICMG thing, and we met in a funny sense because I just checked out of my room. I did not have my wallet, it was already in my bag. I had my belt off cause I knew we were going through security. I get to the register just to buy a coffee. And my key doesn't work anymore because I've checked out of my room. I didn't have my wallet, there's of course, like 30 people in line and I'm like, what in the world? You were behind me like, Oh man, I got you and I was like, okay I like that I found out you with crumb and forster, I was like, Oh man, just as the team.

So look, why don't y'all give us a little I don't know who wants to take this, but give us a little overview of Crum and Forster or what y'all do. The kind of the product you're working with right now, maybe even domestically and internationally, just a 30,000 foot view, so to say.

Marc Flood: Crum and Forster we actually roll up to Fairfax Financial Holdings, which I think you're familiar with, right? So just start at the high level with Fairfax. They're a global, publicly traded holding company, right? And Fairfax or Crum and Forster is actually one of Fairfax's largest holdings. We're one of probably four or five of their largest, but they have investments in property casualty and re insurers, probably 25, 30 globally, right? So they're quite large. Crum and Forster, we've actually been around, we just celebrated 200 years, what, two years ago. So we're one of the oldest insurance companies around.

Ryan Eaton: And that was a big party y'all had. I remember that was New York. Was it?

Marc Flood: It was awesome. It was great.

Bryan Krul: So many people could say they rented out Ellis Island.

Ryan Eaton: Yeah, that was special. I've never seen the picture.

Marc Flood: We had George Bush there and he spoke. It was really neat. A really cool opportunity, but so Crum and Forster. Historically has been primarily a PNC carrier. However, over the last, 24 years old now, the A& H division. We're now about 36, 37 percent of the entire pie. Crum and Forster, roughly speaking, I think 2023 finished around 5. 3 billion. We were just a hair under 2 billion ourselves, so our growth for 2024 will have us well over 2 billion. So pretty amazing growth over the last 24 years and you want to take a crack at like kind of our, some of our product stuff?

Bryan Krul: Sure. Obviously. Yeah, obviously under the Fairfax holdings umbrella, there's a lot on the property and casualty part programs, but ultimately in Crum and Forster, what we're responsible for essentially we look at our three different business units is the way we split things up, we have our medical business unit, which is your more traditional plan, stop loss. We have a lot of ancillary products, all the voluntary benefit type worksite type programs, accident, critical illness, those types of programs. And then we have the fixed indemnity, hospital indemnity. A new program that we're really excited about is the gap program, that's coming out soon and so we're really excited to partner with the Morgan White Group folks on that program. So those are the types of programs that we have in our medical business unit. And then we have a life business unit where we just brought on a new unencumbered a rated carrier. So we just made an acquisition, a modern life insurance company out of New York. And so we're filing programs and various life insurance programs through that. And then lastly, we have our specialty business unit and the specialty business unit is really made up of the travel insurance, international medical, international health K through 12, all the various occupational accident workman's comp, those types of specialty products.

Ryan Eaton: You guys are one of the largest players when it comes to travel insurance, aren't you? Am I correct in saying that?

Marc Flood: We are. We're probably. Top three, top four after the trial, travel guards and all the answers. I think we're about,

Bryan Krul: Two or three in the travel and then number one an occupational accident where the largest player in occupational accident in the market.

Ryan Eaton: Oh, very cool. Look, one of the things that I love about Crum and Forster is how you are so focused. There's that laser focus with what y'all do. I liked it. Hey. You may have a TPA, you may have a distribution channel of some sort, but a lot of times you let people bring products to you and you develop based off what the need is and the market and you'll look at those. What kind of led y'all because there's so many carriers out there that have their own TPA or have their own distribution channel. There's not as many that say, Hey, look, I'm going to be the insurance company. I'm gonna let other people do what they do and take products to market administer the way they do, what brought y'all to that kind of decision or what led you in that path of just being the insurance company so to say?

Bryan Krul: So look every carrier obviously comes in and says what is my superpower? What is my core competency as an organization and what are we good at right? And so a lot of companies want to do a lot of things and sometimes taking a lot of those operational, mechanisms and managing them in house is the way to go cause that best fits their needs. We really came at it saying, what we're really good at is taking risk. We have a great actuarial team. We have a great underwriting team and we know how to assess and evaluate risk and understanding the needs in the market and where it can play but at the end of the day, we're saying we're risk takers. We don't want to be. Is we're not a technology company. We are not trying to go out there and say we have the best administration or the best customer service claims customer service. We are risk takers and what we want our organization to come to us to say, we have a great idea. Will you take risk on this? We need your a rated paper, we'll bring the rest of the solution, we bring the marketing, the distribution, everything else. We just really need a risk taker in your paper. And those are the types of opportunities we're really excited and looking for. There are some instances where we do some of the administration, but those were certain products based on acquisition it came with it, but ultimately our core competency is really underwriting and actuarial.

Marc Flood: A true product manufacturer. And we try to position ourselves as the kind of the brand behind the brands. A lots of times people don't know who Crum and Forster or U. S. Fire is. We really try to support other major brands that are out there and you'd be interested to know some of the brands that are out there that we're actually behind. So it's it's cool.

Ryan Eaton: I remember we came to Eaton town a few years ago and I remember hearing that and seeing your model broken down and the org chart and how y'all did that.

Marc Flood: I was blown away.

Ryan Eaton: How do you feel like you guys are so successful in supporting, or how do you feel like you support the organizations, the TPAs, the brokerages the different distribution channels? How do you feel like you're successful in supporting those different players, when it comes to them getting products to market?

Marc Flood: We all came in as former clients actually and I think our average client tenure, I think exceeds 17 years, so it's longterm partnerships. It's being thoughtful too about the partners that we work with too and that, we want to make sure that if we're bringing on another MGU or MGA or TPA, it's not budding up against our other partners that are out there, we want to make sure that everyone can succeed and win. I think that's been really important to our success.

Bryan Krul: Yeah, I agree with that. I think relationships, as we know, is very important in this marketplace and we try to maintain those. We have a lot of long term partnerships. The other think again, is that. I think when we take on an opportunity, yes, we look at the market, the needs and the market, the distribution plan and where it fits. But before we make a decision, the very first exercise is the expense structure. How does this work for all parties? Can all parties make what they're looking at? What their intent to make it is based on the predictive modeling and so forth. Is everyone going to get a fair share of the pie? Does it make sense? And if we won't even move forward, if we can't get past that first phase, which is expense structure.

Ryan Eaton: So that will bring me to a question, due diligence, I guess I would say when like looking at a deal, I think that obviously is, I think you said it perfectly, you've got to look at the expense. Does it make sense for everyone? You don't want to get through all the other type stuff then find, Oh, this didn't work. What do y'all do when someone brings you, let's say I bring you an idea, thought, whatever the case may be. What does that due diligence look like on the front end? Is there a minimum production amount? What's that process look like? If for someone who doesn't know what that looks like, what does that look like from a 30, 000 foot view?

Marc Flood: I think each deal is unique, right? As Bryan mentioned, so you got to look at the economics of it. We've brought on some deals over the years that were incredibly small to begin with, but we believed in the business plan. We knew it was scalable, right? And we took a gamble on some of those and they've really paid off.

Bryan Krul: Yeah, look, I think when we look at the expense structure, I think our flexibility and our approach being that we have done fronting only deals, we have a captive out of where the largest captive and grant came in a rated captive, so we'll do captive business. And so there's lots of ways to approach a program, so it's not always necessarily what premium it is that's going to drive us to say yes or no and it's really the revenue and the underwriting and the profit associated with it, you can have a 5 million program that nets you a higher margin than a 100 million program. We try to take a step back and look at the expense structure and where it makes sense. Yes, there is a minimum threshold that we're looking for because it is a big lift when you do a filing on a product. Actuarially work, underwriting work, the filing, the implementation, the accounting, the setup, the due diligence, everything that you mentioned, it's a heavy lift and so you want to certainly justify that. But we look at programs on a three to five year forecast.

Ryan Eaton: Okay, that is one. So I love what you said. Yeah, that's right. Three to five years. Look it out. One of the things I liked that you said a second ago, hitting, looking at the value of the deal. I've seen carriers worked with before that, oh, this 100 million in premium. But it was like a 1%, 2 percent.

Bryan Krul: Losing money.

Ryan Eaton: All the time, energy to effort, but they're so focused on the big thing. I think that's another thing that makes y'all so good, is that your leadership team, you guys, everyone that I've met is down to earth, knows how to look at this stuff, it's not just some pie in the sky type thing. Everyone knows how to evaluate a deal. And I didn't prep y'all for this type stuff, but when y'all are looking at hiring people, what are you looking for in employees? Because everyone I've met from Crum Forster has been sharp, easy to deal with, has a good head on their shoulders, has been in the business for quite some time. Are there any kind of common characteristics there that you guys are looking for?

Bryan Krul: You just hit them all.

Ryan Eaton: Yeah, that's right.

Marc Flood: Obviously good looking too.

Ryan Eaton: Yeah, that's a given.

Marc Flood: I think it actually starts with Fairfax, right? Cause like they're guiding principles and that, they've got a bunch of them where, no egos, fun and friendly place to work and those types. And it really trickles down to the different organizations within Fairfax. And Crumb's a big believer in that, right? We hire people with no egos, we hire just good people that and good leaders that want to take the business forward and develop, I think a big thing that we've really been focusing on, wouldn't you say, in the last two years is really developing the next generation of leadership in the organization as well, really bringing in younger people and stuff as well. So it's been great. It's been fun.

Ryan Eaton: What does that focus look like trying to find the next generation of leaders and building them up. Have you seen anything intentional that y'all have done there that to help develop the next generation?

Bryan Krul: Consistently. Number one, not only do we offer like education and things of that nature, which is, something really important, I think as an organization, but I think accessibility and exposure, is I think where we focus our leadership group take for instance, ICMG here today, we're nine deep today, nine or 10 folks. And we brought in some of the younger, new, only two years, associates in. And so we do that at various conferences, various meetings. We want to give them that exposure and access so that they can see how things are done and get ready and identify who has that kind of capability to continue to rise up in the ranks.

Ryan Eaton: I like that idea. Bring them in, let them see the stuff. They may just be another seat at the table, not bringing as much, maybe value, but at least they're seeing, learning, growing, and getting to get that full experience.

Marc Flood: I think you're starting to see it with some of the different organizations too, whether it's SIA or others are starting to have like young leadership programs too, or they're getting people in cause they recognize like we're all in our fifties and we're all aging out.

Ryan Eaton: So what would you say, if you had to take a second to brag on overall leadership team. What would you say that they have done excellent to help obviously training the next generation's one, but what would you say that they do extremely well, maybe direct communication, maybe goals and vision and focus, maybe it could be a thousand different things. And in each of your opinion, what would you say that they've done extremely well?

Bryan Krul: Mark's been here longer than me, so I'll take let him take the longer view. But in the short time I've been here, we've had so many strategic planning meetings. So I want to say that our leadership has such a focus on the future, that the strategic planning that comes into play, and I'm talking to every to fit every single discipline in the organization has their own strategy meetings, then they get together and have a strategy. The communication is king and I think our leadership excels in that. And that's one thing, I think they're planning and their vision is really something that we all understand what our goal is, we know what the vision is, we know how to achieve it.

Ryan Eaton: And a lot of big companies will start losing that over time. That's awesome that y'all have that.

Bryan Krul: Yeah. Or they keep it at the high level and

Ryan Eaton: It doesn't disseminate down to everybody else, so they know the race they need to run. That's good.

Marc Flood: Really well said and from our leadership to, Gary McGetty who started the business a long time ago. He jokes, he started in basically in his garage, right? Having that vision of saying, Hey, we want to be a billion dollars. Hey, we're going to get to 2 billion. He's challenging us now to get to 5 billion over the next four or five years and we'll get there. And the one other thing I think they've done a really good job of too, is the whole idea of really having a diversified portfolio too.

We lived through, I personally lived through that when I was still at the travel insured international, when we went through COVID. The travel business, which, as Bryan mentioned is, second only to our stop loss business. It took a major hit. Yet the organization still did well because stop loss performed well and ancillary performed well. So having that diversified kind of mutual fund portfolio has been critical too, I think, in terms of that vision too, and that's been really key to our success.

Bryan Krul: That's right.

Ryan Eaton: As we get here to wrapping up. Favorite leadership quote or favorite leadership lesson that you guys have learned or seen throughout your time, maybe not Crum Forster, but just in the industry, what would you say is the biggest lesson you've learned or your favorite leadership quote you've heard?

Bryan Krul: I think for me, one thing that always sticks in my head is a former CEO of mine, I always said, best idea wins. Check your ego out the door. Everyone participates. If you have an idea, best idea wins, doesn't matter where it comes from and I think that's a testament to a quality organization, quality leadership. So my quote is I'm a big Raider fan, so just win baby. That's my Al Davis quote.

Ryan Eaton: That's awesome. Mark, what'd you get for us?

Marc Flood: I'm a big believer in like servant leadership, right? And Ken Blanchard's one that I like a lot, right? And he's got a lot of great quotes, but the simplest one I've heard is, leadership isn't about you, it's about investing in the team and your people, right? And I'm a big believer in that. I think we've talked about that. I think Crum and Forster does that and believes that so it's easy for me to live that as well.

Bryan Krul: The other one I was going to say, if you can dodge a wrench, you can dodge a ball, right? We were kidding around about that.

Ryan Eaton: I like that one a lot.

Marc Flood: Patches Houlihan, you got to give the shout out.

Ryan Eaton: Guys, look, thank y'all so much for being on today. Podcast, thank everybody for listening in. Remember, a good plan today is better than a great plan months from now. Thank you very much.

Thanks for listening to today's episode of the Insurance Leadership Podcast. Make sure you subscribe on your favorite podcast app so you'll be notified of future episodes, or stream online at insuranceleadershippodcast.com. Have a great day, everyone.