Corporate culture is changing and with it the prevailing model for chief executives in the (re)insurance industry.
And while no single factor has changed the London’s market’s leadership style, a combination of contributing influences is transforming it.
Companies are making more meaningful corporate social responsibility efforts; staff relations are changing due to millennial hires and a generation of boomers retiring; and technology-led flexible working is becoming the norm amidst the coronavirus pandemic.
Showing underwriting or broking nous and demonstrating authority is no longer enough.
“Leading is ultimately about motivating the team,” says Nick Cook, CEO of BMS. “My primary role is getting everybody to row in the same direction.”
Autocratic leadership cultures are also being consigned to the past, according Mark Stephens, a partner and executive search consultant at Stephens Rickard.
“It’s a more inclusive leadership style, not knowing all the answers, but being able to create an environment where everyone feels they can contribute,” he says.
Bye bye, boomers
The industry has been led by baby boomers for an extraordinarily long time.
“A large share of the reinsurance workforce is set to retire soon, so it’s more important than ever that we attract more talented young people,” says Scor Global P&C CEO Jean Paul Conoscente.
While there are always exceptions, the departure of this “old guard” is hastening a shift in leadership styles, sources agree.
“There is a shelf life for all leaders,” says Cook. “The older, more autocratic type of leadership is waning. It was always ‘we’ve always done it this way, so this is the way it’s going to be’.”
Previous generations of leaders were disproportionately drawn from a male, privileged, white demographic, contributing to the group-think that has haunted insurance company board rooms, Stephens suggests.
“Various studies have shown that diverse boards lead to better outcomes. If you've got an all-male board, it is unlikely that those egos will be questioned,” he says.
Hiring trends have gradually broadened the definition of who makes it to the top, Stephens explains, from the 1980s era of blue-blooded senior underwriters and former military men.
“We went through a stage when many accountants and some actuaries reached the top. We’ve also seen a business school education become more important,” he says.
Diversity and inclusion (D&I) initiatives have proliferated in recent years, mirroring movements such as Pride, #MeToo and Black Lives Matter. According to Stephens, there is now also greater evidence of change in how leaders are chosen behind closed doors.
“Clients are insisting on diverse shortlists,” he says. “This isn't about tokenism and they're not window dressing. People are realising that diverse boards eradicate group-think and make better decisions.”
Shortlists for non-executive board members are also changing, suggests Stephens, citing the example of a recent search request from one traditional London market client.
“I asked him what he was looking for. He said he didn’t want ‘Rent a Gent’, but some real diversity brought to the board. That’s indicative of an encouraging change, and I would say it's relatively recent,” says Stephens.
D&I moves form part of a greater focus on instilling positive corporate culture.
“Leaders now need to be more than just subject matter experts – they have to be much broader and focused on more than just the bottom line,” says Mark Cloutier, executive chairman and group CEO of Aspen. “This change is being driven by a workforce that increasingly wants more from their employer than just a pay cheque.”
Expectation levels have also increased dramatically around non-business issues. Scor’s Conoscente says: “We’re challenged by our clients, employees, and by the young people we need to join this industry to define the core values the company stands for, and how these core values translate into everyday operations."
Corporate social responsibility policies have taken up issues such as climate change, gender equality and D&I. Swiss Re’s leadership, for instance, focuses on climate risk and promoting sustainability as a strategic priority.
“We have committed to achieving the goal of net zero emissions by 2030 for our own operations,” says Natasha Gill Pajarola, head of human resources for reinsurance at Swiss Re. “Our leaders play a key part in helping us to achieve these ambitions specifically by embedding sustainability in all our business activities.”
A deep bench
When Conoscente joined Scor more than a decade ago, the reinsurer’s leadership depended on the “Sun-like” approach of leaders at the centre, he explains, with business teams providing technical expertise to feed decisions.
“This is changing, because one person cannot address all these issues,” Conoscente says. “We’re going towards a small-teams approach, where every function-holder still has responsibility for their function but the management team co-owns all issues regardless of the function it comes from. I think the successful companies are the ones in which delegation occurs naturally because you can become much more result-oriented rather than decision-oriented.”
Cook points to the political and sporting world for examples of recruiting a talented bench, acknowledging that no individual holds top trumps across a spectrum of skills, but they can build complementary teams.
“Great leaders and coaches surround themselves with equally if not more talented people, who bring that diversity of thought,” he says.
Stephens thinks changing leadership traits are visible among top brass at the big brokers, where having the biggest client accounts no longer means making it to the top.
“What you need is a leader who can keep the race horses performing and stroke their egos, but you don't want to let those people loose as a CEO, because that's not what they're good at,” he says.
“Nowadays, broking houses are more interested in strategic leadership. If you look at the big London market brokers, there's a professional right at the top, with some pretty big beasts below them, but they’re never going to run it,” he adds.
Flexible working
Effective communication skills are particularly vital during crises, such as this year’s pandemic. Communication skills are at an all-time premium for the CEO role, Stephens notes.
“The ability to win hearts and minds has become more important because people have more choice these days and the market is more fluid in terms of employees being able to move around,” he says.
Town hall meetings have become weekly occurrences at big brokers. At BMS, Cook has recorded weekly podcasts, as well as stepping up thought leadership and media interaction. “Covid-19 has forced our hand to be much more communicative than ever before, and we will continue that,” he says.
Some flex is vital for leaders to communicate effectively with different constituents, emphasises George Davies, senior client partner at executive search and advisory firm Korn Ferry.
“A narrow style as we’ve seen in the past, whether autocratic or laissez-faire, is not going to be successful in this increasingly complex environment,” Davies says. “A chameleon type of leader, who can play to various stakeholders, is going to be the leader of the future.”
Lockdown’s strain on traditional modes of communication has been a nail in the coffin of micromanagement. And companies have had no choice but to embrace remote working.
Stephens notes that remote working has drawbacks, particularly for staff living and working in busy houses, but it can also have benefits.
“I hope companies will embrace agile working, because a lot of professional people, parents in particular, want the flexibility to work some days from home,” he says.
A workforce more spread out is also good for D&I, stresses Davies. “Not having everything anchored in London is a demographic opportunity to be much more inclusive of a wider population, providing increased value for the market,” he says.
Ultimately, Stephens warns, leaders will increasingly need to deploy the greatest flexibility in their skills to succeed in this environment, while those burying heads in the sand will struggle most.
“You don't change for change's sake, but if the environment changes, there's a high chance you need to change your approach,” he says. “Those CEOs who embrace change and who constantly re-assess what they're doing in light of the ‘new norm’ are the ones who will win out.”
This article was first published as part of an Insurance Insider (Re)Connect supplement on 18 September
