CHAPTER 7
DOM in Motion/Mid- to Large-Size Company: Insurance: Crum & Forster
“I wouldn’t be able to attract great people if we hadn’t spent the time establishing the culture.”
—Marc Adee, CEO Crum & Forster
- Level 4 on DOM
- Culture: High level, decentralized
- Platform: Solid ecosystem that enables fluidity
- Innovation: Utilizes business process automation to innovate new ways of doing business
Crum & Forster was typical of most major insurance companies when Marc Adee took over as CEO in 2015. The nearly 200-year-old business was a top-down culture with decision-making concentrated in the home office.
A DIFFERENT APPROACH
At the time Adee and his management team began the company's transformation, they realized up front that customer satisfaction is dependent on employee engagement. “In terms of the DOM flywheel, we believe that it is our people and culture that get the flywheel spinning,” says Adee. Therefore, the company's first step in the transformation was toward making C&F a great place to work.
Keep in mind that the traditional management school approach to success called for strategy first, followed by culture, execution, and people. That doesn't work in today's digitally enabled business environment. The new flow, as Adee's approach reflects, is culture and people first followed by a strong vision and strategy with data-driven execution.
More Changes
Beyond improving the basic elements of culture like physical environment and benefits, C&F focused on helping people chart their long-term career paths within the company. As part of this initiative, Adee says he thought about what he would have wanted out of the organization when he was moving up through its ranks.
One of the key—and most disruptive—changes was the move to decentralize the business units. As a result, most of the company's shared resources were pushed from the corporate center into the divisions. That move really gave the division presidents control over their destinies.
The cultural changes had a huge impact on employee satisfaction, too. Today, 9 out of 10 employees say they would recommend C&F as a great place to work. The resulting energy also was channeled externally, with C&F increasingly seen as a great business partner, says Adee. All that has bolstered top-line revenue and profit margins.
Power of Innovation
With respect to innovation and navigating the digital landscape, the move to decentralization unlocked innovative ideas and digital solutions that started bubbling up from the business units (instead of flowing downward from corporate), Adee says. “In the old days, it would have been a big decision to invest in an underwriting or claims processing system, and the decision would have been made at the corporate level with an eye toward doing the most long-term good for the most business units,” he says.
“In a specialized company like C&F, this left many of the business units doing manual workarounds to process their policies. Now when you look at our more interesting machine learning, artificial intelligence, robotics process automation projects—even some of our core operating systems—different businesses experiment with different systems. They find what they think is going to work for them and try it out without having to wait in line or get multiple levels of signoffs from corporate. They can just go ahead and do it.”
To keep ideas flowing across the divisions, C&F has established what it refers to as guilds—including one dedicated to artificial intelligence and machine learning—where team members can show off their new solutions to people working in other areas of the company. Says Adee, “When I sit in on the AI/ML guild meetings, I am amazed at what some of the teams are working on to improve our business. Like you say, they are making the impossible possible.”
UNLEASHING THE POTENTIAL
That culture of empowering its leaders and unleashing their potential has paid off for C&F. Add to the equation the business platform and the results are transformative. Change hasn't been instantaneous, and there has been some resistance. But with culture as the driver, once change started to happen, it became easier to introduce new ways to do things.
Now at C&F it takes a few minutes to write an ordinary insurance policy or a few seconds to determine risk numbers thanks to data science made possible via business platforms. Claims can be real time and investments in artificial intelligence have helped eliminate errors as well as some of the tedious and repetitive tasks.
C&F has grown too—from $1.7 billion across its divisions when Adee took over to $3.7 billion in 2021. Looking at just C&F's Accident and Health division under its president, Gary McGeddy, 2015 sales totaled $500 million. Now they're $1.3 billion and, McGeddy predicts, on the way to more than $2 billion by 2024.
Driving Transformation
McGeddy attributes his division's growth to culture, specifically all the investment made in life and career coaching.
“Several macro elements go into building an organization that has the steady trajectory of growth and consistent underwriting profits,” says McGeddy. “To me the most important thing is building a culture where you allow people to focus on achieving excellence.”
“All kinds of things impact an employee's ability to perform and achieve excellence. So trying to create an environment of really high potential, high performers who are focusing on everything that they can bring to the table that's positive in their personal and career life will then create an environment where you have 20 people, then 50 people, and then 100 who are all trying to achieve excellence as opposed to just the C-suite.”
Multiply that attitude of excellence by C&F's Accident and Health division's 1,000 employees and combine it with the power of a business platform and it becomes easier to understand the division's tremendous growth. “It's not just about us trying to drive the bottom line, which is obviously very important. It's about what differentiates you in market,” says McGeddy.
He admits that some people may think career and life coaching is a little bit too cuddly for a major insurance company. But he says an individual who has not sorted things out at home won't show up and do their very best in the workplace. To that end, the company helps employees take care of all quadrants in their lives—spiritual, mental, emotional, and physical. If an employee is happy in all areas, that creates a culture of extreme excellence, says McGeddy.
This holistic approach is a big part of developing the right culture to embrace digital transformation today. Authenticity, trust, transparency, and vulnerability are all part of building the foundation for the future of work and business, too.
Power of Decentralization
Adee attributes the success of the decentralized approach to leaders like McGeddy who lead his divisions. “We have really great people who really flourish when they are given authority and autonomy.”
McGeddy points out that if he always had to ask permission for everything, his hands would be tied, and the company's growth stifled like so many other companies that flat-line or report mediocre earnings. “I have been empowered…so that I can run my own company…. They give us enough rope to hang ourselves or achieve extreme growth.”
In C&F's case it's been the latter backed by the power of the business platform.
DOM IN MOTION
C&F is a great example of what happens when a company aligns the three elements of the digital operating model triangle—culture, platform, and innovation—and high performance naturally follows.
Says Adee, “When I got here, C&F needed to evolve. We took the journey—and now C&F is a great place to work. And it has paid off in terms of attracting people—getting people to want to do business with us—and performance.”
A DETAILED LOOK AT THE DOM JOURNEY
- COMPANY: Crum & Forster, wholly owned by Fairfax Financial Holdings Limited
- INDUSTRY: Diversified insurance product company (pet health, surety, credit, contractors, environmental, travel, trucking, commercial package, workers' compensation, property, cyber)
- HEADQUARTERS: Morristown, New Jersey
- NUMBER OF EMPLOYEES: 3,000
IN SHORT:
AS IS (before digital transformation)…
Business…
- Lackluster results.
- Low employee engagement.
- Top-down processes/centralized control.
Technology…
- Legacy systems.
- Manual workarounds.
- Top-down resource allocation decisions.
TO BE (after decentralization and digital implementation)…
Business…
- High performance.
- Great place to work.
- Great business partner.
- Decentralized business units.
- Ideas bubble up within organization.
Technology…
- Decentralized technology decisions.
- Machine learning business submission triage—allows underwriters to promptly focus on best quality accounts.
- Pricing algorithms—fueled by big data sources.
- Robotics process automation (RPA) implemented to streamline repetitive processes.
MANTRAS FOR SUCCESS
C&F leaders and technology specialists considered the following questions and solutions in helping to map their journey to digital transformation. Every company will have its own questions and find its own solutions. The important part, however, is to be willing to embrace the challenges and be open and transparent enough to search for the answers.
Some of the questions and solutions on C&F's journey to digital transformation include:
- How do we make this a great place to work?
When the mood of employees—and therefore the working environment—improves, everything is better.
- How do we take that new energy and focus it externally to be a great business partner?
- Smaller, empowered business units.
- Our people are closer to the customer and need to be able to do their work in live, real-time without top management guiding their every move.
- What is the landscape of transformation in terms of the combination of technologies used?
- Artificial intelligence/machine learning.
- Robotics process automation.
- Technology customized for different business units.
- How can we enhance the customer experience?
Insurance is not a fun product to buy—but at least we can make it easier.