7 Questions for BHSI’s Peter Eastwood
As the company celebrates its 5th birthday, BHSI President and CEO Peter Eastwood reflects on the success they’ve enjoyed so far, and how he sees the market evolving in the years to come.
R&I: Congratulations on BHSI’s five-year anniversary. Did the company do anything special to mark the occasion?
Peter Eastwood: Thank you.
We did. We celebrated the way we have each year since BHSI was launched – with a video message that features our BHSI team members from around the globe sharing with each other their thoughts on our company and on our journey so far.
The videos are great fun to make and to watch — each year they include a song that one of our team members writes with clever customized lyrics that tell our story to a popular song. It’s lots of fun, very homegrown and casual — and a great way for us to connect and commemorate the day.
Externally, we’ve spent the year hosting broker and customer events that are designed to give our business partners an update on BHSI today and our perspective on the current state of the insurance market. We call these events “Five to Forever” — a title that encapsulates both our five-year anniversary and our long-term focus.
R&I: Can you give us an overview of where BHSI is today?
PE: Today, BHSI has approximately 1,000 team members in 30 offices, across 14 countries. Our platform spans many regions of the world — the U.S. and Canada, Asia, the Middle East, UK and Europe, and Australasia.
We have products and services that address the major property and casualty exposures that our customers have, as well as more niche-oriented products and segments, such as medical stop loss insurance, leisure travel insurance, coastal homeowners insurance and surety. We also have a digital platform to address the needs of small and medium enterprise customers, to name just a few of our offerings.
Importantly, our people around the world are showing up every day putting a high level of care into their work. Everywhere we operate, with every interaction, we are working to establish ourselves as a company dedicated to excellence in underwriting, in claims handling, and in overall service to our customers. We don’t take anything for granted – we recognize that we are not entitled to anyone’s business. We are working diligently to win the support of brokers and customers every day.
R&I: What are the most notable accomplishments or milestones achieved by the company over the past five years?
PE: Our global expansion has been very exciting, putting down roots in 14 countries. We’ve also put a meaningful amount of product in the market, so in a fairly short period of time we can satisfy most of the needs of our customers.
While we’ve been growing quickly, importantly, we’ve been growing in a way that makes us a stable and reliable partner for our customers and broker partners. My message to the team is, “have a sense of urgency, don’t be in a rush,” which is my way of telling them that we value both pace and thoughtfulness. Both are needed for BHSI to be a great company.
My message to the team is, “have a sense of urgency, don’t be in a rush,” which is my way of telling them that we value both pace and thoughtfulness. Both are needed for BHSI to be a great company.
We have also made great progress in building the systems and operational infrastructure that are foundational to our business. We are very fortunate to be able to build the systems we need for underwriting and claims from the ground up. We don’t have to wrestle with legacy systems. That is pretty unique in the insurance industry.
Our aim in building these systems, as with everything for our business, has been to keep it simple. We’ve been using a flexible IT architecture that enables us to build out a single underwriting and claims platform worldwide. That’s a plus for efficiency, expense management, and global collaboration — all of which ultimately benefits both BHSI and our customers.
R&I: What have been the most significant drivers of the company’s success?
PE: When we started five years ago, we knew we had a balance sheet that was strong and a brand that was trusted — two very important characteristics for an insurance company. What we needed to do was attract people with great capabilities and strong character, which I’m pleased to say I think we’ve done extremely well.
The other focus we’ve had has been on building the culture within BHSI — this is not something we’ve left to chance or allowed to simply form over time. The time and attention we’ve given to the culture within BHSI has been hugely instrumental in helping us make the progress we’ve made and, I believe, will continue to serve as a strong foundation and framework for everything we do in the future.
One of the most important cultural characteristics of BHSI is our focus on simplicity — or what I refer to as simplicity over complexity. This focus is based on my belief that the business world is unnecessarily complex, and that complexity impedes value creation. Simplicity on the other hand, is a catalyst for value creation. As a result, simplicity is a guiding principle in the way we’ve gone about building BHSI and how we operate the company. It impacts everything from how we think about internal reporting structures and decision making, to how we handle claims, to the wording of our policy forms.
The business world is unnecessarily complex, and that complexity impedes value creation. Simplicity on the other hand, is a catalyst for value creation.
While we have the capital and the knowledge to be a strong risk-assuming partner for the long term for our brokers and customers, we’ve also taken the time to build a strong customer service orientation into BHSI. Our culture is extremely focused on customer engagement and providing service that exceeds expectations. It’s something we concentrate on every day, with every interaction.
Lastly, we’ve received incredible support from the broader Berkshire Hathaway organization which has been an important component of our success as well.
R&I: What are BHSI’s goals for the next five years, and what are the top challenges to achieving them?
PE: We set out five years ago to build the market-leading global commercial property, casualty and specialty lines insurance company. As we pursue that goal, we’re going to continue to grow BHSI in a measured and thoughtful way — in a way that ensures we produce an underwriting profit for Berkshire Hathaway while continuing to embed value in the business for the long-term benefit of Berkshire and its shareholders. We recognize that to do so, we must build and operate BHSI in a way that creates value for our customers and broker partners, which is what our team aims to do every day.
How big BHSI will be in terms of writings in the next five years, I don’t know. My job, along with the rest of my teammates, is to position BHSI for success in all markets — soft and hard – and to ready the organization for the inevitable dislocations that occur in our business and the resulting opportunities. As we continue to build the company and pursue growth opportunities, I periodically remind myself and the team that market share is an outcome, not an objective.
I periodically remind myself and the team that market share is an outcome, not an objective.
I believe if we do all the things we’ve said we would do and we do them well, we’ll get our fair share of market share with an appropriate return for Berkshire and its shareholders.
Having said that, we see ourselves as an early stage growth organization, with mature risk-taking capabilities and a parent who knows and values the property and casualty insurance business. So, expect to see more from us for many years to come.
R&I: What are your current perspectives on the insurance industry’s challenges and opportunities?
PE: There is a lot of change in the insurance industry, with carriers merging and people moving around the industry. A big challenge and opportunity for the industry overall is showing customers that there is certainty and stability in our marketplace.
To focus for a moment on current events, last year there was the significant challenge of three hurricanes – Harvey, Irma and Maria. These storms adversely impacted some insurers far more than others, but I believe it should have underscored for the industry the need to focus on long-term stability and sustainability. Just because we may have gone an extended period of time without a significant event, doesn’t mean we won’t suddenly have one major event — or three in rapid succession, which is exactly what happened.
A big challenge and opportunity for the industry overall is showing customers that there is certainty and stability in our marketplace.
We need to underwrite with a focus on long-term stability every day, making the time and effort to understand and differentiate between customers and risks and hazards. It’s what our customers and broker partners should want and expect from us. Anything less compromises the concept of a stable, long-term business relationship.
R&I: Innovation is critical to the long-term relevance of the insurance industry. How does BHSI drive innovation internally?
PE: The first thing we do is hire the right people. Then we make sure that we create an environment where people are inspired and encouraged to share ideas and expertise and to act together to further our business by solving the needs of our customers. We don’t view innovation as an initiative, we view it as something that’s part of the DNA of the company. In my opinion, if we’re to be a great company, we should be innovating and adapting in real time, and avoiding major step changes and course corrections — the latter would imply we hadn’t been paying attention to the business. &