If JP Morgan, Amazon and Berkshire Hathaway Can’t Reform Health Care, Who Can?

By: Les Williams | January 14, 2021

Les Williams, CRM, is Cofounder and Chief Revenue Officer of Risk Cooperative. He holds a B.S. in mechanical engineering from the University of Virginia and an MBA from Harvard Business School. Prior to joining Risk Cooperative, Les served in various institutional sales positions at SoHookd, JLL, and IBM.

The U.S. political discord of 2020 that spilled into 2021 will continue to dominate the headlines well into the New Year and for the foreseeable future. Disagreements over pandemic-driven mask mandates, foreign trade, stimulus checks and the election results themselves are indelible themes that will resonate throughout U.S. history.

The one theme that remains intractable, even well before 2020, has been the pitiable state of the U.S. health care system. The recent disbandment of Haven Health has sent a clear signal that health care, like our tax system, remains a formidable foe for any entity or coalition, no matter how well funded, trying to tame it.

Health Care: Is There a Safe Haven?

Shortly after the New Year, Amazon, Berkshire Hathaway and JPMorgan Chase announced their joint venture, Haven Health, would be shutting its doors.

Haven’s goal was to make health care cost and delivery more transparent and economical for employers and employees alike.

The unprecedented announcement of Haven three years ago adversely impacted well-established players in health care, erasing billions of dollars of value for these bellwethers as the market viewed Haven as the industry’s most credible challenger.

All eyes were on this novel approach to health care given the global influence each entity has on the fabric of everyday life.

Amazon, the tech behemoth that brought scale to industries like ecommerce and cloud computing; Berkshire Hathaway, a holding company for a diverse set of lucrative businesses steered by Warren Buffet’s legendary eye for value investing; and JPMorgan, the largest U.S. bank by assets under management.

These three firms, respectively titans in their industries, with all the money and resources at their fingertips, worked tirelessly for three years to not only build a better health care mousetrap … but to redefine how our nation interacts with the health care system.

These firms, aside from their economic, technological and insurance prowess, courtesy of Berkshire Hathaway, which owns Geico, Berkshire Specialty and other interests, also had economies of scale lined up behind the ill-fated Haven project.

The law of large numbers is the bedrock of sound insurance, and nowhere is this concept more important than in health care.

The combined firms were to seed Haven up to 1.2 million of their employees as part of the catalysts for Haven’s market offering.

That this model failed is a bad omen for the health care sector, which is itself an ill patient seeking remedies for perennial challenges. From underinsurance to exorbitant costs and veritable hospital deserts, improving and modernizing the U.S. health care system is an urgent public priority.

The unrelenting spread of COVID-19 only adds urgency to this case. That a well-capitalized, coalition-backed project like Haven has called it quits on mounting a challenger brand in the U.S. health care sector does not bode well.

In the press release announcing the formation of Haven, Warren Buffett, chairman and CEO of Berkshire Hathaway, famously declared, “The ballooning costs of health care act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers. But we also do not accept it as inevitable.”

What began as a well-organized and resourced venture ultimately fell victim to something that many consider insignificant yet is the most important factor in any new pursuit — culture.

Culture Eats Strategy for Breakfast

Designing and rolling out Haven across the three companies proved untenable, mainly because of the different cultures involved.

Amazon’s decentralized culture is what has made it so successful with quick and decisive actions such as the successful acquisition of Pillpack and Whole Foods, but this culture was not conducive to the uniformity needed across the three Haven participants for the platform to be successful.

One example of apparent discord was Amazon’s development of its own Amazon Care app used for its employees, which was viewed by Haven employees as detrimental to the development of a Haven telemedicine app across all three firms, suggesting the economies of scale in terms of an insured population was only there in spirit but not in reality

Another layer of complexity was the thousands of employees at different locations, spread across different organizations, having diverse health care requirements.

Variability introduces complexity in any system, and the sheer size of these firms complicates this approach. The nation is already experiencing vast disparities in medical treatment and availability based on location, and with the increase in telecommuting, more employees have the option to work in locations even further from urban centers or regional offices.

Setting the Stage for the Future

While large health insurers may be breathing a collective sigh of relief, as well as experiencing euphoria in the form of schadenfreude, they should not get too comfortable.

As is the case with many of the greatest innovations in our nation’s history, these advances usually experienced a multitude of setbacks and failures initially. While Haven may be viewed as a “failure” in the present tense, the lessons learned from the project may very well establish the foundation for future innovative approaches to health care.

Accomplishments from these “lessons learned” on a massive scale have precedent, we need look no further than the current global pandemic.

Phizer and Moderna are two of several global companies that shared data and information in a quest to develop vaccines with unprecedented speed. This esprit de corps becomes even more powerful when the ultimate goal is something lofty and seemingly unattainable, like developing a vaccine for a global pandemic, which typically takes years — or innovating in the U.S. health care system.

Haven is not merely the end of an unprecedented journey; rather the catalyst for future innovations in making U.S. health care more transparent and economical.

Much like the federal government-sponsored Operation Warp Speed to expedite a COVID-19 vaccine, there is hope that the federal government will collaborate with the health care industry to create innovative solutions as well.

Health insurers should take this as a clarion call to invest in their own innovations and streamline their organizational complexity … or get left behind. &

The Qualities to Look for when Selecting a Financial Lines Carrier

Operating a business comes with its share of challenges, but having an insurance partner that strives to understand and align with your operations can make all the difference.

By: MSIG USA | October 31, 2024

Running a commercial business is no small feat. Leaders are often tasked with making difficult decisions — sometimes with limited data — and communicating these decisions with confidence while acknowledging their inherent uncertainty.

“Expectations are incredibly high in today’s current climate,” said David Guild, head of financial lines, MSIG USA. “Companies and their leaders must be thoughtful and controlled in their communications, conveying both competence and a clear vision on an ever-evolving world stage.

Nevertheless good leaders (whether they are in the C-suite or on the board of directors) consistently persevere and face the challenges of our evolving world, equipping themselves with the necessary tools and techniques to keep operations running.

For financial companies and commercial businesses looking to keep pace with today’s risks and better understand their own exposures, finding the right insurer need not feel like an added weight.

Below are several qualities to look for in a partner that has the experience and insights to help mitigate and navigate their insureds’ unique exposures, giving leaders the space to focus on their core operations.

Sustainability in All Markets

David Guild, Head of Financial Lines, MSIG USA

When looking for a financial lines insurance partner, sustainability should be top of mind. Knowing that an insurer can provide solutions in a hard market alongside the soft will not only provide peace of mind but also help build resilience.

“Leaders should have the room to concentrate on their vision for the company and what it can achieve — not be burdened by potential risks that keep them awake at night. “Your insurance partners should be able to understand the trials and tribulations of running a business, to respect that there is no single right answer to most challenges, and be prepared to assist wherever, whenever issues may arise,” Guild said.

Sustainability is proven in an insurer’s ability to come through on the promises it makes. For example, MSIG USA’s approach has earned it an A+ rating, proof that its team can back the promises it makes and see them through to completion. “We are confident in our ability to serve your insurance needs, on a global scale,” Guild added.

“Everything we speak of revolves around the credibility of our platform, which is reflected in our A+ rating, a 350-year legacy within our family of companies, and our experienced team here in the U.S.”

An Emphasis on Company and Culture

Successful partnerships are built on a solid relationship between insurer and client.

At MSIG USA, “we aim to be a stable and sustainable presence for our clients,” Guild said. “The value of long-term relationships is at the core of what MSIG USA is all about. Our underwriters deeply appreciate the importance of these connections.

“We believe that building and maintaining strong, long-lasting relationships with our customers is essential to navigating the inevitable fluctuations of the insurance market. We are confident in our abilities, and in yours.” he added.

Company culture, as Guild mentioned, is more than an internal commitment; it’s something that can also drive business relationships.

For insurance partners, analyzing and aligning with their clients’ culture helps to solidify partnerships, as well as open the lines of communication and understanding.

“Variables will change, oftentimes rapidly. From our view, what matters is the culture of that company when responding to change. It’s about trusting their character rather than just the policies and procedures in place,” Guild said.

A Source of Truth and Clear Communication

Effective communication goes a long way in clearly understanding an insured’s business and future potential. This allows for sustainable partners to develop coverage that fits and to work closely with their Claims team to understand the partnership in context.

With the amount of data available today, and the number of ways information can quickly be disseminated through different medium, a good insurance partner knows that companies must be the single source of truth for their stakeholders.

“Quarterly and annual earnings calls provide a platform to discuss financial results and respond to investor questions. Investor presentations offer a more comprehensive overview of the company’s strategy, performance and outlook,” Guild explained.

We will look at what analysts and other third parties think about the information provided to try to glean what the investor base will think and how they will act. But ultimately, it is what the company says, and the way they say it, that we will assist in defending, if need be, and so we make sure to listen and learn from the company leadership.

Bringing These Qualities Under One Roof

Leaders want to know that, at the end of the day, their business is a priority for their partners.

Clear communication, a strong relationship and emphasis on sustainability are just the start. Their insurance partners should strive to understand their business, identify areas of concern and craft coverage customized to meet their needs.

With an impressive 350-year legacy, MSIG USA is doing just that for its clients, utilizing its global presence to further its clients’ goals.

“The key elements of our approach are an intellectual pursuit of information, a well-honed practice of underwriting that identifies material aspects for risk assessment, and clear communication of our insights to our clients: brokers and buyers alike. We aim to provide a transparent and informed perspective on the risks we underwrite,” Guild said.

“We bring sustainable, predictable insurance capital and what we believe is best in class service philosophy, honed by working with some of the most sophisticated brokers and buyers of insurance in the world.”

To learn more, visit: https://www.msigusa.com/financial-lines/.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with MSIG USA. The editorial staff of Risk & Insurance had no role in its preparation.

MSIG North America is a member of MS&AD Insurance Group Holdings, Inc. which is the 8th largest non-life insurance group in the world by revenue. Based in Tokyo, Japan, we operate in 48 countries/regions and generated $46B in 2021 with approximately 40,000 employees globally. MSIG North America is the marketing name used to refer to MSIG Holdings (U.S.A.), Inc. (“MSIGH”), and its subsidiary companies.