‘If You’re Not Changing, You’re Not Getting Better’: What One CEO Says About Insurance’s Biggest Challenges

2019 Executive to Watch Tom Warsop gives his take on the opportunities and challenges created by rapid technological change and the industry’s looming talent shortage.
By: | March 7, 2019 • 6 min read

Tom Warsop, CEO of York Risk Services Group, comes from a background heavy in financial services technology and business process transformation. That’s partly why we chose him as an Executive to Watch in 2019.

Thomas Warsop, CEO, York Risk Services Group

Technological change is progressing more rapidly than ever. Keeping up is a challenge for every sector, but the insurance industry faces unique barriers due to the age of its legacy systems — and increasingly, the age of its workforce.

We sat down with Warsop for his insight on just what opportunities and challenges are created by the rapid pace of change, and how he thinks insurers should tackle the onslaught of new tech.

R&I: When it comes to the pace of change, how well do you think the insurance industry is adapting?

Tom Warsop: There is so much change happening not just within the insurance industry, but in the world in general. Some people thrive on change, and others see it as daunting. I think change is not only necessary, but exciting. You have to change to stay competitive — if you’re not changing, you’re not getting better.

In our industry, there’s constant pressure to become more efficient, so we have to be on the lookout for ways to take advantage of developing trends and stay ahead of the curve. Specifically, the top challenges for our industry are technology implementation and talent recruitment.


R&I: How does technological change put pressure on traditional insurance operations?

TW: As technology makes so many tasks easier and faster, it has created an expectation among consumers that everything should be just as fast and easy.

Look at smartphones. Companies like Samsung and Apple release new products every year, and people have not only become accustomed to that, but in fact demand it. The Amazon effect is another example. We order a product with the click of a button and it a day or two it’s on your doorstep. We’ve come to expect everything to happen immediately.

That increasingly applies to the claims process as well. When people have a claim, they want an answer almost instantaneously. Sometimes the industry can meet that expectation; sometimes it can’t.

Take a workers’ comp claim, for example. There are too many variables and other parties involved to have a case closed in one day. It’s challenging to meet the demand for speed when you’re dealing with complex claims.

R&I: What opportunities and challenges does technology present from an implementation standpoint?

TW: One of the most talked-about applications of technology in insurance is the automation of manual processes. Automation offers opportunity to become more efficient, more productive and more cost-effective, but it presents a challenge when people try to implement automation without a clear idea of the end goal.

If we identify the objectives first, I’m pretty confident we’ll get to a good place. If we do it in the reverse order, I don’t have any idea what we’re going to get to. It’s going to be expensive, and you’re probably not going to be happy with the results.

Early in my career, I met with the Chief Information Officer of a large government agency in Europe, and he wanted to completely automate a specific process. I sat there for a minute and said, “Okay, I understand what you want, but that’s not what we’re going to do.”

I explained that we need to understand the outcomes we’re trying to achieve before we build anything.

If we identify the objectives first, I’m pretty confident we’ll get to a good place. If we do it in the reverse order, I don’t have any idea what we’re going to get to. It’s going to be expensive, and you’re probably not going to be happy with the results. Automating a process with no plan will produce the same bad outcome you’ve been experiencing, only faster.

R&I: How have you brought that mentality and approach to York? How has York implemented technology to improve a particular process?

TW: Soon after I joined as chairman about 18 months ago, we put in place a whole program using Lean Sigma techniques. We had to dissect our business processes and ask ourselves, which pieces of those processes add value, and which do not? Automating the non-value add steps frees up your human expertise to focus on the steps that do create value for your organization.


Using that program, we are re-engineering our claims handling process and have seen a substantial improvement in productivity. That translates to better outcomes for claimants and for our own teams.

R&I: What changes does the industry have to make in order to attract workers earlier in their careers?

TW: Thankfully, Millennials are possibly the most studied generation in the history of generations, so we have some clues as to what they are looking for in an employer and a work environment.

There’s data to suggest that Millennials see our industry as old school, slow to change and generally not all that attractive. I think the exact opposite is true. The insurance industry is all about trying to improve processes and creating solutions that allow businesses the room to create and innovate. It’s far more than just selling products and services.

We also know that Millennials want to work for an employer that does good in the world and is a socially responsible citizen of the community. Well, the insurance business is critical to a functioning economy and society.

The problem we have is one of education. We have to be better at communicating all the opportunity there is in insurance to drive change.

We also know that Millennials want to work for an employer that does good in the world and is a socially responsible citizen of the community. Well, the insurance business is critical to a functioning economy and society. York’s mission statement is, “We reduce risk and get people and organizations back to health, work and productivity.” At the end of the day, we are here to help people get back on track. By understanding and managing risk, we can help to make society and life better.

Many of us in the industry know that, but we have to be committed to reaching young people early in their careers, helping them to see that mission and get excited about what we’re doing.

R&I: Are there any specific ways you’re communicating that message to Millennials?

TW: Yes. We’re trying to identify different ways that Millennials like to communicate and learn, and that has driven an effort to become more adept at social media.

We’re also trying to make our work environment more interesting and modern. One of the things that I noticed when I came to York was that all of the offices looked similar.


They had very high cubicle walls. They were generally pretty dark colors. You’d have private offices on the outside of a building taking all the windows, and then you’d have cubicles inside, and that made the cubicles very dark. It didn’t necessarily inspire collaboration.

So, over the next couple of years, we’ll work on making these office environments much more open, inviting, bright and inspiring of collaboration. That means very few private offices, more huddle rooms, open floor plans, and no blocking the windows.

We’ll also incorporate new tools like “smartboards” that make it easier to work together on documents and presentations. No more emailing attachments and losing things in the shuffle. People coming out of college today are used to these new tools, and that’s what they expect to use at work. &

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.


Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.

R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.


We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?


Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.


Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now and where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.


More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]