Chief Concerns: Claims Executive Focus

GEORGE FAY: My father was in the Navy in World War II and was a tugboat captain in New York Harbor, so I became enamored with the Navy. Early in my life, I thought I was going to grow up and join the Navy. Given my ultimate career in the Army, that's probably a little ironic.

I did as a child. I was a very popular kid on the block because I used to occasionally bring one of my friends with me and we would spend a day on the tugboat in New York Harbor with my father. Those were great experiences.

It began with my military career. I was in ROTC in college, and I went directly from college into the Army. That was in 1970 during the Vietnam War. I was a counterintelligence officer, so I learned how to do investigations. Those investigations were on sabotage and espionage directed against the Army, so it was a pretty interesting four years of active duty. Ultimately, I decided I did not want to make the Army my full-time career, so I went into the Army Reserve.

After the Army, I applied to a few different insurance companies and got a good number of different offers, but I started with Chubb because they offered me a job investigating medical malpractice cases which, at the time, sounded more interesting than investigating auto cases.

It was actually relatively easy. One of my jobs in the Army was as an instructor at the Army Intelligence School. I used to teach new counterintelligence agents going through intelligence school how to do investigations. One key thing that I learned is that, if you know how to investigate—how to conduct a thorough investigation—you can investigate basically anything. I think that is a valuable lesson for claims professionals today. Thorough, complete and professional investigations can take you in many directions. That background has helped me throughout my career, including when I served as the U.S. Army's chief investigator during the Abu Ghraib prison investigation.

Many years ago, companies had fairly rigid training programs, putting new employees through the basics and providing a solid foundation for a long career in insurance. Many of those programs were cut over the years in response to expense concerns, but they are coming back. We're doing it. Some of our competitors are doing it. New professionals have to recognize that it is a challenging industry. They need to have a very broad perspective and learn about more than one line of business. If you do not, you are limiting yourself.

We've had no problems finding people, identifying people and bringing them on board. We try to make it an exciting place to work, and we try to provide opportunities, training and development. We have far more applicants than we have the ability to hire.

Training and development, and on getting the right bureaucracies in place so that they are helping their people develop. A company can make it hard or easy to learn and to grow. I would suggest that what they should be doing is developing systems and procedures that make it easy for people to be all they can be. The Army does a great job of what we call lifelong learning. You go to a school and then to an assignment. And then you go to a different school and then a new assignment. You get used to learning new things frequently. Today's claims professionals should always be focused on figuring out how they are going to continue to learn.

It's hard to say what would be the greatest influence, but certainly leadership is a big factor. Being a leader crosses all borders, and there is really not a significant amount of difference between being a leader in the military and being a leader in corporate life. A focus on leadership is all about your people—it's not about you. You are there for them, they are not there for you. It's a perspective, right? I learned that in the military, and I'm a product of my development. What the Army really drills into you when you are in training to be an officer is that it is all about taking care of your people. I know a lot about my leaders, those that work for me, just by having a very brief conversation with them when I first meet them. Those that involve me in a discussion about how great their team is and what I should know about their team—that is the right kind of leader.

Insurance is a business. The military has an entirely different mission. When you're talking about situations in the military, not to be dramatic, but the reality is you're talking about life-and-death situations. In our business, you're not dealing with those kinds of issues, so you have a different perspective on what a problem is, which frankly makes it easier to deal with.

Part of what I try to get people to recognize is that, no matter what the situation is, calmness always helps. A frightened captain means a frightened crew. As Colin Powell says, "Remain calm, be kind." Organizations are always a reflection of the attitude and approaches of their leader. If you're someone who is prone to panic and disorganization or whatever—so will your organization.

Huge, huge changes have occurred in my span of insurance claims handling. I began at the same time we were just introducing computers into the claims world. Prior to that, everything was done by hand. When we made that transition, a lot of people suffered. They just couldn't cope with the change from handwritten materials to having to use computers.

People have to be adaptive. They have to be ready for change. If you like the way our job is working today, well, don't get too comfortable with it. It's going to change tomorrow. The role of the leader is to make sure people are ready to do that—and ready to make those transitions.

I think it will look different and the tools will challenge people to do what we really want to pay people for, which is effect as opposed to process. So we, like a lot of other companies, have looked at our work processes and tried to determine how much time people are spending on what we call adjusting.

Is there any coverage? What's the liability? What are the damages? All of adjusting should be answering those three questions. If you're not working on answering one of those three questions, it's not an adjusting function. Someone else or some system should be doing it for you. Ultimately, we want to remove as much of that process as possible so that adjusters are spending nearly all of their time—we're talking 80% of their time—doing adjusting functions, answering one of those three questions. There are a lot of people in claims and in underwriting and insurance who are very capable and comfortable doing process stuff. There is going to be less and less of that going forward, which means that the real winners in the future are going to be the folks who are best at using the tools and thinking about how to use the tools to maximum advantage.

In terms of the industry as a whole, I think now people are at 50% effectiveness in terms of process versus true adjusting. This will change dramatically as new technologies are introduced to the industry. We are already doing things here that are changing our processes dramatically and enabling us to make great improvements. During my work at the National Security Agency and during the Abu Ghraib investigation, I saw the most advanced and sophisticated data mining and predictive modeling software and hardware available. The real winners in the future are going to be the folks that are best at utilizing tools like that and thinking about how to utilize these tools to maximum advantage. So people need to be ready to do and think differently, and the role of the industry leader is to make sure that people are ready to make those transitions.

You're very welcome.

Marc Lanzkowsky and Taylor Smith are contributing writers for Claims Advisor. Lanzkowsky is founder of The Claims Spot—a Claims Advisor media partner and award-winning blog dedicated to claims professionals. Smith is a contributing editor for The Claims Spot. Chief Concerns are interviews with C-suite and top-level claim executives that seek to give insight into the insurance claim industry's highest leaders.