ITB with Tyler Asher - From Catastrophes to the Economy - Being Aggressive in Insurance 2023

2023 is on track to be another record-setting year when it comes to economic impact and catastrophic events in the United States! What's the answer to insurance industry success during these times?

Tyler Asher, President of Independent Agent Distribution at Liberty Mutual joins Rick Fox for this week's edition of the Insurance The Brightway (ITB) podcast. Hear one of the top thought leaders in our trade as he shares his secrets to successfully navigating the market...

...to help your customers and your agency alike!

Subscribe and listen to the ITB podcast at www.brightwaydifference.com/podcasts or wherever you listen to your favorite podcasts today!

ITB is a weekly podcast brought to you by Brightway Insurance, the insurance franchising leader coast-to-coast.

#LibertyMutual #Safeco #2023TheBrightway #podcast #insurance

Transcript

Rick:
Welcome back to another episode of Insurance the Bright Way, ITV podcast. I'm Rick Fox, the host, and today I'm honored, I am blessed. I'm just all around excited to have Tyler Asher, president, independent agent distribution at Liberty Mutual. Tyler, welcome to the show.

Tyler Asher:
Thanks Rick, appreciate you having me on.

Rick:
And Tyler and I have done this before, so we're going to try to keep it to an amount of time that you guys will all stay tuned in for, um, not because I don't have good information, which I don't, but Tyler does. So, uh, Tyler's been with Liberty mutual and safe co for a couple of decades. Now I think of him as one of the. The top guys in the industry as it relates to what's really going on in market, um, really understanding. not only what a carrier thinks and what a carrier feels, obviously from his position, but has a really good, keen sense of the agent. So Tyler, I appreciate everything you do for this industry. I appreciate you being here. And I'm just gonna ask you the question I always ask everybody. So how did you get here? Like, how did this happen?

Tyler Asher:
Yeah, you know, well, like everybody, I plan to be in insurance for, you know, my entire childhood. No, I kind of fell into it like many. I was just at a school and looking for something to do and I was planning to go to law school actually, so just trying to figure things out. Safeco actually was just a couple blocks off of our campus and so ended up getting a job there and what I thought was going to be temporary. I actually ended up falling in love with. So you mentioned, Rick, a couple decades. I just celebrated my 24th year. So next year,

Rick:
Wow.

Tyler Asher:
if we get back together, I'll be celebrating a quarter century. And so while I fell into it, I think what made me fall in love with it was just the people we work with, the challenges that we face, and certainly plenty right now, and just really have enjoyed. and have a passion for working with independent agents to help them be successful business owners. So it's been a very rewarding career and one where I'm fortunate to have spent a good amount of time with one company, Safeco Liberty Mutual, and just being able to evolve as the company's evolved.

Rick:
Well, and the other part, which I can't believe I didn't mention first and foremost is we're both huskies. We're both UW huskies. So we got that going for us. Go dogs.

Tyler Asher:
Go Dogs!

Rick:
So, all right, so let's get into this. Um, not a, not a surprising topic, especially considering your position in the industry, but, uh, let me just, let me tee this up with for everybody out there. I'm going to kind of do. Here's a problem that we all feel the, when I say it and then but I really want from Tyler is kind of, okay, we know it's out there, we know what's going on. What are some possible solutions or ways to look at this as more of an opportunity? That is, that problem is the hard market. It is, you tell me what you think. I've been doing this about as long as you, I've never seen it like this ever. And so I would love for one, do you agree with that question? Is it the hardest? And two, How has that impacted you? I mean, you're on this carrier side and I'd love to hear from your perspective what this means to you and Safeco Liberty Mutual.

Tyler Asher:
Yeah, you know, as a company, so we've been in business, Liberty Mutual, for 112 years. Safeco, actually, earlier this year celebrated 100. And so we've been at this a long time. And so over 100 years, we've seen every market cycle, disruption, you name it, and we've been able to successfully navigate it. So we're confident that we'll do that here as well. That said... I mean, you hit it like it is an incredibly challenging environment. And really having only been in the industry for 24 of those 112 years, I can't say it's the worst, but I can definitely confidently say it's a generationally bad

Rick:
Yeah.

Tyler Asher:
market cycle. So it is incredibly challenging. It's really a confluence of factors. I think lots of headlines around inflation. And really, inflation being more acute in the areas that matter to insurance companies. Replacement costs, the cost to replace damaged or total vehicle, the cost to repair homes. In some cases, replacement costs up well north of 70% in

Rick:
She was.

Tyler Asher:
the last couple of years. So we're just in a position where it costs more to replace and repair everything. than we're currently charging. So you take inflation, and that's a pretty significant headwind. You add to it, we're in an environment the last few years where every year we have set new records for the number of catastrophes and severe storms. We're on pace for another $100 billion loss event for the industry. And for us, you know, we're top three rider of property insurance across the country. So significant weather. significant catastrophe events continued to be a major headwind. And then just broadly, as if those weren't enough, I think there's just continued pressure in all liability lines. And there's been a lot in the headlines on, say, social inflation. We're actually trying to change the narrative around that because the major drivers are what we believe are legal system abuse. Just

Rick:
Yes.

Tyler Asher:
higher lawsuits and loss outcomes. Driven by a whole bunch of factors, but third party litigation financing where there's not transparencies at who's funding lawsuits. We're seeing predatory, in many cases, advertising practices. And so there's just a lot happening with liability trends that are putting pressure on commercial lines for sure, but starting to dip down into personal lines as well. So the three of those together have really put us in a situation where there's been a lot of market headwinds. for all of us to navigate. From a carrier standpoint, the number one factor for us has been, how do we make sure that we get pricing in line with what it costs to replace vehicles and repair and replace homes? How do we make sure that customers are insured to value? So, if a customer hasn't really looked at their coverage in a few years, and replacement costs have really skyrocketed, we wanna make sure they're protected too. So in the event of a loss, They have adequate coverage to get them back to that pre-loss state. So pricing has been a huge lever. Obviously we have in that whole kind of period dramatically slowed new business writing. So being a little bit tighter on underwriting, mostly because anything you're writing today, you price 12 months in advance for covering losses that are going to happen in the next 12 months. So if you know you're underpriced. and you're writing new business, you're doing so knowing that it's at a loss, and it's just harder to play catch up on the back end. So it's been really important for us to slow new business. You've seen the industry really pull back there as well until we can get pricing in.

Rick:
Yeah. And I think, I think it's great to hear from a carrier because like, so I work at an agency when I was at Verta 4, we worked with agencies and I have, you know, plenty of carrier relationships. And, but I think the general sense of the agent level is, man, these carriers are messing with me. They are, they are, they are messing with my livelihood. They're pulling back, like you said, they're pulling back, they're pulling out. Um, rates are going through the like. And I think it's very important that we take a deep breath

Tyler Asher:
Yeah.

Rick:
and realize that we're all in this together. Because if you look at this from the carrier perspective and I, and by the way, Liberty Mutual, Safeco, very large in our agency, Safeco was my original appointment when I started my agency. So I have like the warmest spot in my heart for Safeco of all. But talking to all of the carriers that we work with, no one's making money and then charging more for insurance so they can make more money. They are backpedaling into not losing as much. So at the agent level, I mean, it's worth a deep breath and understanding. And somebody like Tyler, who's basically the number one guy for independent agent distribution at a giant carrier is saying, Yeah, we're, we're playing catch up to trying to get back some rate, get back to where we're not, you know, behind the loss, you know, the cannon of losses that are coming through all the time. Is that, am I framing that right?

Tyler Asher:
No, you're thinking about it right. And we've seen carriers really span the spectrum in terms of the response. And there's companies are responding in different ways. We believe, and part of it again is back to our history and having been in this business for a long time and partnering with agents for 100 plus

Rick:
Yeah.

Tyler Asher:
years, is the best way to navigate the cycle for us is to be aggressive at getting pricing as quickly as possible where it needs to be. making sure that we're tight on underwriting, making sure that we're only writing new business where we know we can do it profitably, being focused on expenses and taking expense out of the system. So all of those actions for us have put us on a path, we believe, to get through the cycle faster. The hardest thing to do from a carrier seat is to play catch-up year after year after year after year. And you've seen companies start to report combined ratios north of 120, north of 130, I think some in Q2 north of 140. Those are really daunting challenges to climb out of from a pricing standpoint. It will take years in an environment where trends are already high. So if you're behind, if you're playing from a position of you were already behind and now we're playing catch up. It's just really hard to get through it. So I think the entire industry needs pricing. I think that's largely working its way through now. Some companies were early in taking action and aggressive in taking action. We think those companies will likely end up with an advantage in terms of coming through it faster and then finding opportunities for growth on the other side. We tell our team, our aspiration is to be the number one choice for independent agents. Today, we're the second largest rider through independent agents, and we'd like to be number one. But our path to number one isn't linear. We've got to take the medicine we need to, to feel great about getting back towards consistently growing towards that aspiration. And we're confident that we're doing that. And I think you're seeing carriers, some that were early and really were clear on their path. Some that were kind of trying to wait and see what might happen. For many, you looked at the inflationary trends and there was a good case to be made that it was going to be transitory, that this was kind of residual effect of the pandemic, that supply chains would normalize, that things in a relatively short period of time would get back to normal. I think what has actually played out is higher trends have lasted for longer. very long time for things to normalize. There are signs of hope for sure, but I think the trends are with us a little bit longer, which just means you've got to be that much more aggressive. And if you were slow to take action, you're playing catch-up. So you're seeing carriers and headlines that demonstrate that full spectrum.

Rick:
And so I would just, let me make a point and then let's kind of move on here. So my point is just, again, I'm just reiterating that this is a relationship business, you have relationships with your customers, this is also the time to make sure that we have the right relationships with our carrier partners and that they have the right relationships with their agents. And so we're in a position where we get to kind of like work on that. Like this is like, you know, you. like a marriage or anything else, you need to work on our relationship and understanding the perspective and the plight of the carrier. And Tyler, thank you for being so transparent in kind of presenting that out to us. It's tough out there, everybody. And if we all work together, we're all gonna get through it. So how do we get through it? Let me shift gears. Let's

Tyler Asher:
Yeah.

Rick:
get a little more positive and let's say problem, here's solution. So I'm gonna ask Tyler an open-ended question. We sort of talked about a few bullets, but him and I could go on for hours about this. So I'm gonna let him just see what pops into his mind when I ask this question. What can agents do to look at this like an opportunity and not a problem?

Tyler Asher:
Yeah, you know, in any market disruption, any kind of, you know, chaos, there is opportunity for agents that are willing to pivot and see it and not get, you know, kind of bogged down by what's happening right in front of us. And there's plenty of opportunity for that. But we think it's a great time for agents. And we have long held that independent agents have a competitive advantage relative to any other distribution channel. a unique kind of value proposition that really marries ease of doing business, choice in terms of offerings. That's so important right now. But even more important than that is advice. Trusted advice, advocacy, and education. So that has long been agents competitive advantage. If you think about this environment right here, right now, that's only amplified. If you're an insurance, you know, policy holder, and you bought directly or you did it yourself online and you're getting the renewal in the mail, who's providing you context as to why it went up? Who's providing you context as to what's the next best step for you to take? It's a huge opportunity for agents right now really to drive home that value proposition for their clients. customer calls and they're wanting to understand what happened at the renewal, what should I expect at the next renewal, should I shop, should I stay where I'm at. That level of advocacy and advice is so valued by customers and really understanding a complex environment. And it's just a huge opportunity for agents to build long-term loyalty, to demonstrate that value, to gain additional referral opportunities. You've got people talking like, hey, I just got my renewal bill, it's way high. someone else says, yeah, me too, but my agent explained, who's your agent? It's a big opportunity. And as we look at the market, right now new business is a little bit harder, but agents that have kind of pivoted say, you know what? We're gonna focus right now on really driving long-term loyalty, serving the needs of our customer, focused on higher attention. We think that pays dividends today and will pay huge dividends going forward.

Rick:
Tyler, let me jump in because

Tyler Asher:
Yeah.

Rick:
I want to clarify something that I think is super important for, I mean, just for understanding, because I guarantee you agents right now are nodding their heads and going, yes, this makes sense to me. I understand it. The value I bring, because if you're in the price game as an independent, you're going to lose. Let's just call it what it is. And I don't mean because your prices are not going to be low enough, but that's not what we're doing here. the advocacy and the word that I want to hit on here is education. So we've always said you want to educate your customers, but I think in the past, it's felt more like, uh, educate them about why they need a certain coverage or why they need a certain limit and why it's important that they're protecting today, tomorrow, and, you know, 20 years of potential garnished wages. If they're not covered properly that, that education piece. You know, check, we've been talking about that a lot. Okay. Um, the second piece to me on the education is the education of what's going on in this market. Because to me, you mentioned this earlier when we were talking about the problem. It, but like I live in Florida. It, my, my insurance, I just got my renewal and my insurance went up 30%. And I'm happy about that. Right. That is not bad. But if you're not educating your customers of what's going on in the market, if you're not educating them with what they need to be, how they need to be looking at this, then they're gonna be like, no, what the hell? I got a 30% rate increase. I'm going elsewhere. It's like, that should be jackpot in Florida. It only went up 30%, right? I mean, am I thinking about that in the way that, like this sort of

Tyler Asher:
Nepal.

Rick:
unedited education monster?

Tyler Asher:
No, that's exactly right. I mean, it's like fundamentals of communication, right? It's setting expectations, like what should the client expect? And then when it comes, they kind of know, this is the environment that we're in. It's going to be 30. And honestly, you're probably not going to find, even if you spend all the time trying to shop, you're really not going to find something better. Or carriers will look favorably upon customers that have higher tenure, right? So it's like you actually benefit from staying. exactly where you are. So

Rick:
Which

Tyler Asher:
setting

Rick:
also

Tyler Asher:
expectations.

Rick:
goes back to, it

Tyler Asher:
Yeah.

Rick:
goes back to me as an agent now to basically say, I got you, like I've got, like it's, it might be more, but I got you. And this is why my carrier partners have raised their rates and you're, you should be grateful that they're even still, I mean, in our case, Florida, even writing business in that state. So, so I think there's a, there's like a two-pronged approach there to education.

Tyler Asher:
Absolutely. And I think you hit on something important, like being proactive is, is really important. So, you know, explaining it to a customer as they call with a, you know, big renewal. Um, and maybe they're a little bit passionate about why on earth a mind go up by this amount. I haven't had any losses. Um, you know, it's important to step them through it. Um, it would be even better, uh, to start communicating before renewals

Rick:
That's

Tyler Asher:
to

Rick:
right.

Tyler Asher:
be proactive.

Rick:
Proactive. Yep.

Tyler Asher:
and setting expectations. So when you get that 30% increase, you're like, okay, yep, my agent told me this was gonna happen. And even setting expectations for the next term, as much as we all hope that this environment kind of normalizes quickly, it will for sure bleed into 2024. And if we looked at hard market cycles in the past, typically, whether it's three years, whether it's four years, they do end. And so we are well into this, not something that's going to immediately go away. So it's really educating clients on, we're in this period together for a while, and that I am watching, I'm watching for your best interest, and I'll let you know if we feel like you need to make a change. There's just a huge opportunity to demonstrate that value.

Rick:
And okay, so that's, that's one huge, like we could, we could just sign off now. And I think there's enough there for a huge win for our people, but take me somewhere else, take me in a different direction. What, what else should people, because like everybody I talked to is either completely freaked out

Tyler Asher:
Yeah.

Rick:
or completely excited because they do see this opportunity. So from where you're sitting, you've got some of the biggest, you know, best agents around, um, what, what are What's the, what is, give me more, give me more of how we take advantage of this.

Tyler Asher:
So I mentioned the importance of really leaning into advice, advocacy, education. Part of what we're seeing from the really top performing agents is how do they do that? How do they shift the time to put more energy into that than really ever before? So again, moving from reactive to proactive. And so one huge area that we think is an advantage for agencies that have really invested in digital. really invested in the ability for customers to, whether it's self-service, or whether they're leveraging a carrier service center, whatever it might be, but the way to get automated service for really low complexity transactions kind of off their plate, really frees up time for the staff to be proactive, to focus on activities that do build kind of long-term loyalty. And, you know, I think customer receptivity to being, you know, almost 100% digital is as high as it's ever been. So it's just a big opportunity for agents to think about their strategy there. The more they can offload from a service demand, the more they have time to spend on their education. And for many agents, they're like, well, now is our highest service period. And it is. But it's customers calling in about renewals or trying to understand what they should do next. Those are the transactions that agents should be focused on. Those are the relationship-based components. It's more the simple stuff. How do I pay a bill? How do I get ID cards? If you're spending time on that, it's going to be very hard to keep up with what's coming in the door in terms of customer needs. So we think digital and service strategy are key components. We also see agents that are in this environment continuing to find ways to grow. And there's certainly a case to be made. I mean, I think. If you were heavy in the lead space, now as many carriers, their large purchaser leads, particularly direct riders, as they pulled back on their marketing and acquisition spend, the cost to buy leads is a little bit lower now, quite a bit lower actually than it used to be. So for agencies that are sophisticated and in that space, you might actually find an opportunity right now where you can compete against some of the big guys. And so we're seeing agents do that. We're seeing agents really refocus on centers of influence that drive higher leads. Those lead to household accounts. So not just auto, but home and the entire package. So we're seeing agents really look at this opportunity to say like, this is a place for us to get even stronger. This is a place that we can take some opportunity now to build some capability that will pay dividends long-term. So it's not purely like, let's pull back and protect the book and the castle.

Rick:
Fine, fine.

Tyler Asher:
There's agents out there kind of sending the ships out to explore

Rick:
Yeah.

Tyler Asher:
and we think both strategies are sound. You can make a case for now is a great time to actually. think about kind of exploring new potential lead sources from the standpoint of it's slow and there's opportunity to really start to build small so that when this thing comes back and it will, that you're fully ready to go and can scale that.

Rick:
And if you look at your first point about the advocacy, the education, the proactive approach, we're telling people that, and that that's a huge win, because so many of you aren't doing it. Which leads to your third point, which is, when the market's this volatile, there is fruit on that tree of all of the other agents that aren't taking care of the 30% increased guy, like me, who's angry. And if you're out buying leads or finding those centers of influence, centers of excellence, whatever, whatever you're in, in your community, like this is a time to attack. So if I just, just make sure I'm right here, Tyler, let me, let me just read back the three. So we've got advocacy education is one. Number two is digitization, which I believe a hundred percent believe in. You know that about me. And the third thing is look for opportunities to grow. Like if you hit those three things hard as we like, to your point, I think we're at the bottom of this cycle, we might stay here longer than we hoped, but it's, we're not staying here. We're not at the bottom of the ocean forever. We're coming back up. And if you attack one, two, and three, or one, two, or three, even, man, you're going to put yourself in a position. Am I, am I looking at that through the right lens? Okay.

Tyler Asher:
Totally agree.

Rick:
All right. Cool. Well, so, um, I'm going to ask Tyler the question I always ask, but I do want to just say, listen, it is, it is tough. The market is hard. People like Tyler Asher telling you that this is a rough market, but they're also providing ideas and opportunities that I've been saying now Tyler's, you know, got, gone even a layer deeper with like, this is an opportunity for you out there in the agent world to just grab it and tackle it. and take it home and eat it. Like this is the time to do that, right Tyler? I mean, I'm right?

Tyler Asher:
Yeah,

Rick:
Yeah, so

Tyler Asher:
I think it's yeah good

Rick:
go ahead. No, finish, finish your point. Cause I like, I think this is great.

Tyler Asher:
No, I mean, like I said before, in chaos, there's also opportunity. So it's a balance. And I think most agents and most carriers, we're in this for the long haul. So we've got to put the right lens on it, which is we've got to act aggressively at what we're seeing near term. But we have to continue to lift our gaze on what's ahead and not stop investing for long term success. And so agents need to do a little bit of both. I think there's a huge opportunity on their side for those that do.

Rick:
All right, I love it. I love it. Well, that I can see Don right now is my producer has got his wheels turning. That might that last line might be the teaser for the podcast. All right, Tom, I'm gonna ask you the question I ask everybody at the end of the episode. This is my time capsule question. So we're gonna record this next little piece right here. We're gonna put it in the time capsule and bury it. Someone's gonna dig it up. What is Tyler Asher's one big piece of advice for the insurance industry?

Tyler Asher:
Yeah, Rick, it's always been clear to us. The relationship, the partnership between carriers, agents, customers, like all really working in unison to meet the needs of our collective clients has been critically important. I think this environment just really heightens that and makes it that much more pronounced. And you said it at the top, the ability for carriers and agents really to tackle this environment head on together. as partners is absolutely critical. You know, it's certainly not easy for agents. And I, you know, certainly for our part, we've taken tough actions, whether it's rate or whether it's underwriting. And we know it causes agents to spend more time on renewals than they probably want. And so we know that's an opportunity to strain kind of the relationship, but we also know the importance of us navigating it together is just so important. And so it's really important to us that we continue to demonstrate our commitment to agents, our commitment to be champions for agents, our commitment to really do more than any other carrier to help agents grow and thrive in the market today and tomorrow. And we will get through this together. Hard markets, while very acute, they don't last forever. And so true to who we are is our value. our values that drive us and our commitment to the independent agency system. We are incredibly optimistic and we think that partnership is just so important and we look forward to looking back on this with all of our agency partners as a fond memory of a challenging market but most importantly as an opportunity to deepen our partners and relationships with all of our agents.

Rick:
and look back and say, whew, we made it. We made it through.

Tyler Asher:
We made it.

Rick:
Tyler, my man, I appreciate you so much for coming on. It's such

Tyler Asher:
Thanks.

Rick:
great perspective that you give. And I know you care so much, not only deeply about this industry, but about all of the agents out there that are part of the Liberty Mutual family. So thank you so much for being on. If people wanna be connected with you, is it LinkedIn? Is that the best way to sort of be connected?

Tyler Asher:
Absolutely, find me on LinkedIn.

Rick:
That sounds great. Tyler, thanks for being on, man. I appreciate it.

Tyler Asher:
Thank you.

Rick:
Thanks again, everyone, for tuning into another episode of the ITB. Make sure to subscribe wherever you get your podcasts. Leave a review. If you like what you're doing, make sure you're connected with me on LinkedIn. Send me a direct message. If you have somebody awesome like Tyler that you think should be on the show, uh, or any topics for one of my rants. And I am humbled and blessed every day by all of the messages and the community that we've created here on this podcast with great guests like Tyler coming on. We will keep bringing it. You keep showing up and we'll see you next time.