Mobilizing for a Cause

“I don’t like to think of myself as a female CEO.” It may be a somewhat uncomfortable role, but as chairman and president of Chubb Insurance Co. of Canada, Jan Tomlinson has become a role model for women in the industry.

“It goes back to when I was an underwriter. I really just wanted to be a good underwriter, to have brokers and agents feel that I knew underwriting. That’s how I built my career.”

And, she adds, while when she first took the helm, female CEOs were not so common, there are now several examples, such as Peace Hills’ Diane Strashok and The Co-operators’ Kathy Bardswick.

That said, Tomlinson understands that she and other female CEOs in the industry can act as flag bearers for other women. “There is a challenge in that, how do we make certain we create opportunities for those who come behind us.” But, breaking through the glass ceiling is not Tomlinson’s only means of supporting women in the industry. Shortly after coming to Canada in 1995, she noted a story in CU about a new group known as the Women in Insurance Cancer Crusade. With about 80% of the insurance industry comprised of women, taking up the fight against breast cancer, which inflicts one in nine women, just made sense, she says.

Chubb began to sponsor WICC events, such as its annual learning breakfast and spring dinner. Then, in 2000, when WICC co-founder Mabel Sansom announced her retirement, she approached Tomlinson about taking over as co-chair. Fellow co-founder Linda Matthews also retired, with first Debbie Green and now Linda Wahrer stepping in as co-chair. Wahrer was part of WICC’s original steering committee and has fulfilled a number of roles, including organizing WICC’s highly successful golf tournament. WICC has become an “unbelievable” success story, Tomlinson observes. “If you talked to Linda and Mabel, I think they’d say they never would have anticipated it would become as big as it has, or raise as much money.”

To date, the organization has raised more than $800,000, and, just as importantly, has become a means of mobilizing the industry around a common cause. “It’s not only about the cause – especially given the number of people affected by the disease – it’s also about the number of people involved within the industry…you see how warm-hearted the insurance industry actually is.”

UNDERWRITING TRADITION

Tomlinson has been around the industry for 30 years, although Chubb has been her home throughout her career. In 1973 she started as a casualty underwriter in the New Haven, Connecticut office of Chubb and Son Inc. She later managed underwriting departments in New Haven, Westchester and New York and became Westchester branch manager in 1986. She was later worldwide director of human resources, prior to coming to Canada in 1995.

Along with her roles as CEO and chairman here, she is also a senior vice president and managing director of Warren, New Jersey-based Chubb and Son. Underwriting has been a foundation for Tomlinson throughout her career. “At the end of the day, this [underwriting] is what I know best.” She sees this as a strong suit when dealing with underwriters and brokers alike, to “speak the language” of the underwriter, to have credibility as someone who can determine what is a good risk and what is not.

She notes that Chubb was founded on the fundamentals of underwriting. “Back in 1882 when Chubb was founded the philosophy was that you have to make an underwriting profit and the investment side will take care of itself.” It is a view she shares, and one she has carried throughout her career. Adequate pricing is something she advocates even at the risk of conservative growth during soft pricing cycles. “We were not growing as much in the soft market in order to maintain discipline.”

With Chubb focusing on specialty risks, she acknowledges that pricing is a challenge. “From the standpoint of our products, some are potential catastrophic products but we price the overall book based on this potential.” For example, during the soft market she found herself questioned on the company’s directors and officers (D&O) rates, but stood firm that this risk needed to be priced for future perils. This foresight has been validated by the recent wave of corporate scandals and shareholder lawsuits, which have caused other companies to boost D&O rates sharply in response.

STICK TO THE KNITTING

Tomlinson hopes the industry will learn from its mistakes in terms of maintaining underwriting discipline even when the soft market returns, although she does not anticipate this turn will come anytime soon. Tomlinson expects to see more of the same in terms of rate increases in 2003, and to a lesser degree in 2004. The lack of capital, amongst other factors, should prolong the hard market this long, she says.

Ontario auto, of course, is the biggest thorn in the industry’s side. “Until they fix Ontario auto there is going to be a big lack of capital available in the market because no one can get the rate increases to offset the claims costs.” Even recent legislation tabled to reduce fraud and misuse of the dispute resolution system in auto will not have an impact on results for many months to come.

Just as troublesome are growing costs on commercial policies. “The development of losses has been much more on the general liability side of house than has been discussed in the insurance press.” Despite Canada’s legal system being more favorable to defendants than that of the U.S., the litigious environment is growing here. “You’re seeing changes slowly,” says Tomlinson.

Insurers have to be looking ahead as they reserve for claims, rather than basing decisions solely on past losses. While the patterns of the past are often replicated, lack of good prior experience on which to base underwriting decisions calls for foresight on the part of insurers. And pricing should be geared not to 2003, but to 2004, when 2003 claims have developed. Companies also need to be realistic about their operating targets. In the past the attitude was “a combined ratio less than 100% is all we want to be happy, that’s our goal”. Tomlinson points to a recent IBNR Insurance Weekly report by Dowling & Partners that suggests in order to achieve 12.5% ROE, companies need a combined ratio of 91.6% on a standard book of business. “I don’t believe 100% is the magic number anymore, it’s somewhere below that,” she says. And with investment income dried up, “the days of being able to combine at 103% or 104% are gone”.

Chubb’s strategy going forward will be to “stick to its knitting”, ironically the vision Tomlinson had when she first came to Canada. The company will remain a specialty player, and will continue the claims service level that has taken it to the top of customer satisfaction surveys done by the Financial Services Commission of Ontario (FSCO).

KEEPING BUSY

Tomlinson has become a key figure in Canada’s insurance industry since moving here with husband Thomas and son Ryan. Along with her duties at Chubb and role with WICC, she is also on the boards of the Insurance Institute of Canada (IIC), InRoads/Toronto, the Toronto Board of Trade, and the Providence Centre Foundation. She has received the Distinguished Alumna Award from alma mater Marymount College, the YWCA of New York’s Women Achievers Award, the Tribute to Women in Industry Award and is a Leadership New Jersey Fellow. She has also been given an honorary CIP from the IIC.