How Global Atlantic is staying relevant

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Beyond the Challenge is a podcast where executives in the insurance and financial services industry share their insights and experiences. Hosts Kevin and Sandy Dougherty talk with today’s top business leaders about what keeps them up at night and the biggest opportunity organizations can capitalize on today. We encourage you to listen, share, and subscribe to our program.

Kevin and Sandy Dougherty each have over 20 years of experience in insurance and financial services, corporate leadership, and executive search. They’re the owners of Global Corporate Solutions and Global Corporate Leaders. Global Corporate Solutions partners with organizations to gain efficiencies and contain costs. Global Corporate Leaders partners with organizations to enhance and evaluate talent.

Beyond the Challenge podcast is sponsored by Exactuals, perfecting payments and the data driving them; Techficient, transforming the protection journey with intelligent data and machine learning to drive better outcomes; and JourneyGuide, improving your clients’ retirement outcomes through interactive planning software.

Welcome to Beyond the Challenge. Here are your hosts, Kevin and Sandy.

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Kevin: Today, we’re talking with Rob Arena, Co-President and Head of Individual Markets at Global Atlantic Financial Group, about the trends, challenges, and opportunities he sees for the insurance industry. Rob is highly engaged in the day-to-day management of the business and the company’s overall strategy. Rob, can you tell us a little bit about yourself and how you got into the insurance industry?

Rob: Yeah, thank you, Kevin. So, my journey into the insurance industry, I suspect, was like many others. I didn’t go to school to be in insurance. Looking back, I’m not exactly sure what I wanted to do when I graduated, but my first job was as a group sales representative for a company that no longer exists or it’s been acquired a couple of times over called Paul Revere Insurance Group and so that was my entry point in sales training program, learning how to sell group insurance and I did that for about two and a half years and a couple things were clear to me. One, great experience, and, two, there’s just no way, if I was going to be successful in my career, it was going to be in outside sales so went back to graduate school and then, from there, I continued my career in insurance, coincidentally enough, with a company called American Skandia where I got into the home office part of the business focusing on product, product development, product innovation, and it’s been an incredible 30-plus-year career, but certainly not one that I thought was going to be an insurance but very glad that that’s the way the path took me in life.

Sandy: Thanks, Rob. All sectors face challenges, but for the insurance industry, the list seems especially long. Many carriers seem to be struggling to stay relevant while others are embracing new technology, reimagining distribution channels, and developing strategic partnerships. How do you see carriers keeping their competitive advantage and keeping it going?

Rob: Yeah, it’s a great question. You know, it does seem daunting when you think about the list of challenges that as an industry we face but, as I remind folks, there’s been other periods of time where we’ve had challenges as well, it’s just a different set of challenges and I think that’s always the case in any type of business you’re in, it’s just, when you’re in the middle of it, it feels overwhelming and different and fundamentally new. But if I just rewind 5, 10, 15, 20 years ago, we were faced with challenges, some of the same and some different challenges. And I think for companies like at Global Atlantic, whatever the company might be, it’s really important to understand what your value proposition is and how you stay true to that through these different market environments. I think where companies make mistakes is sometimes they try to do things that they’re just not capable of doing and capable of focusing on and they get a little bit distracted. I think one of the areas we’ve been successful has just been laser focused on the opportunities that we see where we fit, where we think we can add value, and trying to do a great job there and not get distracted by everything else going around us because, if you do, it’s very easy to get overwhelmed and it’s very easy to get sidetracked in what you’re trying to execute on. 

Sandy: Great. So what do you see as the main barriers to growth and innovation for carriers?

Rob: You know, I think one of the things, and we’ve had a couple of expressions that we’ve used that I really liked, probably three years ago, we adopted this expression where process is the new product. And so for so long, I think in the insurance space, it’s been product, product, product, and if we provide more product, then that will be the solution to getting more people to purchase our products and increase sort of this adoption of insurance and addressing the underinsured sort of gap that exists in our country. But what we recognized is it wasn’t just about product. Product had evolved to the point where product is very compelling, adds great value proposition, but it’s not just about product. It was really about process. And now, there’s an article I read that says adoption is the new innovation. I think that’s very true, particularly in the industry we’re in where we’re so used to doing things the same way for so long. So, to answer your question, I think it’s less about product, it’s more about making the buying, selling, owning experience to be more — everybody likes to use the word “Amazon like” so let’s use it here, more Amazon like, and then thinking about ways to drive adoption of that new technology. That’s really where we need to go as an industry. Yes, product, we got to continue to do that. We got to continue to innovate and get better and make sure we’ve got the right client-focused approach to that, but these other themes around process, around adoption are so critical to increase overall ownership of the types of products that we offer.

Sandy: Rob, from your experience, how can insurance carriers embrace innovation and transformation?

Rob: Yeah, I think one of the things that’s just so important is while we need to understand what’s worked in the past and why it’s worked in the past, we need to appreciate that in order for us to really change insurance and change ownership and change usability, if you will, of the types of solutions that we offer, we need to understand where the industry is going, where the marketplace is going. We’ve got to look at other industries, I think, as a good sort of bellwether for what we need to do. No longer is it okay to compare the insurance industry to the insurance industry. We’ve got to compare the insurance industry to all other industries. That’s how we’re being judged, whether we like it or not. That is increasingly how we’re going to be judged as we go forward. So, Sandy, I think it’s so important for us to sort of step out of this insurance world and insurance-speak world and insurance way of doing business world and think about how things are being done elsewhere and how we can bring that innovation, that technology into insurance to make us more credible, more relevant here as we go forward.

Kevin: Rob, what is Global Atlantic doing to stay relevant?

Rob: Yeah, it’s a great question. So, one of the things we have done recently is we have undertaken what we call transformation, business transformation, particularly in our individual markets business, which is where we deliver insurance-oriented products to individuals. We’ve undertaken what is going to be a two-year, $60 million plus transformation effort where basically we’re re-platforming all of our products on a new system with a theme is we want to build a modern digital client-centric business. So it’s been an opportunity for us to say, “Hey, what we’ve done has worked.” We’ve had some success with it, but we just want to pause and think about now what do we need to do going forward? And so we’re making a huge investment, predominantly technology oriented. We’re looking at all the ways that we’ve done business historically, what makes sense for us to continue going forward? What are the things we need to change? And what are some of the things that are even new that we haven’t even thought about? And so, for us, it’s about challenging the status quo, about thinking three, five years into the future, and this platform has given us a great opportunity to really reimagine what this business is going to look like as we go forward. And I think one of the key things, Kevin, is you can’t be afraid to do that. You can’t be afraid about change. You can’t be afraid about what it might mean to your existing business. The reality is, if you don’t change, then it doesn’t really matter what your business looks like, it’s going to be irrelevant as you go forward. So that’s been a big theme of ours is really this transformation movement and looking at, end to end, the process that we operate with this modern digital client-centric lens. 

Sandy: Rob, being a product guy, I think you’re going to like this next question. So, how do you see the recent rise in interest rates and market volatility affecting future product development?

Rob: Like you said, I began my career in product. Well, out of my short journey in sales, I began my career in product, and at some level for 30 years, it’s always been my passion, has been product and thinking about different ways that we can address the needs that individual consumers have. And those needs are plentiful and where does insurance fit in addressing those needs? And, for so long, in an interest rate environment that was going down, it was just more and more difficult to innovate around that because you just don’t have the capability in a lower rate or a decreasing rate environment, how do you sort of translate those lower rates into compelling, unique, different innovative types of solutions? So we’re really excited about what we’ve seen recently in getting those product development juices going again and innovation going again. That doesn’t mean the industry in Global Atlantic hadn’t done some things but it’d been pretty quiet and more quiet than you’ve seen in the past. So, I’m really excited to see what we can do at the current rate level and how we can translate that into new and different types of solutions to address the needs. I think we’re just starting, this is a relatively recent rise in rates, so product development does take some time to play out through the system, but I’m pretty excited to see what we as an industry, what we as Global Atlantic can do to translate these higher rates into even more compelling solutions here as we go forward.

Sandy: Great. So, Rob, I understand Global Atlantic has a different ownership structure than most carriers. Can you tell us about your structure and why it works?

Rob: Yeah, it’s a great question. The ownership of insurance companies has certainly become an area of focus as of late and it’s important to take a step back. There’s lots of different types of ownership structures for insurance companies. There’s private and that’s what Global Atlantic was prior to the acquisition of KKR. There’s mutuals, which has been sort of the traditional way of ownership, if you will, let’s use that word. There are public companies. We happen to be owned by a public global asset manager and so that happens to be our ownership structure where KKR has a majority ownership of Global Atlantic. There’s a lot of debate as to which one is better. I’m not quite sure there’s a clear answer to the question. I think the most important answer to the question is making sure that whatever your ownership structure is that you’ve got clear commitment around your strategy, your vision, your goals, with an ownership structure that supports that. Through the journey here, you’ve seen public companies do well and struggle, mutuals do well and struggle. You’ve seen companies get in and get out. There’s no sort of commonality to that other than making sure, whatever the ownership structure is, it aligns with the vision you have for your company, the strategy you have for the company, the direction you want to go in, and that you’ve got the commitment from that ownership structure to be able to execute on that. What I’ve said to folks who joined this industry is keep in mind insurance is a promise business. When somebody buys our product, they don’t walk out with a big box with a tangible product in it. They get a piece of paper delivered to them at some point in the future and, increasingly, not even a piece of paper but an email that links to a piece of paper. And so it’s all about a promise. It’s an IOU business. And so it’s really important that the ownership structure you have commits to that value proposition, believes in it, understands it. We’re fortunate to have a partner in KKR that is every bit aligned with us. This is a long-term business, a long-term commitment. We use the term a “forever business” so there’s a lot of attention around this ownership thing in the industry but, over a lot of years, I think those are the things that are really important and we’re really excited about the structure we have here going forward.

Kevin: What do you see is the next new product within the life and annuity marketplace?

Rob: Yeah, this is one of these questions that’s been, I think, hotly debated for a while. We haven’t seen a ton of new innovation come out recently, at least through my eyes, I haven’t seen anything. There’s some stuff that we’ll call innovation but, at the end of the day, it’s fairly similar. There’s been a lot of attention around these hybrid types of products. How do we take and combine the best of what annuity products bring to bear along with life insurance, long-term care insurance? And what does that Swiss army knife, if you will, what does that hybrid product look like as you go forward? And so I think you’ll continue to see a lot of interest there. There was a lot of development, Kevin, and I think, in the low rate environment, it became very difficult. I think as we go forward, I think you’ll see a lot of attention focused on this hybrid nature of products and thinking about how you can provide different types of solutions. We know long-term care is a critical need. We also know standalone, long-term care insurance has been particularly challenging, that doesn’t mean there’s not things you can do in a different type of package, so I think that’s one and I think two is around income, particularly in the annuity industry, for those who are focused on that space. The scale is really tipped to be more of an accumulation-focused business but, fundamentally, the income challenge that exists in our country hasn’t gone away and I think as rates move to the levels they’re at, it allows us to bring back a greater emphasis there. So I think how do we best package the different types of products into a solution that addresses the needs that people have, that’s one, and then sort of the second thing I’d highlight is sort of a reimagined way of thinking about income here as we go forward. You’re seeing this come into play in the 401(k) space. I don’t think that’s by accident. There’s a tremendous need for protected income in our country and I think you’ll continue to see a lot of development go on from that standpoint. So those are the two things that I like.

Kevin: What type of strategic partnerships do you see working the best for the carriers? 

Rob: We’re not trying to be all things to all people. For us, a strategic partnership is, first and foremost, how can we partner with somebody to make their business more successful than it was before? And in turn, how can they partner with us to do the exact same thing? And so, for us, strategic partnership has been about focus, it’s been about mutual commitment to what we’re each trying to do. Your interests don’t always align and that’s okay. And where it doesn’t align, it’s important to step away and not try to force it. And so what we’ve tried to do is say, hey, you know, we’re those partnerships out there where we think we can add value and those partners can in turn add value to us and we share that commitment, and where it doesn’t exist, that’s fine. There are lots of great companies out there who deliver lots of great solutions and we’re not going to be able to address everybody’s need, but where we can, we want to have that focus. So I’ve used that word a couple times here throughout this session but it’s sort of understanding where our strengths are, understanding where the needs are, and make sure that there’s mutual alignment there and mutual commitment. Where that happens, that gives you the best opportunity. And where you stretch around that or you hope or you think or potentially, oftentimes, those things can fray, not through great efforts on everybody’s part but if you’re just not aligned at the core, then those things just don’t have the staying power to them. 

Sandy: So what do you see as the biggest opportunity for the insurance industry over the next three to five years?

Rob: Listen, I think what’s happened the last couple of years, and, obviously, what’s happened has been horrible globally as well as domestically with this pandemic, but it has fundamentally forced the insurance industry to think very differently. It’s something that we had been talking about as an industry but we were slow to adapt. And I think what you’ve seen in the last couple of years is sort of a forcing function where we recognize we do need to change, we do need to adapt, we do need to do business differently than we did before. So I don’t think it’s about product. While I’m excited about what we can do in product innovation with a different rate environment, it’s not about product. It’s about process, it’s about adoption, it’s about, and I’m going to come back to this, how do you make the buying and selling and owning experience different and better? How do we bring these products to more consumers? There’s no question in my mind that there’s never been a greater need, there’s no question in my mind that people are under-protected across our country and so the types of solutions we can bring to bear are critically important and as important as they’ve ever been. But what’s preventing us from getting there is not the product, what’s preventing us from getting there is making it easier to fit into a financial plan. This is not a separate asset class, it simply is an asset class that fits within the broader picture. And how do we make insurance feel that way and operate that way? And, if not, you get your statement and then you get an insurance statement. Regulatory wise, you may need to do that, but how do we make all this fit within the pie so somebody can see their plan holistically and where our products fit in? And if we’re able to do that, we’re able to make this an experience that feels like other experiences, that people understand the products better, it fits within the process, the owning experience is easier, less cumbersome, less complicated, then I can really see this industry continue to accelerate from a growth standpoint. But that’s a lot of work to do as an industry. It’s not any one company, this is where we’re going to be much better served as an industry if we come together and solve this jointly rather than us trying to solve this individually as a competitive edge. Yeah, in the short term, maybe you can win, but in the long term as an industry, we’re going to have far more success if we work together to improve that owning, buying, selling type of experience.

Sandy: Thanks. I think I can guess your answer to this but what are you most passionate about when it comes to insurance in retirement?

Rob: Listen, as I said, it’s been a 30-year journey for me in insurance and it wasn’t what I started out. I didn’t have a family who’s been in this industry a while and that sort of led me to the industry. So, I’ve developed sort of a learned or experienced sort of passion around this industry and what I’m so excited about is the way that we can help people address their needs. That’s always been, for me, the gating item. I want to work in an industry and for a company where I feel really good and I feel like we can add real value and really drive sort of positive change, if you will. I feel that way about the industry. I feel that way about Global Atlantic. So what I’m most excited about is our ability to continue to do that as we go forward. We serve a really, really important role. Sometimes, we don’t have the best of reputations for whatever history or whatever it’s been. It’s unfortunate, it is what it is, I think we’re doing a good job to try to change perception because what we deliver is really important and we can never lose sight of that and what we deliver people have a real need for and so our job is just to try to break down the barriers, change perception, bring it back to reality, because what we do is really important. And that, to me, Sandy, is what I’m so passionate about, is figuring out ways to increase the adoption of what it is that we do. I know there’s the need, I know we have the solution, how do we bridge that gap? As an industry, as a company. I’ve been at it for 30 years and I love it. I love the challenge of that but that’s what we got to continue to solve. 

Kevin: Rob, what do you feel is maybe one of the best decisions that you have made that had a positive impact on your career?

Rob: Yeah, as you get later on in your career, you reflect a bit more on those things and I certainly have as well. Certainly, when you bring a lot of new people into the industry, it’s one of the questions that I get asked. So I was thinking about this. You know, in a world where jobs today are pretty fungible, particularly in a remote work environment, people move around with a fairly high degree of pace to it, and that’s fine and I’m not saying that doesn’t make sense for some folks, but, for me, the most important decision was the one I didn’t make, which is I made the decision to stay with companies and to stay with the journey and learn with a company and I’ve only changed jobs or changed companies once in my 32 years and so, for me, that’s been hugely positive in my career because I didn’t chase that next opportunity. I stayed with the company. I learned, I grew, I developed, opportunities came up that I was able to take advantage of them and that was able to accelerate my career. And so, as I look back, sort of a degree of patience, I’m not sure I thought about it at the time, Kevin, I think as I look back, I’d say, okay, well, yeah, I guess maybe looking back, maybe I did have a plan that I didn’t give myself credit for. But, to me, it was the decision I didn’t make, which was to go and leave for the company when this other opportunity, maybe it seemed better, but really to stay the course and to really embrace what each company that I was in had to offer and I think that’s helped me in my career getting to where I am because it gave me an opportunity to see a lot of different things in a company and to learn a lot of different disciplines within a company, started a product but it involved virtually all aspects of an organization, from sales to operations to technology and everything in between. So, to me, I think that’s the best decision I made was sort of the non-decision in my career, and it really paid off for me in the long run.

Kevin: What advice would you give to someone looking to get into the financial services or insurance industry?

Rob: Yeah, I love this question and it’s a question that, in the role that I’m in now, I get a chance with young professionals coming into this industry to answer this question. First thing is I love this industry and what we stand for and the value we add and so it’s really important that young people coming in understand that, but the two things that I touch on most of all when I answer this question, one is always be learning. I had an incredible mentor or series of mentors when I began my career in American Skandia early on and those folks committed a lot to me and my career. I asked questions all the time. I learned this business from the very basics out. One of my mentors gave me a prospectus very early on when I began my career and he said, “Okay, read pages one to eight and, tomorrow, we’re gonna go through ’em,” and I read every word, pages one to eight, and then we kept going from there. So the lesson there is always be learning and I think that’s really, really important in any career is not to get stuck. And, two, is always be networking. And sometimes people think networking has a bad name. Absolutely not. Network is really important to build your relationships. Relationships are so important in any industry, particularly in this industry. It may feel like a big industry but you’ll be surprised at how those relationships pay off over your long career. And so, always be reaching out, have breakfast, have lunch, have coffee. I think what you’re going to find in this industry, in particular, is people are willing to help because, let’s be honest, insurance is a helping business, and by nature, the people that are in it, therefore, I think are wired that way so take advantage of it. And so those are the two things that I touch on most often when I get this question.

Kevin: Rob, what is it that keeps you up at night from a business perspective?

Rob: Yeah, I am, by nature, a bit of a paranoid person so the answer is a lot, it just depends on the day. As to what I’m most focused on, I think what I’ve learned in my career is not to focus so much on the things I can’t control. That used to keep me up at night a lot. Turns out, you can’t do anything about it, so I think I’ve learned to sort of focus my energy in the right spot. But, listen, I think, for me, there’s a lot of change going on in the world, in the country, in the industry, bringing it down more narrowly to our business. And so, for me, what keeps me up at night is really the pace of change. How do we drive change in the right way? Are we going too fast? Are we going too slow? How do we get that right from our employee base, where we’re asking a lot in a very different work environment, to our customer base to the folks who own our products? And so, to me, that’s the one thing that I think a lot about. I don’t know about keeping me up at night but I do know I think an awful lot about that, as we do as a leadership team, is the need for change and then the pace and adoption of change and making sure that we’ve got the right balance here as we continue to evolve our company and I think as we as an industry continue to evolve as well.

Sandy: Rob, thank you for your time today. It’s been great to hear your insights on how carriers can stay relevant and the opportunities you see for the industry over the next few years.

Rob: Sandy, Kevin, thank you. Thank you for your time. Really enjoyed this.

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