I.I.I.’s Robert Hartwig: The exit interview

Insurance Information Institute President Robert P. Hartwig remembers being in the I.I.I. offices on William Street in New York City on Sept. 11, 2001. “We were on the 24th floor at the time and I watched the towers fall with my own eyes,” he says.

He recalls assuring a reporter from The Wall Street Journal that the insurance industry would respond to the events in the form of claims paid, and would not avoid payments based on terrorism or war exclusions.

“It was kind of a gutsy call on my part because there were some rumors of terrorism or war exclusions applying here,” Hartwig says, adding that his assessment turned out to be the right one.

While there was some prolonged litigation about whether the attacks on the Twin Towers constituted one or two events, Hartwig notes the industry responded quickly to tens of thousands of mostly business claims, and there was a widespread sense that the industry responded “fairly and expeditiously” to the event.

“It was a sad moment in American history,” says Hartwig, “but a proud moment for the insurance industry.”

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Univ South Carolina Business School

The Darla Moore School of Business at the Univ. of South Carolina (Columbia, S.C.) will be Hartwig's new professional home, beginning with the fall semester. (Photo: University of South Carolina website)

And that has been the role Hartwig has played at I.I.I.: highlighting the insurance industry’s critical function of helping individuals, businesses, and even nations recover after catastrophes both big and small, and passionately defending the industry’s response to those events.

Now, as Hartwig prepares to leave after 18 years to pursue a career in academia at the University of South Carolina, “I knew we played important role,” he says of I.I.I., “but I think even I underestimated how important a role we do play. I’m proud of the organization and the industry we serve.”

The industry, he explains, has to deal at times with a negative media or regulatory environment, and it is I.I.I.’s job to correct the record when it comes to the role insurance plays. Data and facts matter, says Hartwig. The “media formula,” he explains, involves finding a victim after, say, a natural disaster and characterizing that victim as the general case. “The antidote to that is countering with the data,” he says. So if a narrative emerges after an event about insurers not paying claims, “I can come back and say, within six months, 98% of claims were settled and we paid this amount of dollars.”

As an example, Hartwig recalls a recent trip he took to Georgia, where a spike in auto claim frequency has caused insurers to file for large rate increases, generating negative press. “I went there loaded with facts and stats,” Hartwig says. “One was, in the past year, 22% more people have died on Georgia roads in highway accidents. Why did it go up 22% in Georgia?

“The story isn’t about insurers raising rates,” he says. It’s about people dying on Georgia roads unnecessarily. Why is it that Georgia leads the country in number of deaths per road?” He points to the state raising its speed limit up to 70 mph in suburban areas and no law against texting and driving as contributing factors.

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The landscape is changing for insurers, Hartwig says, but it must continue to show its value. (Photo: NUPC)

Changing times

I.I.I.’s leadership change comes amid a changing landscape for insurers. For one, the industry has caught attention from federal legislators and regulators in a way it hasn’t seen before. “When I started, there was really no one in Washington thinking about insurance,” Hartwig says.

Events such as Sept. 11 and the push for the Terrorism Risk Insurance Act, the financial crisis and the formation of the Federal Insurance Office have changed that, and as federal scrutiny increases, Hartwig says the industry must continue to make the case, that it is different from banking and should be recognized as such when it comes to regulation and legislation.

Apart from increased focus from Washington, Hartwig sees an evolving economy that presents challenges and opportunities beyond the horizon for insurers. He talks about the currency of data, and how insurers may be cut out of the loop in the future. The industry currently adds value, he explains, by collecting, warehousing, analyzing and archiving a wealth of data.

“In the future,” Hartwig says, “data useful for underwriters might be collected elsewhere.” Cars with black boxes, for example, collect a lot of raw information. “Could an auto manufacturer take that information and contract with someone else like Google to analyze it, and then in effect develop insurance products on its own? Do they want to do that?

“I’m not sure,” he continues, “but data has value and we are not the sole proprietors of that data anymore.”

“Twenty years down the road,” says Hartwig, “who insurers are teamed up with in order to collect information and evaluate, measure and price risk may surprise you. But that’s how the world is going to evolve, and it’s exciting to think about that.”

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You know your insurance career has peaked when you get your picture taken with the Governator. So says Insurance Information Institute President Robert Hartwig (he uses the more formal “former governor” to describe Arnold Schwarzenegger) as he reflects upon his 25-year career in the industry, including 18 years at I.I.I. (Photo: I.I.I.)

A new challenge: Recruiting young talent

Regarding his upcoming transition, Hartwig says it’s a move he always knew he’d make. Academia is the path he believed he was on when he started his Ph.D., until circumstances took him down a different road — first as a statistician for the government, and then to the insurance industry in roles at the National Council on Compensation Insurance, Swiss Re, NCCI again, and finally to I.I.I.

Now, armed with decades of insurance industry experience, Hartwig will finally find his way to academia — in a role that will also allow him to continue helping the industry he is departing.

“There are going to be upwards of 400,000 retirements in [the insurance] industry over the next four or five years, and you have to replace them,” says Hartwig, stating a problem that anyone who works in the insurance industry is all too familiar with.

In his new role as an insurance and risk management educator at the University of South Carolina’s Darla Moore School of Business, Hartwig says, “One of the things I’ll be doing is making people aware at a younger age what a great career choice insurance can be.”

Hartwig wants the school to produce a generation of graduates that the insurance industry will be excited to hire. He wants to see insurers recruiting his students for internships and careers afterward, and he is looking forward to “proud moments when students down the road say, ‘Dr. Hartwig, when I sat in your Intro to Risk Management and Insurance class, I only took it because I had to, and then when I took your other classes, I knew this was the career for me.’”

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