My Industry Chat with Nick Gerhart — Embracing a Changing Industry and Adding Great Value

Nick Gerhart is Chief Administrative Officer of FBL Financial Group Inc. A multi-line insurance and financial services company. In this role, he has responsibility for enterprise strategic planning, government relations, human resources and health services, among other administrative functions.

Nick Gerhart served as the Insurance Commissioner for the State of Iowa from February 2013 until December 2016. During his time as Commissioner he was very involved at the NAIC and appointed to the Federal Advisory Committee on Insurance.

Thank you for joining me for this interview Nick. We’ve known each other for a while, but I don’t know much about the career path that took you to FBL Financial Group Inc. How did you end up in insurance?

I didn’t go to school thinking I’d be in insurance, I actually thought I’d end up running a hospital. I practiced health care law for a while, and when we decided to move back to Iowa I worked at American Equity and then Sammons Financial Group predominantly in compliance and legal and regulatory roles. In early 2012 I received a call from Governor Branstad’s Chief of Staff and that began a conversation about becoming the insurance commissioner, which I ended up doing for four years here in the State of Iowa. As that role was winding down, I talked to FBL Financial Group and came on to help build more capacity at the executive management team level. The role really lined up with a lot of areas I find very interesting and it has been a positive transition.

Tell me about the work you’re doing at FBL Financial Group. What are the initiatives you’re working on, in addition to always providing great service through your field sourcing for your customers?

We’re a multi-line insurance company. Our main market is in agriculture based insurance products, but we also offer personal home, auto, umbrella and commercial insurance. In addition to our property and casualty offerings, we have a life insurance company that offers life, annuity and wealth management services. We really seek to help our client/members holistically. One of the areas I spend a lot of time on is enterprise strategy and that includes innovation, so my team is working a lot on bringing new ideas and offerings into the company to enhance member and agent experience.

As a former commissioner in Iowa, you worked with the NAIC and federal regulators. Let’s talk a little bit about what you think regulation will look a few years in the future, and what do you do to prepare for that?

When I was commissioner under the previous presidential administration, there was a strong push to regulate our industry out of D.C. Since 2016, a lot of new regulations have been rolled back from the FSOC to some Dodd-Frank regulations to numerous ACA regulations. In addition, the DOL Fiduciary Rule was struck down by the courts.  So, from my vantage point the current Administration is not doing nearly as much regulatory creep. Depending on the point of view of a future administration, I suppose we could see more D.C. and federal creep into insurance regulation and further regulations impacting annuities out of a federal agency, but I think most of the activity certainly in the near term is on the state level. For the record, I do think insurance should be regulated at the state level, not the federal level. If regulators can clearly stake their claim on some of the global macro issues, I think that would be good. I’m really tracking the reaction to the FinTech and InsureTech innovation space. How do you regulate innovation? There’s a lot of things happening there. I joke all the time, that we might have debates on what is insurance in the future. What it is and who regulates it may actually be a policy debate in the future. It sounds silly, but with technology increasing fast and becoming more and more ubiquitous we will debate what vendors need to be licensed, what data sources are credible for underwriting and pricing, what is discriminatory and not and should there be professional standards for data scientists? Just to call out a few examples. There are huge issues impacting our industry and there will be equally large debates on many of these topics.

You recently wrote an article on LinkedIn about the rebirth of the industry. I’m interested in talking about this rebirth. Is that technology? Is it about what is insurance and how does insurance look different? Group funding? We have a mentality, especially with the younger generation, about shared services. Shared cars, shared work spaces, and there’s even conversation about shared insurance services. With all the things that are changing, what’s your vision of the “rebirth of the industry”?

When I say “rebirth”, I am referring to what some people feel is a huge coverage gap – that consumers are not as informed as they need to be and should be buying more insurance. My view is that the industry has to meet customer demand in the present. Longevity is a big risk today and our job is to manufacture the products that meet current needs and future needs for the next generation of customer.

We also have to make products available on the customer’s terms. I think agents will be around for a long time, but we have to be able to put that agent in a position where he or she has the right technology and support to succeed. When I think of rebirth, I think it’s partially new products and designs, it’s part technology, and it’s incorporating the human expert at the right time when they’re most needed. There is no single silver bullet here but there is certainly a number of ways to work toward success and the future.

In terms of the sharing economy, there are interesting things happening with on-demand insurance starting to emerge. What is insurance going forward, and can you insure the person and not their stuff, can you kind of decouple and create different liability products for people that walk with them? Can we come up with products that fill the gaps and appeal to consumers where they are at in their life journey? I am also intrigued by what is occurring in emerging economies and micro insurance. I think some of the most fascinating things are occurring outside the United States.

What do you focus on when recruiting and developing new agents? Recruiting has changed a lot – how are we going to attract people to our business in the future?

Being an insurance agent is an awesome career. How do we get folks to realize the good that agents do? Our purpose has always been to protect livelihoods and futures, so when we have a catastrophic event happen, and it wipes out a huge farm, or a city block, we’re on the ground helping these people rebuild their lives from scratch. Companies need mentoring programs. We have a gray wave coming and a lot of agents will be retiring. Bring someone under your wing who has the right stuff. Don’t take it for granted how hard the job is for those new agents because in my fifteen plus years in this industry I think it is pretty easy to forget how hard it is to make it as a successful agent. It can be a very financially rewarding career and the work is critical to people all over the community. Clearly articulating the value and assistance and agent offers people can align very well with many younger people’s desires to help others.

If you were standing in front of a room of 100 agents now, what final thoughts would you have for them?

You have to be a lifelong learner, you have to be a subject matter expert. You don’t have to know everything, but you have to be able to add real value beyond what’s free. If you can’t add value beyond what’s free, then people will go to the cheapest, easiest option. So, the best example I have in this is if you’re a life agent, you need to understand tax issues. If you’re a property casualty agent, you have to understand gaps in coverage. In financial services in general right now, you’re competing against free, you’re competing against robots, you’re competing against a lot of these pressures that have brought compensation down and increased transparency.

The second thing I would say is, “You don’t have to be a technologist, but you need to figure out how to use it and embrace it.” And the final thing I would say to the agents is “Just call people back!”

When I was commissioner and with other companies I don’t know the percentage of complaints that started off with “My agent never called me back”, but it’s pretty darn high. Happy customers do not write to the insurance commissioner, but upset ones do and a lot of those started from a lack of agent responsiveness.

Call people back. Yes! Good customer service wins every time. Nick, my final question is for you to imagine your perfect Saturday morning, when you have no responsibilities for your kids or work, you’ve got a free ticket.

Well my perfect Saturday morning with no kids crawling all over me, and I don’t have to go to work? It’s probably a workout of some sort, and then this will sound totally nerdy, but I read a lot…so just being able to sit down and have an hour or two where I could just read or write would be my choice. I journal a lot and write a lot of articles. I don’t publish them all, but I’ve got about 75 sitting in a queue that could use some attention! So, a couple hours could maybe get a few ready for primetime.

Nick, thank you very much for your time. Your great insights, your friendship — it’s always fun to get together with you and chat about the industry and where we’re headed.

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