Whenever disaster strikes in the United States—be it economic, man-made or delivered by Mother Nature—the global media often contacts Robert P. Hartwig, the president of the New York-based Insurance Information Institute. Few people have more expertise or a clearer mind to eloquently offer up the insurance ramifications of the catastrophe at hand.
Now, the 52-year-old Hartwig is packing his bags, getting ready to start teaching in August at the University of South Carolina’s Darla Moore School of Business in Columbia, S.C. His loss is a big one. I’ve had Bob on speed dial for the 23 years he’s been involved in the insurance industry. I’ve interviewed him dozens of times, always with the understanding that he would articulate the industry’s views with tremendous knowledge, clarity and objectivity.
I’ve been covering the insurance industry long enough to remember Hartwig’s predecessors at the III—Gordon Stewart, Mechlin Moore and its founder, J. Carroll Bateman. Smart people all, but none had his exceptional ability to convey the role and importance of insurance without selling the business at the same time. The industry’s reputation was better served as a result. A trained economist with a Ph.D. affirming his credentials, Hartwig was the furthest thing from an industry flack. He could be bold when an event demanded nerve. A case in point is 9/11.
Hartwig was a witness to the Twin Towers collapsing. “I was in my office in downtown Manhattan and could see the disaster unfolding,” he said. “Within minutes, The Wall Street Journal was on the phone asking, ‘Are you guys going to pay for this?’ And I instantly said yes. It was one of my gutsiest calls ever. Had there been a different determination, I could have been fired.”
His remarks were not completely off the cuff, however. Property/casualty insurance policies exclude acts of war. Hartwig, perhaps alone and certainly before anyone else, understood that the terrorist attacks did not fit the traditional technical definition of war. “I was nervous, but I very quickly determined that the industry would pay for the losses,” he said. “Within 48 hours, the rest of the industry came to the same conclusion. I didn’t get any pushback because I was right.”
The financial impact of the terrorist attacks for P/C insurers and reinsurers was substantial, producing losses of about $32.5 billion (more than $43 billion today). Had Hartwig procrastinated in his comments, the industry’s reputation would have suffered along with its financial losses. “Coming from an economics background, Bob has a great sense of the political aspects of the industry,” said Bruce G. Kelley, president and CEO of EMC Insurance Cos. and the III’s current chairman. “He has a clear call of what the industry will do in an event.”
A Fast Rise for a Bright Fellow
Hartwig began his career in the insurance industry in 1993 with the National Council for Compensation Insurance. He hired on at the NCCI, a provider of workers compensation information, fresh from receiving his Ph.D. and Master of Science degrees in economics from the University of Illinois at Urbana-Champaign. He had initially planned to follow his father’s path as an academic. (“It runs in the blood,” he said.) But after working as a statistician for the federal Consumer Products Safety Commission during his years at the university, he decided to venture more broadly into the job market.
“They offered me the opportunity to apply my analytical skills in a statistically based environment, which I found very appealing,” he said. “It was my first job in the insurance industry.”
Hartwig never looked back. Four years later, Swiss Re offered him the chance to join its research group in New York, having decided to expand the group to the city from beyond its historic base in Switzerland. He took the job to learn more about reinsurance and to relocate from Florida (at NCCI) to New York. One of his first tasks was to write one of Swiss Re’s respected sigma insurance reports—the first time it was penned in English.
After returning to NCCI in their Hoboken, N.J., office for a period of just under a year, the III came calling. Hartwig was hired as the Institute’s economist, although he quickly persuaded then-President Gordon Stewart to alter the title to chief economist. “I told Gordon that we needed to be on par with individuals having that title in banking and elsewhere in the financial services industry,” he said.
In 2007, Hartwig succeeded Stewart as the III’s president. During his tenure as the Institute’s chief economist and president, he had to elucidate the insurance industry’s response to one disaster after another. He was the go-to guy for media questions when Hurricane Katrina and her evil sisters Wilma and Rita struck in 2005.
“The devastation was enormous and extraordinary,” said Hartwig, who flew to New Orleans to see the destruction up close. “I knew the industry would experience historic claims and record losses. I also knew I’d have to counter unsubstantiated arguments that the industry was not paying out its fair share of these losses—that it was leaving policyholders empty-handed by denying and litigating everything.”
The statistician in him worked overdrive to amass and analyze a vast array of data on filed and closed claims, in addition to the dollars paid by insurers. “We maintained this database for the better part of two years, periodically issuing numbers to get ahead of the narrative,” he said. “Consequently, we could say that we had received 550,000 claims in Louisiana and paid out $12 billion so far.”
Once the dust settled, the industry received 1.75 million claims, of which less than 1 percent was disputed. “I could in all honesty state that this was an industry I was proud of,” Hartwig said.
Three years later, he coped with another disaster, this one man-made. The financial crisis bankrupted major investment banks like Lehman Bros. and Bear Stearns and plunged the U.S. economy into the Great Recession. Other than the giant international insurer AIG, which the federal government ultimately bailed out in a mammoth $85 billion deal, the insurance industry fared remarkably well through the difficult period.
“It was another impressive moment for the industry,” Hartwig opined. “We were able to say, ‘despite this crisis, the worst since the Depression, the industry remains financially secure, sound, stable and strong.’ Insurers made good on all their claims—small and large—irrespective of what was happening in the economy.”
Of late, Hartwig often must respond to media questions regarding the survival of the insurance industry, given the many entrepreneurs armed with new technologies changing how insurance is marketed, underwritten and distributed. Perceived in some quarters as a dinosaur, the industry is in the crosshairs of more than one hundred so-called InsuranceTech startups targeting more efficient and cost-effective ways to do what traditional insurers and brokers have long provided.
Hartwig does not discount the value of these new businesses or the competitive threats they represent. He also acknowledges that insurers and brokers were slow in developing their own technological solutions. This is no longer the case, he asserted. “The industry is investing heavily in technology at the front end and back end of the business while also developing new coverages to address the proliferation in the use of different types of technology,” he said. “For example, the cyber risk product has enlarged in the last couple of years to address a wider array of risks, such as the liability of directors and officers for cyber-related intrusions and other incidents.”
Hartwig is quick to point out that the insurance industry may be old, but it is nonetheless resilient. “From the advent of Lloyd’s of London in 1688, this industry has evolved from insuring ships to insuring steamships, airplanes and satellites,” he said. “Every time a new property or liability risk emerges, the industry develops a product designed to soften its financial impact. Few industries have changed as fundamentally over the centuries, time and time again, as insurance. The same will be true in future.”
A More Open and Transparent Industry
During nearly a quarter century of service to the insurance industry, Hartwig has been its chief spokesperson, regularly quoted in insurance trade periodicals and such leading business publications as The Wall Street Journal, The New York Times, USA Today, Washington Post, Los Angeles Times, Financial Times, BusinessWeek, Newsweek, U.S. News & World Report, CFO, Fortune, Forbes, The Economist and many others throughout the world. His face is a familiar one on business news programs and in the halls of Congress, where he has testified on a great variety of insurance issues. “I’d like to think that since I came to the III in 1998, we’ve been able to increase the stature of the organization,” he said.
This is indeed the case. In the 1970s, the III was perceived as a New York-centric institute, not surprising given the large number of insurers in the city and just north of it in Hartford, Conn. By the 1980s, the III was more of a national enterprise. Today, it is global in scale, having grown its membership ranks to the highest levels in its history. Last year, the III handled more than 6,000 requests for information and contributed to more than 3,700 news stories, most quoting Hartwig.
“We’re a service organization—that’s our culture—although we’re technically organized as a trade association,” he said. “My job, as I’ve long seen it, is to improve public understanding of what insurance is and does and how it works.”
The Institute’s members are insurance companies, but its stakeholders are consumers, regulators, legislators and the media. “We conduct analyses on their behalf and respond to requests the same business day,” Hartwig said. “In many ways, I’ve approached my job academically, the inner professor in me always close to the skin.”
Now, he gets to be a real professor. “I’m incredibly excited to be able in my next career to get students excited about risk management and insurance, by way of attracting them to what I am certain will make for great careers,” he said. “I am very proud to have been a part of this industry, given what it does for people and businesses in their times of greatest need.”
Bob Hartwig will be missed. But he has promised to still be available to the media next time disaster strikes. I, for one, will be calling.