The head of Motorists Insurance Group steers his company into the future.
Never mind autonomous vehicles. One of the first challenges Dave Kaufman had to deal with as CEO of Motorists Insurance Group was autonomous companies.
Now that he has integrated affiliated companies and instituted group-wide leadership practices, the Columbus-based insurer is better prepared to deal with the future of mobility.
“There's definitely disruption going on. It's technology- and artificial intelligence-based,” the soft-spoken executive acknowledges, adding, “If you take the artificial intelligence with the mobility, it's almost limitless what could be disrupted.”
But Kaufman is not fearful that self-driving cars and other technological advances will doom his industry. “In our business, it's still a people business. … artificial intelligence and machine learning can enhance what we do, but I don't think it's going to replace what we do,” he says.
Kaufman likes to say he “stumbled into” insurance, that he “stumbled into” his decades-long marriage with a hometown girl from Bellefontaine, about an hour northwest of Columbus, but that's just his self-deprecating style.
No stumbles are evident in his work to assimilate Motorists' affiliated companies after he assumed leadership in 2013 or in the company size-doubling joint venture he engineered earlier this year to align with BrickStreet Mutual Insurance Co. Inc., of Charleston, W.Va. And he's about to take Motorists into real estate with a mixed-use residential and commercial development behind the company headquarters (see Q&A).
Kaufman talks about the process he initiated four years ago to get Motorists' companies and leaders working more effectively together.
“When I came into this position, I spent a lot of time creating a vision … and the vision defined what's going to differentiate us in the market. ... The key thing was the culture aspects, so what are our beliefs? What are our values? How do we behave?” Kaufman says.
“We brought all associates into Columbus to spend time with the executive team, to go over ‘here's our beliefs, here's our values, here's how we're going to work together, here's our behaviors that are expected of everyone.' … And then what was interesting, we focused on that before the strategies, and our numbers started to turn and improve.
“So you hear about ‘culture trumps strategy,' or ‘culture eats strategy for breakfast.' We actually experienced that,” Kaufman says.
Sandra Harbrecht, president and CEO of Paul Werth Associates, has seen Kaufman at work on a statewide insurance industry workforce council, as well as on the Motorists board.
“He is truly an extraordinary executive and leader,” Habrecht says. “Dave knows where he wants an organization to go, and he's very much the kind of leader who engages and motivates other people to participate in that journey.”
Dean Fadel, president of the Ohio Insurance Institute, also praises Kaufman's work leading the Insurance Industry Resource Council. “While insurance companies are fierce competitors in the marketplace, Dave has been instrumental in uniting the Ohio insurance companies as the industry is working to attract the talent needed to fill 29,000 jobs by 2024,” Fadel says.
Working with leadership consultant Joe Johnson of Telein Group in Orange County, Calif., Kaufman created integrated teams and introduced circular dialogue, a process in which everyone takes turns to either comment or pass when it's their turn to talk.
As Kaufman explains Motorists' use of teams, “instead of assigning a financial thing to accounting personnel, we integrated the team so they'd have personnel from different subject matter expertise and different companies. We found the innovation's better, a much more collaborative environment. They built relationships. It was more responsive.”
He adds, “We had a saying that none of us is as smart as all of us.”
Focusing on shared processes helped integrate companies that had been operating autonomously, Kaufman says. The affiliated insurance companies “serviced different states, and we pretty much left them alone to do their thing. We resourced them but we never fully attempted to integrate them, and then, really, as the world has moved, we saw, wow, we need to really get everyone (together),” Kaufman says.
“We used teaming to create more diversity of thought. We have more cities to draw talent from, and I think it protects us a little bit going forward. To really work effectively as an integrated team took some work. … (But) if you were on three or four teams, you knew that they all acted or behaved the same way, so we got efficiencies that way.”
Spending as much as six months getting aligned on vision and leadership behaviors—working in some cases with newly named presidents brought into Columbus from their companies elsewhere—had the added benefit of empowering others back in the companies' home offices, Kaufman says.
“It's hard having a new leader spend this much time away from their teams. And that required people to stand up there. … Then they could become leaders on other teams. When you've got an inventory of teams, you need other leaders, and that comes with confidence, being the decision-makers, so we saw that and still see that. We're still cultivating that. … You want a whole organization of that, and part of that is developing that confidence in yourself and trusting yourself to really lead.”
Getting the various insurance companies integrated and then investing in an information systems makeover positioned Motorists well for the joint venture with BrickStreet, which specialized in workers' compensation insurance for large clients, Kaufman says.
Motorists and BrickStreet had started talking about a possible affiliation three years ago, but Kaufman says the discussion ramped up with the IT upgrade. “Once they saw that investment, it seems like our conversation heightened. It was just a better fit.”
Kaufman continues, “We just launched a brand new commercial lines company that's a completely digital experience. From the client and agent, they've got new portals. And then we've got policy and billings and claims, an integrated solution there with the analytics on the back end. It's really big to take that comprehensive of a solution to a complete commercial marketplace.”
While the IT improvements helped seal the deal with BrickStreet, that wasn't the reason it was undertaken, Kaufman says. “Whether it was with them or for us, we knew this was the future. With all the disruption and the digital age, we knew we had to consolidate some of our systems and offer some new services. It just by chance accelerated our discussions because it was such a nice fit to bring us together.”
The impact of combining with BrickStreet is significant. It doubles Motorists' net worth from just under $800 million to $1.6 billion and boosts combined assets to $4.5 billion. “So financially, it really took us to another level,” Kaufman says.
Even more important is the way the companies complement each other strategically, he adds. While
BrickStreet serviced large companies, Motorists' workers' comp experience was with smaller employers. The joint venture allows the combined companies to offer complete commercial packages to companies of all sizes.
Before the affiliation with BrickStreet, Motorists' business was split about 50-50 between commercial and personal insurance, Kaufman says. The joint venture flips the balance to nearly 70 percent commercial, he says.
Growing up in Bellefontaine, Kaufman would not have predicted a life-long career for himself in insurance. The course was set, he says, with a life-changing experience as he was about to graduate from high school.
“Honda was starting out at Marysville, and I bet 70 percent of my graduating class was going to Honda, trying to get in on the ground floor there. And out of the blue, this guy called. His name was Mr. (L.T.) MacGillivray. He had MacGillivray Ford in town, so I knew the name.
“He said he went to our basketball games; he knew I was good as a student,” and he invited Kaufman to visit Ohio Wesleyan with him. “He knew their basketball coach really well. … And this was like in April. It was typically past any timeframes to get in the university. To make a long story short, he's the reason I went to Ohio Wesleyan, but the irony is he passed away the first term of my freshman year. I spent one day, and he changed my whole life.”
Kaufman played basketball for Ohio Wesleyan and graduated with a bachelor's degree in mathematics and economics. Then serendipity intervened again.
“My intent was to coach basketball and teach math. So I had graduated and was going to get my master's in Chicago, and I took an interview with Connecticut General just to kind of practice. And the guy said, ‘Man, you'd be great in our actuarial program, math and economics,'” Kaufman recalls.
The company flew him to Hartford for more interviews and some tests on a Friday, and one of the interviewers noted he was an athlete, asking if Kaufman played baseball or softball in addition to basketball.
“I was a shortstop and their shortstop was hurt, so they asked if I'd stay over the weekend. I played in a softball tournament with them and just liked everybody; got (another) job interview, so that's how I stumbled into it,” he says. Following his start with Connecticut General, Kaufman joined Motorists in 1986 and has been there for 31 years.
He expresses the same quiet awe about finding his life partner, wife Nan, as he does about the forces that pointed him in his career direction.
“I always say I stumbled into her. I was heading for detention and she was heading to study hall,” he says with a smile. They dated for two years in high school and then she went to Ohio State University.
“She's a nurse, and we went to different universities, so it was kind of a distant relationship. Gosh, that's hard to believe. What's the chance of meeting a person you're spending the rest of your life with in Bellefontaine, a town of 10,000? But it's been terrific,” Kaufman says. He and his wife have three adult daughters.
Kaufman says he is surprised at how many other Motorists executives met their spouses in high school: John Bishop, his predecessor; Sue Haack, treasurer and CFO); and Charlie Stapleton, executive VP and COO.
It was Stapleton who prompted Kaufman to pursue what has become one of his personal passions—Future Possibilities Inc., a nonprofit that Kaufman found in New York City and brought to Columbus.
“There's a group of us here playing basketball down south of town on a Saturday morning, and we stopped for a beer,” Kaufman says. Conversation turned to stories about people who influenced their lives, and Kaufman was reminded of the Bellefontaine Ford dealer who introduced him to Ohio Wesleyan.
“And I said it haunts me, I never got a chance to thank this guy, and Charlie Stapleton said, ‘Well, you thank him by doing it for another kid.' That made me search, and I found Future Possibilities in New York, and that's what they do,” Kaufman says.
Professionals who volunteer with the program meet with disadvantaged youth for an hour a week, helping them define goals and make plans to reach them. Students are then recognized for achieving their goals.
“So I brought that to Columbus and Lorraine White was the founder of it; she was a life coach. I found her on the internet and asked if she would be open to that, so I flew out and met her. It was interesting; she went to Norman Vincent Peale's church, and he was an Ohio Wesleyan graduate. Anyway, there's a weird connection there.”
He adds, “She let me bring it here, and we just continue to expand it. This year for the first time we're going to have high school kids coach elementary kids, so twist the model a little bit.”
Kaufman isn't haunted anymore about not being able to thank his Bellefontaine benefactor.
“Here's a professional I didn't know who came into my life and made that kind of impact. That's why I tell the coaches, ‘You're going to be in this kid's life for just a school year. You have no idea the impact you're going to have.'”
Mary Yost is the editor.