While many of our readers will know Risk Strategies based upon its national reputation as a top 10 privately held insurance broker, many may be surprised to learn that this national broker first it got its start as a Boston-based agency. With the company celebrating its 25th anniversary this year, as well as publishing an insightful State of the Market Outlook Report for 2022, Agency Checklists thought it might be the perfect time to learn more about this major agency in Massachusetts.
We reached out to John Mina, the President and CEO of Risk Strategies, who was kind enough to take the time to share his thoughts with us on the growth of Risk Strategies as well as his thoughts on the current state and future of the insurance industry. Here is what he had to say:
Thank you for taking the time to share your thoughts with Agency Checklists and our readers. To start, could you give our readers a brief introduction to Risk Strategies and how it came about?
Risk Strategies is actually celebrating its 25th year in business this year. The firm was founded in Boston by its current Chairman, Mike Christian, as a specialty risk management consultancy. Mike was an insurance industry veteran, having worked at a few different large, generalized brokerages. In starting up Risk Strategies, he saw a market opportunity to create a true specialist, by industry and product line, focused on a more consultative, business-first approach to solving the risk and liability issues faced by middle market organizations. In his engagements, clients would often tap his experience in insurance placement as they looked to implement their risk mitigation strategies and, over time, the firm evolved into a more full-service brokerage model, but retaining its specialty consultant approach.
Turning to your own personal story, how did you get your start in the insurance industry and when did you join Risk Strategies?
I am, as they say, a veteran of the industry. I saw a tremendous opportunity and joined Risk Strategies in April of 2017 and became CEO in October of 2019. Previously, I spent some 25 years at Willis Towers Watson. When I left Willis, I was Head of Corporate Risk and Broking, Atlantic South Region, but started there as an international broker. Before Willis, I worked at Marsh in their international group.
Risk Strategies has seen explosive growth over the past few years. To what do you ascribe this growth, and how much has Risk Strategies grown in market share and commission income (premium)?
The primary driver of our growth is our specialist approach to risk. Clients face an incredibly complex risk environment. Engaging with our experts, our clients get senior level people who have been working in the insurance industry, focused on their particular industry or product line, for decades. That deep specialty knowledge allows us to provide clients a more holistic and strategic perspective to ensure that they have the right risk management programs in place to enable their business goals. It engenders deep client loyalty and invariably opens more doors through broader engagements and referrals. We’ve added to this specialty expertise with a very successful M&A strategy; each new acquisition is additive to our expertise and specialization.
In terms of growth in numbers, we’re about a billion dollars in annual revenue now and we see that going to about two billion in five years.
As Risk Strategies celebrates its 25th year in business, what do you think Risk Strategies has brought into the brokerage marketplace that has allowed it to have such success?
Really it’s the unique combination of specialty expertise, a flat management structure built for a culture of collaboration, leveraging our entrepreneurial spirit, and a client-first approach that delivers practical, highly effective solutions that help clients effectively manage their total cost of risk. Clients get the large-scale market access they would expect of a large, national broker but with a personal touch and an operating structure that promotes collaboration and delivering a superior client experience.
Your company recently published a free State of the Market Report 2022 Outlook [Very favorably reviewed by Agency Checklists with the review already read by several hundred of our readers]. Why publish this the first State of the Market now in 2022?
Simply put, we are in extraordinary times with key risk issues – from climate change and the COVID-19 pandemic to the evolution of technology and escalating cyber threat landscape – playing out across any number of product lines and having notable effects across our specialty industry and service practices. We thought it was important to have our specialists weigh in at this time with their expert view on these issues and how they see them affecting their practice areas and clients.
What do you think are the main take-aways that agents and insurance professionals should garner from the 2022 Outlook Report?
The past is no longer prologue. So many of the rate and coverage issues we are seeing in the market are being driven by a pace and scale of change that is upending historical norms and patterns of insurance underwriting. The insurance industry, in response, is dramatically reassessing and re-calibrating their risk appetite and underwriting practices. It is vital to communicate this new reality to clients and help them successfully navigate the scenario. In particular, helping clients understand their risk profile, and putting effective risk mitigation practices in place. This is vital to demonstrating that they are effectively managing risks and being in a strong position to secure the right solution for their unique needs, and at a competitive rate. Also being in the position to look at viable alternative risk transfer options.
In the report you highlight a variety of industries, many of which Risk Strategies does business in, such as in Aviation, Entertainment, and Fine Art. How have these markets fared during the pandemic and how important has the specialty or wholesale market been to Risk Strategies?
Certainly, Aviation, Entertainment and Fine Art were among the industries heavily affected by the COVID-19 pandemic. We are seeing signs of optimism as things move towards more normalcy and the business climate improves. Entertainment, for instance, is seeing record increases in productions as the streaming services that gained so much traction during the pandemic, seek more content to solidify their customer growth.
If you had to pick one specialty market that you expect to see the most growth over the next five years, what do you think it will be and why?
Cyber would be the specialty market that I believe will see the most growth over the next five years. Cyber risk is complex and rapidly evolving. As businesses become increasingly reliant on technology, they are facing new and unprecedented risks. Ransomware is swiftly becoming the most prevalent attack.
Cyber criminals are more sophisticated and more adept at identifying sensitive information, leveraging both production data and backups to extort huge sums from victims. Increased reliance on technology also makes organizations more susceptible to business interruption from malicious attack, human error, or technological malfunction. As clients face uncertainty and the potential for financial and reputational damages, they will need a holistic approach to their coverage and risk management.
What is your ultimate outlook for 2022 and the future of the insurance industry?
Insurance will remain a durable industry, and a key enabler of business development and growth. It has been a vital, empowering element of the business landscape for centuries and I do not see that fundamentally changing. With the growth of uncertainty and risks overall, it is more important than ever for businesses to be prepared to show their risk mitigation efforts and tell their unique story. Sustained rate increases have attracted new entrants, and over time underwriting capacity will expand and rate increases stabilize. The highest- quality accounts will see the best pricing and coverage terms.
What do you see as the main challenges for the insurance industry in the post COVID-19 marketplace?
Aging workforce and competition for talent seems like an intertwined, baseline challenge. Risk Strategies is in the professional services business and that means we are only as good as the people we bring to the challenge. With the pivot to remote work during the COVID-19 pandemic, we are learning new ways of working. People have realized that their work horizons were broader than the nearest large city, and Risk Strategies has been a leader in offering a variety of ways of working, as we seek smart, entrepreneurial people interested in a challenging career, irrespective of location. The industry overall is facing this new paradigm and will have to focus on the things that will make us a great destination workplace – great culture with diversity and inclusion, competitive pay and benefits, clear avenues for advancement, rewarding, and meaningful work, for starters.
There is a tremendous amount of consolidation happening in Massachusetts and nationally among independent insurance agencies and brokerages. Since Risk Strategies has acquired a fair percentage of these agencies over the years, what are the trends you are seeing in the industry right now?
Well, demographics for starters. A lot of Baby Boom generation industry veterans who founded and built successful business are looking for a viable succession plan. It is driving a lot of the M&A activity, perhaps accelerated with the changes in the tax law. On top of that, there is the more fundamental driver of increasing complexity and the need to scale to compete effectively. The investments needed to scale up from a strong local or regional player, or even a niche or boutique national specialist, are not insignificant. We have acquired a number of firms that came to that juncture, did the math and decided that becoming part of the Risk Strategies family presented a more effective way forward.
Do you plan to continue acquiring agencies? If so, what is the profile of agencies you would consider as good acquisition candidates?
Yes. Acquisition is part of our overall strategy to continue to grow our specialty expertise and overall growth strategy. We are always on the lookout for additional talent and expertise and acquisitions are a meaningful way to add to the capabilities of an existing practice or expand into a new specialty area. Beyond looking for well-run companies with strong leadership and the expertise we seek, our primary criteria for any potential acquisition is cultural fit. We are building something special at Risk Strategies, and we closely look at the culture of each potential company. We’re not interested in acquiring to roll up revenue. We are looking to invest in our business future and expand our company. That means adding expertise – capabilities and people who fit with our culture of entrepreneurial collaboration.
How do you think this consolidation is going to change the business of insurance, if at all?
The insurance industry has a long history of consolidation and continued evolution. The industry now is driven by many critical elements – aging workforce, ever changing and growing risks, and the scale and technology needed to effectively compete. Insuretechs are changing dynamics at the lower end of the market where a lot of agencies and brokerages got their foothold, so the path to start-up and scale needs to begin with a different mindset and strategy. For larger firms, technology is still a factor, but more in service of a chosen business model. Again, Risk Strategies has, instilled from its founding, focused on specialty expertise delivered in a flat operational structure that allows people to organically collaborate to solve tough client problems. To the degree we are participating in this current cycle of consolidation, Risk Strategies is primarily focused on those agencies, brokerages and people who can further our specialty focus. The technology in which we are investing is aimed at both better enabling this collaborative specialty approach for our people and helping clients more easily and effectively tap into our resources in ways that work for them.
How do you think technology will continue to influence agents and brokers in the post-pandemic workplace?
Google, Amazon and the whole digital online experience had already broadly changed people’s information and business engagement expectations, and that mindset carries into every industry and work that they do. Clients expect ease of interaction, speed to market, effective communications and full business transparency. The pandemic’s pivot to virtual working has only amplified this trend and made the need for effective technology tools all the more vital. I do believe that relationships are critical, but I see technology not only dramatically affecting how and where our people work, but how our clients expect to access us, our expertise and the information and insights we provide. Firms that do not embrace this change will be at a significant competitive disadvantage.
What are your thoughts about DEI? What has Risk Strategies done to improve or implement more Diversity, Equity, and Inclusion (“DEI”) measures into the company?
Diversity and Inclusion are core values at Risk Strategies. We are building a culture that promotes the sharing of our varied perspectives and lived experiences. Central to our efforts are acknowledging, promoting, and celebrating the talents and backgrounds that each of our associates bring to the table. Our BeHEARD series amplified and celebrated our differences.
We have established a Diversity & Inclusion council comprised of employees that acts on behalf of the company to support diversity and inclusion initiatives. It works with Regional Committees to ensure D&I issues, and their importance to the overall culture and business strategy at Risk Strategies, are constantly promoted. Working in concert, these groups make recommendations and work closely with the National D&I Committee to identifying needs, action initiatives across the firm, and help to institutionalize human capital practices that support and accelerate D&I goals.
Are you worried about the Great Resignation and the increasing difficulty in finding talent?
As concerned as any other business leader, for sure. Long before now, we have had a focus and priority on creating a destination workplace. We work hard to attract talent, ensure that their work life is rewarding, fulfilling and enjoyable. We have a low attrition rate, and added almost 1,000 employees last year, so we are optimistic that we will continue to be in a strong position to attract the right talent.
Risk Strategies had the foresight to start its “Careers in Insurance” internship program before the pandemic. Was this in anticipation of the “greying of the insurance industry”? How has the program fared since it was started? How do you advertise this internship program?
Risk Strategies Internship program has been very successful for the past several years. Each year we identify opportunities across the company for interns and successfully recruit a diverse group of candidates. We see this as a positive force in the industry. A win/win if you will. Our candidates get a great learning experience, and we get the benefit of their knowledge and expertise.
How do you think we as an industry can attract more talent?
I think part of it is dealing with perception – or, rather, misperception. Insurance gets broad-brushed as a less attractive industry. People sometimes think insurance is boring or even negative. The reality is that insurance is effectively dealing with risk management and ensuring businesses and organizations have the right lines of coverage in place. We need to do a better job of sharing how rewarding and exciting the industry can be.
Ask anyone in the industry and you will typically hear how rewarding their careers are; how challenging the problems of risk mitigation actually are, and how effectively dealing with risk and liability considerations are germane to the smooth functioning of the world around us. We need to do a better job as an industry of explaining this. People are looking for interesting, rewarding work in a field where they can grow professionally and count on some stability to build their personal life. Insurance meets those criteria.
What is your overall outlook for the coming year? What about over the next five years?
Despite 2021’s challenges, I’m optimistic about the year ahead. There are some indications of stabilization in the broader economy. Business health is improving with revenue growth and profitability, and the U.S. economy, in particular, is rebounding. These positive signs will be tempered by lingering COVID-19 impacts to some industry segments and unexpected developments with possible broad knock-on effects, like Ukraine.
From an industry standpoint, there is increased insurance capacity entering the market and organizations who work closely with their specialist broker to improve their quality of risk can differentiate, successfully navigate market conditions and improve the likelihood of getting competitive pricing in 2022.
Over the next five years, I expect to see business and our industry continue their rapid adaptation to the larger trends re-shaping or world – climate change, technology adoption, demographic shifts, increasing regulatory changes, and the outfall from the pandemic. In general, times like these present real opportunity for firms like ours who are well positioned to be a trusted advisor for clients concerned about navigating the risks and liabilities of such a dynamic landscape.
Is there any other words of wisdom or advice you would like to share with fellow agents and brokers reading this interview?
Given the experiences of the past couple of years and the challenges that lay ahead, resiliency, tenacity, and change agility are the watch words I would offer up. More than ever clients are looking to us as a trusted advisor and how we, as a company and as an industry, adjust and adapt to new circumstances and challenges really matters. We can, and must, lead by example – adjusting, adapting, and emerging stronger and better able to help our clients understand and overcome the challenges they face in this time of dynamic change.