In this monthly series, the Business Journal talks with those who occupy the top spot in a local organization, asking about their professional and personal opportunities and challenges.
Sponsor of North Bay Business Journal’s CEO Spotlight series is Summit State Bank. It had no input into the editorial content.
Climate change is impacting how GeoVera Insurance Group does business.
“The pace of catastrophic weather activity worldwide the past few years is not sustainable for our industry,” CEO John Forney said.
To combat exposure to climate related claims, Forney said the company has been “getting out of other states and out of residential wind, and concentrating on earthquake insurance, which is not impacted by (climate change).”
The Fairfield-based company provides residential earthquake insurance in California, Washington and Oregon, with wind insurance policies written in Florida.
It used to write polices in eight states.
“The Florida market is a barometer. It is the highest (catastrophic) risk state that there is. The market there is very dysfunctional,” the 61-year-old Forney said.
Forney has been president and CEO of GeoVera since July 2020. It intends to launch a commercial division this fall, but Forney would not yet reveal in which states.
The following is a Q&A between the Business Journal and Forney that has been edited for clarity and space.
Wildfire is a very difficult risk to quantify and price for, so I understand companies’ reluctance to write fire insurance in areas with wildfire risk, which is essentially the entire state.
We have a nearly three-decade track record of writing two specific perils: West Coast earthquake and Southeast wind. We wrote our first residential wind policy in Florida in 1994 and our first residential stand-alone earthquake policy in California in 1995, making us the longest-tenured writer of stand-alone earthquake insurance in the state. During that time we have continually refined our data-driven underwriting approach to make sure that we have adequate rates and an acceptable spread of risk to enable us to write successfully in catastrophe-exposed areas.
After the Northridge earthquake in 1994, which followed Hurricane Andrew in Florida by less than 18 months, the big national carriers realized they had an inadequate understanding of catastrophe risk, so they drew back from writing hurricane and earthquake risks. That created an opportunity for companies like GeoVera.
We specialize in insuring catastrophe risks, and we have unique expertise in understanding these perils. Our chief underwriting officer, Nesrin Basoz, has a Ph.D. in civil engineering from Stanford with a concentration in earthquake engineering, and her team of 17 data-analytics-underwriting professionals includes others with similar credentials. This gives us a competitive advantage in modeling and pricing catastrophe insurance and is the reason why we have been successful for so many years.
Reinsurance — essentially insurance purchased by insurance companies to protect their catastrophe risk — plays an important role in making sure GeoVera will always have enough money to pay claims after a catastrophic event.
There are many different forms and providers of reinsurance: insurance linked securities and collateralized reinsurance are two of them. They are attractive because (i) all of the money promised by these reinsurance contracts is held in a trust so there is no doubt that the money will be there when needed; and (ii) they allow GeoVera to access a diversified base of reinsurance capital.
GeoVera had only a handful of claims from the 2014 Napa earthquake and none from the 2000 temblor. Two reasons: (1) low market penetration for earthquake insurance overall in those areas; (2) high deductibles for some earthquake insurance products selected by consumers there.
Everything. In Ranger school you learn the importance of teamwork, trust, accountability, integrity, bias to action, and most of all perseverance. All of those are directly relevant to the business world.
If a decision is tough, it usually means you haven’t thought through it enough. Once I spend the time weighing alternative paths, the decision almost always becomes easy. Then, be decisive. Spend more time making sure the decisions you make turn out right than making the “right” decision.
I don’t. Motivation always comes from within. I just try to create an environment where people can thrive personally and professionally, have the resources they need to be great at their jobs, and are trusted to make the right decision.
1. Start and grow an organic commercial division.
2. Gain access to additional capital to support this and other growth initiatives.
3. Keep our brand-new office looking “opening-day fresh!” (The company moved to the Green Valley area of Fairfield in July.)
Winston Churchill once said: “Success consists of going from failure to failure without loss of enthusiasm.” I like that. In other words, getting up one more time than you fall down.
Our primary product, residential earthquake insurance, is an optional purchase for homeowners, so economic pressures can affect sales in a meaningful way. Inflation, recession, unemployment, all have negative impacts on residential earthquake sales. We are trying to navigate that by introducing competitively priced, flexible products that allow consumers to tailor their coverage to accommodate their budget.
I would probably stay in the Army a little longer. I got out after four years and there was a lot of stuff I wanted to do still.
I wanted to be a writer. There’s still time for that. (He’s working on a book.)
Exercising, enjoying the outdoors, and spending time with my family.
Be intellectually curious. Do what you say you are going to do. Put your head down. Keep moving forward. Never quit. You’ll be fine.
In this monthly series, the Business Journal talks with those who occupy the top spot in a local organization, asking about their professional and personal opportunities and challenges.
Sponsor of North Bay Business Journal’s CEO Spotlight series is Summit State Bank. It had no input into the editorial content.
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info@aktengineering.com.au
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