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- [00:00]
A
This is Scott Becker with the Becker Business and Private Equity podcast. We bring you one to two market and business episodes a day, plus typically an interview with a brilliant leader or founder. We're thrilled today to be visiting with a brilliant person. We're visiting with Ryan Spalding and Ryan's got this fascinating career. He both built a company and sold it and now he's a leader at Gibson and he works in the property and casualty world. And he's going to talk to us a little bit today about both his background, what he does and what companies get right and wrong about property and casualty insurance and a lot more. Ryan, can you take a moment and introduce yourself and tell us a bit about your background and history and about Gibson.
- [00:45]
B
Hey Scott, good morning. Appreciate you having me on here today. Yeah, you know, I've had a pretty, pretty great career thus far here. So fortunately for me, I grew up in the insurance industry. My family out of Michigan had been doing this since 1905. When I relocated to Chicago a little over a decade ago, they gave me the option to kind of open up a shop here or spread my wings and leave them. So for the last 11 years, I was fortunate to build up a little agency up in Skokie, Illinois that focused on skilled nursing facilities, assisted living and other healthcare operators. A couple of years ago I got out of that, been sitting out a non compete here and that brought me to Gibson to expand their presence within the Chicagoland area. You know, Gibson's a top 100 firm. Recently had merged with Unison Risk Advisors, which was a key component of why I wanted to end up here. It's the resources that I now have at my disposal are something I've never been able to bring to the table for the clients. So only bright future. We're fortunate to have already had about a dozen employees in the Chicagoland area. Now it's my task to hopefully double or triple that over the next few years.
- [02:06]
A
That's remarkable and thank you for joining us. I grew up Skokie and know it well. Let me ask you, Ryan, let me start with this question. When people talk about or think about casualty, property insurance, insurance in general, where do companies most commonly get insurance wrong as they grow and they scale and what should they be doing?
- [02:28]
B
I think people don't realize that it's really a math game. And when everybody starts off in their insurance portfolio, they're looking for the most cost effective structures, they're looking for the lowest deductibles. Once you get into that middle market space where we're Very familiar. And where we tend to play what risk you're retaining for becomes math. You know, what am I saving on the premiums to take on a little bit more. And that's where I think people tend to get a little scared. Not because of their operational risk management platform and what they're doing there, but when you go from a $25,000 deductible per claim and at your first building and now you've got a portfolio of 25, 30 locations, it doesn't make sense to pay the additional premium to kind of keep those retentions and attachment points that lower. And I think that's probably just one thing I wish more insured would, would realize is that take on a little bit more as you're growing from the risk component and you're going to save on those premiums. Obviously you have to feel comfortable with the safeguards you have in place. But I do believe that people not, not gambling on their own operations is probably where they throw away the most dollars when, when it comes to insurance.
- [03:46]
A
But isn't that correct that if you're taking a little bit higher deductible or a lot more deductible, you take first responsibility, you cut your premiums. And so many insurance agents, carriers don't want to have those deeper math discussions because it really is a trade off. You get lower cost for taking on a little bit more risk in terms of your deductibles for something that might not happen. And it really is a math game. I love that description of it. Any more thoughts on that, further comments on that?
- [04:15]
B
No, I think, I mean when you're partnering with insurance companies and even insurance brokers, like anything in life, those businesses that demand more from those providers are always going to get more. So I think that that's probably another failure is I used to call it a binder full of fluff when I would, when I would compete against people I shouldn't have been in the same room with. And I would say to the buyer, hey, they walk in and they can tell you here's all the things we'll do for you. And you're sitting here telling me that they've never done anything. Well, I think that's a multiple person problem. You know, the broker for not offering those services that they told you they were going to bring to the table and then you not holding them accountable to make sure that they're doing those things. You know, even the basic loss prevention in services, claims management, you know, having those conversations quarterly or as needed. And Scott, you Know it from the healthcare space. That's a claims heavy activity. We provided loss runs monthly to all of our clients with an analysis within the first 10 days. We talk about trends. We would ask them for their safety committee meeting notes. Those are all things that we've built and we do to hold people accountable. Because I never want to be the person that at the renewal, you're looking at me and saying, hey Ryan, we had a really bad risk here and you didn't help us, you know, the other way around it's going to be, here's everything we did for you, here's everything that we tried to do for you, but your team maybe wasn't as responsive to getting them implemented overall. You know, Scott, it's like I live insurance. I see, I see the claims, I see this across the country. So I know what's going on. It's really, really hard to get people to buy into something because insurance, at the end of the day, it's a pain. It's a pain from 90% of the businesses out there.
- [06:04]
A
And talk for a moment about you work with a lot of companies. What signals help you to think this company's really well run from a risk and control standpoint? Like, like they're in conversation with you about the claims and analysis, they're focused on it. What gives you the signals that companies are on board, understand what they're doing and really understand the math. The question about how much risk to take on versus premium, et cetera, et cetera. What signals give you the right signals on that?
- [06:31]
B
How responsive and organized they are is usually my first, gives me the first idea. If I ask you for your loss runs and you're one confused about that question or two, you don't have a copy of them. That that kind of tells me that it's not a priority to you. When we're going through a process with any new client or current client, we ask a lot of questions. My favorite question tends to, tends to be when was your last claims review and what was discussed? And usually that question is going to tell me a lot about how serious they taken their own risk. Another question I love is have an employee gets injured on the job, you know, how quickly are they supposed to inform you of that injury? And so once you answer those couple of questions for me and then I get the loss run data from you, if the data doesn't align with what you're telling me, I know that we have a safety culture issue and the conversation needs to fix or to change into how are we going to fix that? How are we going to implement best practices with you? And then I'm going to tell you. My role as a broker is to hold you accountable for the things that we agree on. You know, I fired some clients in my life, Scott, that wanted to, to get better, but when we tried to do the things, they didn't have any interest in doing it. And insurance is a reputation game. So I was never going to work with people that didn't want to get better because my name was on it. And I wanted everybody to have a great experience. 80 something percent of my business comes from referrals. So I need to make sure that I'm doing what I said I was going to do and you're doing the same thing.
- [08:07]
A
It's a fantastic perspective and I love the concept of a true professional that sort of works closely with their clients, their customers. And if the customers can't hold up their end of the bargain at some point, they can't be a customer because there's too much risk with that customer and it's bad for everybody. I love that perspective. And talk for a second, Ryan, about how do you help leaders think about insurance not as just a cost, but part of their business strategy? And is there a discussion there?
- [08:35]
B
Yes, yes, it's a, it's a huge component. We'll talk about it from a competitive landscape. If you're a health care organization that has a lot of claims and a poor safety culture, you're going to pay more for insurance. And when you're paying more for insurance, that means you're not able to provide as much to your staff in terms of compensation, you're not able to focus as much as retention. All of our conversations usually go to like all the indirect cost of insurance and how it makes your business less competitive with the guy down the street. You know, if they're paying 40% less on their insurance and you're in the same industry, that means they can do a lot more creative things with their capital than you can. So I don't think that people always have those conversations and they understand that insurance can be weaponized when you do the right things to add to the bottom line. You know, here at Gibson too, we're in the process, we're about to launch, you know, a couple revenue generating streams for different industries that utilize insurance to bring money to them in a different way. So I think it's just creativity.
- [09:42]
A
Thank you and talk for a moment, Ryan. Let's say a CEO gives you 30 minutes and says, you know, what should I know. What should I be thinking about in terms of protecting the business? How would you have that discussion? What do you tell someone like that?
- [09:58]
B
I'm going to talk to them about claims resiliency in the cyber landscape and I'm going to say to them that there's going to be a day that they will experience some sort of cyber event data breach. It's not if it happens, it's when it happens. And so throughout my career, I've had the same conversations. We need to either have a tabletop exercise where we're running through a breach simulation with you and your executive team, because when that day occurs, and it's going to occur, it is going to be chaos. It's the biggest conversation that I think a lot of people aren't having. You know, at the end of the day, property insurance is property insurance. You can do some creative stuff there. Liability, There's a lot of safeguards we can put in place in the cyber world, we're all kind of screwed. And I hate to say it that way, but that's pretty blunt. Like, it's going to happen to us all and how you deal with it is going to be a huge thing that I think 90% of executives have no idea. You know, they might have a business plan of how they're supposed to execute it when that event happens, but odds are, nobody's read it, nobody's actually prepared for it. But that's what I would just tell anybody is like, go through a tabletop exercise. We put them on all the time for our clients, where we're going to simulate that event. So when that day comes, you're prepared and you're not scrambling around calling everybody in the world trying to figure it out. It's a very, very confusing process that I don't think people fully understand how much time and energy it takes away from the executive team and everybody on staff.
- [11:34]
A
Thank you. And talk about cyber insurance for a second, because so many of us are, you know, there's so many issues with it. To get cyber insurance, you have to have certain safeguards in place and then everybody's scared if you have cyber insurance and it's not going to pay correctly. Talk a bit about some of the issues with cyber insurance, because it's big on everybody's mind, particularly the last decade or so and continues to escalate. Talk a little bit about the cyber insurance world, if you don't mind.
- [12:00]
B
Yeah. From the safeguard perspective, it's funny because the insurance industry actually made everybody go out and get better hygiene when it comes to their IT infrastructure, having MFA going through the trainings, I'm sure, you know, you guys have all probably done the know before and like anything, it's out of sight, out of mind. But when the cyber, the insurance industry kind of forced that down everybody's throat, I think things got better. The only problem with that is, is that the data from all these safeguards still aren't gonna stop human error. We can have. I think the industry statistic is you could train everybody every single day and remind them about cyber and the risk and don't click the link and, and always call to verify before you send the wire. But every single day we read the stories about somebody in some major event that did the wrong thing, no matter how educated they are. So that's kind of where I still will always focus on the resiliency of it. I've never experienced in my lifetime a claim denial. The ransomware and how those things get paid are very, very complex. And obviously, anytime we get involved with the, the government, that makes things more difficult on how those individuals can get paid. But those are all things that I think that you learn going through the tabletop exercise because everybody thinks that, hey, we get held ransom, we're just going to cut a check for $5 million to somebody. That's not exactly what that process looks like. So it's a scary world. I personally think that the insurance world, space has done a good job of educating people on the risk. But. But I don't think that they've talked about the only important thing in my mind, 100%.
- [13:43]
A
And I think your point on the best people that we know in the area have done the tabletop exercises. He have talked about resilience and how do they bounce back? Ryan, I hear you 100%. In the best people that we know, the best organizations have done those types of tabletop exercises. If looked at, how do they respond? What's the resilience look like? What's their backup look like, you know, and what are they going to do when it happens? I think your points are so well taken.
- [14:15]
B
Well, Scott, let me share one thing that I've heard too many times in my life. When it comes to just cyber, our IT can handle anything or our outsourced. It has us protected. Right. And that's been going on for over a decade as I've had conversations with people about one, the need to even have the protection. And my favorite thing to tell people is that if your IT individual was so good, they would not be working for you. They would probably be out in Silicon Valley or working for somebody a lot more powerful. So I think sometimes people, executives, because none of us typically had any idea of what actually happens in that IT space, they just believe that the team that they have assembled is so much more powerful than they probably are.
- [14:59]
A
And I think that point is well taken. And it's just the reality of it that the, the criminals in this area, the state actors, the other actors are so well organized and so at it that no matter what you have internally, it's almost impossible to fight it all by yourself. And so it's a constant, it's almost an arms race to keep up with the cyber and insurance and backup and tabletop exercises and precautions are all a big part of that. Could not agree more. Ryan, anything else you'd like to add today about Gibson or the team you're building? Would love to get a few moments from you about what you're trying to build and where you're growing.
- [15:37]
B
Yeah, I think that, you know what attracted me to Gibson from, from a lot of different options I had was Tim Layman, The CEO has built this incredible culture of scrappy insurance people. And when I say the word scrappy, I mean the, what I've experienced in my, my short tenure here are people that go so far above and beyond for the client. They're in the, in the online world they'd be called like insurance sickos. You know, where they love the industry, they love coming up with solutions, they love different thought process. So like any most organizations, it starts from the top. Tim's built something pretty, pretty impressive here after he's built things previously in his life. So Gibson, as we tackle Chicago and we tackle Scottsdale and Salt Lake City, Grand Rapids, and then obviously our big presence in Indianapolis and South Bend already ready, we just get to bring a whole new approach to things where we're not going to sit around and wait for the insurance market to dictate things. We're going to go advocate in a real way. We're not going to sit around and not be aggressive on how we handle the process, how we handle claims, how we handle loss prevention. So, I mean, I'm here because of one human at the top that spoke to me about his vision and, and it's my job to come execute that vision with what I've done here previously in the Chicagoland area.
- [17:04]
A
Ryan, I want to thank you for joining us today on the Becker Private Equity and Business podcast. What a pleasure to visit with you and learn more about Gibson and more about property and casualty insurance and what's going on today. I love the concept that it's really a math game and the more you dig into it, the better off you are. Thank you so much for joining us.
- [17:21]
B
Thanks, Scott.