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Cracking the glass ceiling

Dynamic, confident, and focused, Lori Fouche represents a new generation of women in the executive

By Elisabeth Boone, CPCU

Among female insurance professionals of a certain age, stories abound of frustrating efforts to win recognition for their accomplishments, obtain deserved promotions, and gain admittance to the board room as respected leaders.

Although the insurance business has not entirely shed its reputation for being conservative and male dominated, both women and minorities have made impressive strides toward achieving parity, and a new generation of talented young professionals is infusing the industry with fresh energy and perspectives.

Exemplifying this trend is Lori Fouché, who at age 41 was recently named president and chief executive officer of Fireman's Fund Insurance Company. She joined the insurer in 2006 as the head of marketing for Specialty Lines and later became chief operating officer of that division. Before going to Fireman's Fund, Fouché held a variety of leadership positions at Chubb & Son and served as a management consultant with The Parthenon Group.

Throughout her 20-year career, Fouché has worked to advance the role of women and minorities in the insurance industry and in business in general, and she is keenly aware of both the challenges and opportunities that face these groups.

As a graduate of top universities, Fouché had her choice of attractive job opportunities in a variety of fields. What motivated her to pursue a career in insurance?

"Like many people in our industry, I didn't plan to enter the insurance business," Fouché says. "I was really interested in a career in international business. When I was in college, I was offered two summer internships through INROADS, a program that partners with corporations to offer internships and training to minority students. One internship was with a bank and the other was with Chubb's international department. I chose Chubb because I wanted the international exposure," she explains.

"I spent four summers with Chubb, and in my last summer I worked in the Executive Protection department, which handles directors and officers liability, employment practices liability, and fiduciary liability. It was an intriguing combination of law, business, and the applicability of insurance to real-world situations, and I really enjoyed that," Fouché says. "After graduation, I was fortunate to have job offers from Chubb's international department as well as Executive Protection, and I chose Executive Protection."

Before her recent promotion, Fouché served as president of the Commercial Insurance group at Fireman's Fund, where she oversaw a business unit that serves entities with specialized needs. "We deliver our products and services through four underwriting divisions within commercial insurance," she says.

"The divisions are entertainment, small business, middle market, and special risk. In the special risk division, we create programs for affinity groups and associations that are distributed by MGAs, MGUs, and qualified retail agents. Our professional liability unit offers products for lawyers, accountants, allied health professionals, medical facilities, and miscellaneous service professionals. We also work with wholesalers to deliver products on a nonadmitted basis."

Market in flux

Having recently served as head of Fireman's Fund's large and diverse Commercial Insurance group, Fouché offers an informed perspective on key trends in the commercial marketplace.

For Fouché, as for most insurance executives, the number-one issue continues to be the intense competition that has characterized the property/casualty market for several years.

"Competition is the dominant force, and I believe that's the result of some underlying issues," she remarks. "We're in a unique environment because of the economic pressures that we've withstood over the last several years. That has driven down exposures, which in combination with intense price competition has had a significant impact on commercial insurers."

On the positive side, Fouché comments, "Although the economic recovery has not been as robust as we would have liked, we are seeing improvements. Consumer spending and consumer confidence are up, and those trends likely will lead to some growth in exposures. As the unemployment rate continues to decline or at least hold steady, we should see payrolls start to go up, which also can drive increases in exposures."

Amid these optimistic signs, Fouché also sees reason for concern. "I think the property/casualty industry is still significantly overcapitalized; last year insurers released some $15 billion in reserves, and that can have the effect of masking some underlying underwriting trends. If we see fewer reserve releases this year, it will be interesting to see the impact on earnings throughout the industry."

During the later stages of a prolonged soft market, a huge amount of lip service is paid to the idea of a return to sanity in pricing and underwriting, and the current market is no exception.

"There's a lot of talk about pricing discipline within the industry, but I think actions speak louder than words," Fouché observes. "The talk is there; the action, broadly speaking, is not materializing. In some specific market niches, we're starting to see signs that indicate a stronger focus on underwriting discipline, but it's not broad enough at this point to suggest a major shift in the race to the bottom on pricing that's going on in some areas right now."

In previous soft markets, a single catastrophic event or a series of catastrophes has snapped the string and driven premiums upward as the industry absorbs billions of dollars of insured losses. In the wake of the horrific tornadoes that have devastated parts of the Midwest and South this spring, will the market begin to harden?

"The industry historically has responded from a pricing perspective to a significant event that has caused capital to leave the industry," Fouché observes. "The capital that's in the marketplace right now is so substantial that it would take a catastrophe of massive proportions to drive that capital out."

Insured losses from the April tornadoes are estimated to be as high as $5 billion, Fouché notes, "but although those events have been a terrible tragedy for so many, the dollar losses are probably not sufficient to materially change current conditions in the market." By the same token, she adds, "Losses from the earthquakes in Japan are estimated to be second only to those from Katrina, but because so much of the insurance was written by Japanese insurers and because the government provided the needed backstop, the impact on the global insurance market is probably not as significant as one might have expected."

In a prolonged soft market, no one wants to be the first to sound the call for a return to pricing sanity and risk losing business to competitors.

"The market swings within commercial insurance are causing some lack of transparency with respect to the causes of loss," Fouché says. "A key challenge for us is to understand the data and the trends within each of our core businesses and to price our business appropriately, irrespective of what that might mean in terms of building scale or market share. That's the kind of discipline we need, individually and collectively, as we move down the path toward better results as an industry."

Partnering with agents

Over the years, Fireman's Fund has earned a well-deserved reputation for its strong support of the independent agency system.

"We're one of just a handful of large carriers that work exclusively through independent agents, and we are firmly committed to that distribution channel," Fouché comments. "For us, a key strength of the independent agency system is that agents have the freedom to choose the carriers and products that meet their clients' needs."

In a still struggling economy, with the specter of inflation looming, many independent agents face the daunting challenge of rising operating costs and declining revenue as a result of intense price competition.

In this environment, Fouché says, "It's important for the agency to have a strong sales force that knows how to sell more than just price. I meet with a lot of agents, and in conversations with them, I find that there's a strong link between revenue growth and a sales force that knows how to sell that difference. Price-only shops seem to be having a much harder time withstanding the current economic and insurance market challenges. There's a great deal of strength in having a clear value proposition that the agent can articulate and deliver to clients and prospects, and that can differentiate the agency from competitors."

In addition to creating and communicating a compelling value proposition, Fouché points to another powerful tool for generating business: leveraging social media.

In today's market, she remarks, "Figuring out how to use Facebook and Twitter, as well as creating attractive and functional Web pages, is key to driving agency sales. Being really thoughtful about how to use social media has the potential to be a strong differentiator for an agency. A new generation of insurance buyers has grown up using social media, and using this channel to communicate with these younger buyers represents a huge opportunity for independent agents," Fouché asserts.

Cracking the glass ceiling

Historically a conservative industry, the insurance business was in no hurry to open doors for women or for the members of minority groups like African Americans, Asian Americans, and Hispanic Americans.

Since beginning her insurance career almost 20 years ago, Fouché has been an ardent supporter of initiatives to expand opportunities for talented young women and minority group members.

At Fireman's Fund she serves on the Women's Development Committee, and while at Chubb she was co-chair of the 2004 Chubb Women's Leadership Conference.

"There has been a change in attitudes toward women over the 20 years that I've been in the business," Fouché comments. "Specifically, I'm seeing more women in line jobs or owning P&Ls. Using Fireman's Fund as an example, half of the CEO's leadership team is women. In addition to me, that includes our CFO, our head of sales, the head of HR, and our general counsel. This may be unique in the industry, and it definitely would not have been the case 20 years ago," Fouché remarks.

"We're also seeing increasing numbers of women in the underwriting ranks, which is typically the pipeline from which executives are drawn," she observes.

For both women and minorities, Fouché explains, "The issue is how you make the leap from a staff job to a leadership position. The glass ceiling in the insurance industry is fairly thick, and women CEOs are still extremely rare. We've made strides, but we still have a long way to go to achieve parity for women and minorities in the executive suite.

"It's not just a question of numbers," Fouché emphasizes. "It's vital for the insurance industry to have diversity of leadership and thought in order to take the best advantage of the available talent pool."

As leadership opportunities for women expand, Fouché remarks, "It's important for women to be willing to take risks. Women in general tend to be less comfortable with risk-taking than our male counterparts. Women need to be willing to challenge themselves with jobs that they might believe are a bit of a stretch for them. As part of my work to advance the role of women in our industry, I encourage women to look for mentoring and training opportunities to help them develop relevant skill sets and become more confident about taking risks," Fouché says.

"At Fireman's Fund, as I did at Chubb, I encourage women to go beyond their comfort zone. It may take the form of formal training, it may involve networking, or it can be as simple as lifting your head up from your desk and observing the environment around you and understanding what it's going to take to advance in that environment," Fouché continues. "In addition to understanding your environment, you need to know whether it's one where you can thrive and be excited to wake up in the morning."

With her carefully honed skills, quiet determination, and strong sense of purpose, Lori Fouché is driving impressive results for Fireman's Fund and at the same time providing inspiration for a new generation of talented leaders.


Lori Fouché, President and Chief Executive Officer, Fireman's Fund Insurance Company.


"It's vital for the insurance industry to have diversity of leadership and thought in order to take the best advantage of the available talent pool."

—Lori Fouché











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