Rich Stamets 00:00
I landed. I was really just kind of quiet at first. I listened to the team. I heard what they were going through. I heard what was happening to them from their previous manager. And to kind of give you a quick example, they would come in on Monday morning, and they would have a 30-minute voicemail from their manager telling them what they were going to do that week. I just thought, that's so impersonal to sit there on a Monday morning and hear that your boss is going to tell you what's going on for the week. And I just said, no, that's not it.
Callan Harrington 00:27
You're listening to That Worked, a show that breaks down the careers of top founders and executives and pulls out those key items that led to their success. I'm your host, Callan Harrington, founder of Flashgrowth, and I couldn't be more excited that you're here.
Callan Harrington 00:47
Hey everybody, today's guest is Rich Stamets, and Rich is the Senior Vice President of Business Development at Arch Insurance Group. Rich, welcome to the show.
Rich Stamets 00:54
Thank you, Cal. It's great to be here.
Callan Harrington 00:56
I'm excited for this conversation. When you know, when looking at your career and the experience that you've had, I'm excited. So tell us a little bit about Arch and what you're doing for Arch today.
Rich Stamets 01:06
Yeah, sure. So I lead distribution for Arch in the East. Arch, as you may know, is a multinational insurance company with a lot of specialty products, handling some of the larger and middle market accounts in the United States and abroad.
Callan Harrington 01:21
Gotcha. So in distribution, a company like that, you're the main person that's driving revenue for that side, correct?
Rich Stamets 01:29
That is way too much of a compliment. I would say I'm a part of a much bigger puzzle. I am hopefully an enabler in a pretty amazing machine over at Arch. I think a lot of the credit would certainly go to the underwriting team across the US. There is a larger presence here in the East, which I oversee, but it really kind of boils down to the relationships and the experiences that the underwriting team has had with the brokers here in the East.
Callan Harrington 01:55
So you specifically highlight underwriting. And as I understand it, your career started out in underwriting, correct?
Rich Stamets 02:01
It did. Yeah, I still, today, even though I started with a small company called Atlantic Mutual, truly a mutual insurance company. But I really think that my training as an underwriter really began at Chubb. I still introduce myself as a Chubb-trained underwriter. I got a lot of really nitty-gritty details of understanding how to underwrite policies, truly what the commercial lines manual is, which is really technical, really geeky. Back in those days, it was a book that was almost like four feet wide that would sit on an underwriter's desk. Honestly, before the internet—that's how old I am these days—a manual about four feet wide that helped you basically price everything from automobile property and general liability insurance. Pretty crazy.
Callan Harrington 02:40
Yeah, so here's something I'd like to talk about in particular. I've spent a lot of time in the insurance space, in the InsurTech world. I haven't been personally on the carrier side, but a lot of our listeners are across all sorts of different markets, and I've loved being in that InsurTech space. Now on the underwriting side, can you break this down a little bit? Why is that so important for an insurance company?
Rich Stamets 03:04
Sure. Well, I think that some of the underwriters would joke. We used to call it legalized gambling. The idea in that process is that you really have to assess risk from a multitude of areas. And what that means is, how likely is it for something to go wrong? Whether that's with a worker's comp injury, whether that's with a fire loss or a windstorm loss on a piece of property, or a general liability loss, or even today's issues, which are much more prevalent in the cyber world, which didn't even exist back in the 90s when I first got started. Cyber is super interesting because, you know, I think when people started writing cyber insurance policies, we all knew what hackers were, right? Even in the early stages, we knew what hackers were. I don't think anybody realized the extent of just how much damage that could actually be done. And now that market's getting—I don't want to say turmoil. Turmoil is the wrong word, and that's an aggressive word, but it's definitely way different.
Callan Harrington 03:56
I would say aggressive, perhaps, in the sense of, you're right. So back in the 90s, there wasn't really even the discussion too much about cyber. I think AIG probably came out with one of the early cyber policies back in the late 90s, but most people didn't even understand what that was. And then as you kind of advanced to perhaps the last five or seven years, where you had major hacks of major retail organizations, where the data was stolen of all their customers, and that information goes off to the dark web. Then, luckily and fortunately, with help from insurance companies and from the public in general, the government has decided that there need to be safety protocols as well as notifications. So the expense of an organization, even just notifying their clients, could be in the tens or hundreds of thousands of dollars just to comply with state and federal regulation.
Callan Harrington 04:40
Let's go back to kind of the start of your career at Atlantic Mutual. I hear this the most in sales and insurance: nobody starts out to go into either sales or insurance, but you end up falling into it. How did you get into it?
Rich Stamets 04:54
Just to kick it off, I would say I have to go back to my college days when I wasn't sure really what I wanted to do when I grew up. I knew I wasn't going to be a fireman. I'm 5'8" on a good day. I knew I wasn't going to be a professional football or basketball player. And so I had to really assess, if you will, what I thought I was pretty good at. And what I thought I was pretty good at was that I thought I was pretty good at a lot of different things. And I had a natural curiosity, so I wanted to understand how business was run, etc. I just kind of started asking around to see how I could apply what I wanted to do into the business world, and the whole idea of underwriting came up. So right out of college, and even in college, I was interviewing for a multitude of opportunities, specifically in underwriting, because that's really where I felt that my skill sets would be most appropriate. But I also learned a lesson pretty early on—and maybe it's just my way of telling myself that I've learned this lesson—but back then, the folks that were really getting the positions were those people that actually knew people in the insurance industry. My parents weren't in the insurance industry. I didn't really know anybody in the insurance industry. So initially, I didn't get a job directly out of college in insurance. In fact, I ended up going into retail for about a year and a half. Once you work a year or two years in the retail world, and from Thanksgiving until Christmas—back then, before the internet, when people would literally, the day after Thanksgiving, show up at the mall, and there wouldn't be any parking for six weeks, right? Because everyone was out there. And you, as a young manager, are working six days a week, 12-hour shifts per week. And you just think, "How am I ever going to get out of this?" Then, learning a lesson, you look forward and say, "Well, what are these folks that have been here for 10 or 12 years doing?" They were not happy with their lives, and I said, "I have got to refocus and get back into it." So literally, I started reapplying for insurance opportunities, and that's when the opportunity at Atlantic Mutual came up, and I jumped on it quickly.
Callan Harrington 06:56
What was it like once you started getting into it there?
Rich Stamets 06:59
Fortunately, the insurance companies were pretty robust in training programs. We had a six-week onsite facility training, which really got you into the really detailed contract language—how to rate policies, how rates are developed. And when I say rates, for those who are not in the insurance industry, that basically means, how do we end up charging for a particular coverage? Whether that be homeowners or automobile insurance—I was on the commercial side, so I was doing a lot of business information. But that was six weeks. You had another six months of on-the-job training. You came back to the home office for another two weeks of wrapping up, and then you basically graduated from this course, and then you were given your underwriting authority back in the field.
Callan Harrington 07:39
Gotcha. So when you say underwriting authority, you were able to make more decisions on your own, given the guidelines and parameters that you're around?
Rich Stamets 07:47
That's right. As you might imagine, as a newbie, you're in a pretty tight box, because you may only be taking a couple hundred dollars worth of premium, which doesn't sound like a lot, but if you're paying it, it certainly sounds like a lot. But you might be putting hundreds of thousands of dollars of risk on the company balance sheet. Or as you graduate, as you continue to grow—literally $100,000, $1 million, $10 million, maybe $100 million worth of risk or assets at risk of the company. And obviously, they want to make sure that you're making those right decisions. So you prove yourself through referrals, etc., and you kind of grow through the organization, you're granted higher authority as you get more and more experience.
Callan Harrington 08:23
It looks like, and you mentioned specifically, that Chubb is where you really learned everything that kind of molded a lot of your career in general. Why do you say that?
Rich Stamets 08:33
Well, they offer a lot of training. In fact, not that many people will know this unless you're in the insurance world, but if you are a business owner, you should know what this term means. There's a coverage called business interruption insurance. What that coverage means is if you happen to suffer a loss—if your building burns down, or there's a windstorm loss, and you can't actually keep your business going—there is a coverage that will cover that. It's called business income. When I was at Chubb, I had the opportunity to study with a gentleman by the name of Bob Edgar, and Bob was basically credited for actually creating that coverage. So Chubb at that time was definitely known for being very innovative. They're still a very innovative company today, but at that time, they had a huge emphasis on underwriting profitability to make sure that you were making the right decisions. Again, it just became part of who you were.
Callan Harrington 09:18
So a couple of things that I think are interesting are that you kind of moved up into underwriting, right? You started out in this underwriting space. And one of the things where I think this really applies to any position, is you understood the core product. If you understand underwriting, you really understand what the product of insurance is, and then, same with claims as well. You learn really quickly what's in a policy when you figure out where the money's going—like, where are we actually paying?
Rich Stamets 09:49
Yeah, you understand where the money's going, where you're actually paying, and where you're not paying. Honestly, when it really gets down to it, the contractual language of the insurance policy is incredibly detailed. There are areas where we're reviewing the contracts; underwriters are trying to make sure that their intentions are actually being well made and that there's really no gray area. You're trying to be as fair as you can to your client, but also, at the same time, understanding what's covered and what's not covered. Because at the end of the day, insurance is really just a transfer of money from the premiums of the many to pay for the losses of the few. But the idea of that money transfer—you want to make sure that, from a contractual and expectation perspective, you're actually making money at the end of the day, so that you can stay in business and help customers as you play the long game in insurance.
Callan Harrington 10:32
Yeah. So what I want to fast forward to a little bit here is, you were at Chubb, and then you took what I would say was your first executive-level role when you were a VP of underwriting at Caliber One. Would you say that was your first executive role?
Rich Stamets 10:47
I would think so. I mean, I was a supervisor at Chubb, but certainly, there was a reason why I left Chubb to move on to a new opportunity, which was really a startup excess and surplus lines company. To help explain that in common speak, many standard companies like Chubb are very much regulated by state departments of insurance, and E&S companies, or excess and surplus lines companies, are less regulated by the state, but they have the ability to do some things that admitted carriers are not. Having worked for Chubb, which is a very organized, straight-laced organization, they're very precise in the way they want to underwrite their accounts. A good part of that is that you get a chance to really understand and hone your craft as an underwriter. But what you're not necessarily doing with an excess and surplus lines company, it's a little bit more like what some people may know as Lloyd's of London. Lloyd's of London can pretty much underwrite and insure everything. You've heard of the crazy things like XYZ hunter off of whatever football company, a football organization, their leg may be insured for $5 million, right? That is not what Chubb is going to do. So the E&S world is a slightly smaller version of what most people think of Lloyd's. You can do pretty much anything. You have freedom of rate and form to write some interesting things. And so for me, at that time, I wanted to expand my understanding of insurance in general. And going from a company that was so studious, like Chubb, going to an E&S world certainly was very exciting to me.
Callan Harrington 12:19
So this was a startup company in general?
Rich Stamets 12:23
It was a startup division within an existing insurance company. The company was PMA.
Callan Harrington 12:28
So this is almost like kind of an intrapreneur type of role. Is that accurate? What was that like?
Rich Stamets 12:33
It was amazing. We almost kind of kidded around and said it was like the Wild Wild West. You went from a great company like Chubb, where you were wearing the blue suits, the white press shirts, the black shoes, to this Wild Wild West company, where you were basically deciding what you wanted to cover in the morning, creating a Word document, and by the afternoon, you were issuing a policy. That was completely different from what I was used to.
Callan Harrington 12:57
That speed in particular—so when you went, and this comes up quite a bit, and I think this, I didn't do this, but I think that there's a lot of value to this in that we had a guest on here that had said, you know, if you're in sales, go spend a couple of years at Oracle, spend a couple of years at Salesforce. And a lot of what you're referring to really is that, right? The thing that I hear the most is how you learn scale, and you really do learn scale, and what that takes in order to especially Chubb—Chubb is kind of a gold standard company in the insurance space. How did you like that change? Because the pace had to be, I mean, as you've mentioned, like night and day.
Rich Stamets 13:36
It was crazy. I was employee, I think, number 20 at this new company, whereas at Chubb, I don't know, I was probably employee 7,000, and that's a complete guess. I have no idea. We basically knew that we wanted to be a great company, but we just had to grow. So the idea was, I was in charge of helping to grow a territory. I would share that responsibility with some other folks, but we were brand new, and the objectives were to go build a business between Chicago and Houston. We didn't have any brokers assigned to us. We didn't have any relationships. Just go. So making phone calls, dialing for dollars, jumping on planes, going to meet people, sharing what we could do, showing that we could do something that was very valuable in the marketplace—that's what we did. And I would say that it was great for as long as it lasted. It was very exciting, working long hours, getting in early, working late at night, weekends, whatever it might be. It was fun because the energy was incredible.
Callan Harrington 14:27
What were some of the challenges that you had coming from these large organizations, very structured, to moving to this startup environment where it's kind of, "Here's your structure. You go follow it, you create the structure, and let's see what becomes of it"?
Rich Stamets 14:45
That is such a great question because what I learned is something that I've actually carried with me—that'll be a lifelong lesson—and that is, no matter what business you're trying to do, as long as you're in insurance, certain insurance principles will still prevail. You never want to take on more risk than what you think is appropriate. You never want to underprice accounts because there is a right price to charge for some things. Unfortunately, I started to get a little uncomfortable at that company because we started going after some crazy business at the time—nursing homes. The nursing home business was really, I would say, going a little bit under attack for some very good reasons and for some not very good reasons. People die in nursing homes. Well, guess what? People can sue for almost anything, and because your father or your mother or your aunt or brother has fallen in a nursing home, they're going to say that it's negligence, that the nursing home was negligent. And some of the jury cases that were coming back at that time were astronomical. The legal folks had jumped on that. You had attorneys in Florida and Texas basically advertising on billboards saying, "Hey, if your loved one's been injured in a nursing home, call us, because we will sue and get you money." When you're charging, say, a couple of hundred dollars per bed, which was really the going rate back then, and all of a sudden, you're getting these astronomical, $10-20 million claims coming back, you just can't survive. Unfortunately, that's really what happened to that company. So again, the lesson learned is that these underwriting principles remain true. No matter what you do, whether you throw technology at insurance or change your distribution, those underwriting principles still have to apply in order to have longevity.
Callan Harrington 16:21
If I'm hearing correctly and zooming out a little bit, you could almost apply that to anything—that certain principles have to be there. In insurance, it's magnified just because it's one of the only—it's one of the, you know, I had a conversation the other day, and we were talking about like, you know, it's insurance, and he had also brought up lending, right? They're the only two businesses where you get penalized for selling too much. If you sell too much and you've got too much out there, it doesn't take one thing in the market if you're lending or one catastrophic event that can take the whole company down, depending on where you've written all that business.
Rich Stamets 16:58
Yeah, I would say that both lending commercially from a banking perspective and underwriting commercial insurance, we're probably the only industries that really don't know the cost of the product that we've sold until years after it's been sold, right? I'm going to simplify this: when you're selling socks, you know what your expenses are. You know the cost of materials, your shipping, all those things, right? You know how much money you can make. With insurance, it's completely different in that you say, "Well, I think based on historical assessments that this rate could be $100." Well, you don't know if the right price was really $80 or $120. And if there's no loss, if there's no fire to that building, you think, "Oh, well, I'm really smart. I really made the right decision." Well, if that building burns down, did you really make the right decision, and did you get the right price? You're not sure, but you have to aggregate all of your wins and your losses, and hopefully at the end of the day, you're making more money than what you paid out.
Callan Harrington 17:58
What drew you to that business? Why was that intriguing to you?
Rich Stamets 18:03
Great question. I just really think it was the uncertainty. You just don't know. I get bored pretty easily, and I think if I knew everything about my business, I might get bored. I don't know. I've been in this business now for, gosh, 33 years, and I still learn something every single day. I don't know if I could do that in any other business. That's why I love it. I've been doing it for a long time, but that's what keeps me energized. That's why I've kind of moved either from underwriting over to sales or to whatever role I happen to have at the time. There's always something to learn in insurance, for sure.
Callan Harrington 18:29
Perfect segue again. So when you moved on to the branch vice president role at CNA, were you leading a region in that role?
Rich Stamets 18:39
Yeah. I started off as the underwriting director first, which was sort of the middle market area that I was responsible for. A good friend of mine had brought me in—an ex-Chubb colleague—who actually asked me to come and help him basically help fix that branch because it wasn't doing very well. To answer your question specifically, it was basically just running the operations for the New Jersey office for CNA. At that time, I think we were the seventh-largest branch at CNA, but we were not doing well when I first arrived. We were losing a lot of money. That loss ratio was pretty bad, but we worked really hard over five years. We actually grew that branch by about 50%, and we cut the loss ratio significantly. We went from actually losing a fair amount of money to making money by the time I left.
Callan Harrington 19:27
So what did you do to turn that around?
Rich Stamets 19:30
Great question, and I know this is going to sound like we've preplanned this answer, but it actually goes back to what I said before. It's really about the underwriting principles. At the end of the day, you really just need to be able to understand the risks of the business that you have and make sure that you're pricing that business correctly. That branch happened to have most of its business in the middle market area, which I had already started off in. To be honest, it changed in two different ways. I actually had to make some changes to the underwriting team, but I also had to change the mindset of the team as well.
I don't think I'm telling tales out of school too much here, but when I landed, I was really just kind of quiet at first. I listened to the team. I heard what they were going through. I heard what was happening to them from their previous manager. To give you a quick example, they would come in on Monday morning, and they would have a 30-minute voicemail from their manager telling them what they were going to do that week. I just thought, "That's so impersonal to sit there on a Monday morning and hear that your boss is going to tell you what's going on for the week." And I just said, "No, that's not it. This is a one-on-one conversation. I want to get to know you as individuals." One of the things that I did was realize that they were getting beaten up—not physically, but they just felt like they were down. Their audits were coming back poorly, etc. I had said to the team at a meeting, "Look, I've been here now for a couple of weeks, and we're changing this branch. This branch is going to move from one of the worst at CNA to one of the best at CNA."
I looked around the room, and I could see the expressions on the team's faces. Some of them were really excited, some of them were really concerned. And so what I had said to them was, "Look, some of you are going to be really excited because we're going to be the best branch that CNA has, and we're going to go in a different direction than where we were before. And for those of you who are not happy about that, I want you to be happy, because you're going to be here more than eight hours a day. You deserve to be happy. And if this direction is not going to make you happy, then I think you need to go find a place that's going to make you happy." It was a nice way to say, we're not going to be the last in the company. We're moving on. Some people embraced that, and some people had to move on to other opportunities outside the organization. I was fortunate enough to bring on some heavy hitters. In fact, I was actually able to grab one of Hartford's top underwriters. They were so upset when I got that person on board, but she herself just basically helped drive the entire team to rally around that new cause, and we really became a strong branch by the time I left.
Callan Harrington 21:54
I'd like to go back to that a little bit. How fast did you make that change? That's a pretty big, sweeping change, right? And you had to know, like in most large companies, it's hard to go in there and make that big of a change because the culture has been like that for—I mean, CNA has been around for a long time, and I'm not saying the whole culture of CNA was like that, but that team had probably been around for a long time, and you were going to do a pretty major shakeup for a large, established company. What was kind of going on in your mind as you're leading up to that?
Rich Stamets 22:25
What's going on in my mind is that that's what I want to bring to everything that I do, no matter whether I'm going for a bike ride or if I'm managing a team or a business. I want to do my best. Otherwise, why show up, right? So for me, that was sort of the direction that I wanted to apply to the organization overall.
Callan Harrington 22:44
After you did that, how did people react?
Rich Stamets 22:48
Some people absolutely loved it, and those that didn't, they moved on. They weren't happy, and they found happiness at other organizations. I obviously still wish them very well, but it wasn't just going to work out for them, and I was super happy. To turn an underwriting branch around, from major losses to major victories, I consider that one of my greatest turnaround stories.
Callan Harrington 23:11
I think you hit on something well. I personally believe in, and I talk about this quite a bit, that I think a lot of times we're afraid to make that change. I know certain scenarios where I've been afraid, where I'd come in, and I was like, "Well, I don't know that I want to shake this up immediately, but maybe I'll slow play it." Right? Maybe I'll go into this, and then you end up being really strict on one group and not another. The reality is, I totally agree with what you said. You have to go in there, and you've got to know that you're not going to get everybody in. What really resonated in particular was, you've got to be out there recruiting. If you're leading, if you want to be a really high-performance team, you have to recruit because you have to be okay with people leaving your team. That doesn't mean that you're creating a negative culture and it's "get in line or not." It's actually the exact opposite. Some people might not like that, and that's totally okay.
Rich Stamets 24:02
The idea too is that I'm not everybody's cup of tea. That's fine. I try to be as nice and as driven for everybody and support everyone, but I will say, I think that I was also very fair and very open about the direction. I'll give you a quick story. One person who was not doing incredibly well—I had really bent over backwards to try to help out. I told this person that they were performing at a certain level and that they needed to be at a different level, and that I would come in early, I would stay late, I would help them with whatever it was that they needed from me to get to that point. I said, "At some point, though, you've got to be able to get from here to another level within 30 days." That person never asked me for my help. I checked with them a couple of times, but I wasn't going to babysit them because I had already done that leading up to that point. Each week we'd have a one-on-one, and by the end of that 30 days, I stood at that person's desk and said, "I think it's time we have a conversation." That person walked in, we sat down, and he actually apologized to me. He said, "I'm sorry that I let you down." I said, "Well, I appreciate you saying that, but you know what's going to happen today." So obviously, that person was no longer with the organization. When I changed and moved to another company, AIG, I didn't realize that that person was there—the one I had let go. Well, guess who I saw on day one? It was that person. I think most people would have thought I was a jerk, that I was absolutely horrible. That person could have turned around—we were in a big office building—and walked away. But he actually looked at me, locked eyes with me, walked over, gave me a big hug, and said, "Hey, I'm so glad that you're here. We really need you." I just thought, what a compliment to deliver some incredibly bad news to someone, get them into a different place where they could be a bit of a shining star, and they actually were. He did really well at AIG.
Callan Harrington 25:48
That's the beauty of it. The beauty of it is that, I mean, I personally find that those individual turnarounds are what I remember 10 times more than the organizational turnarounds. Don't get me wrong, I love building a team and all that, but seeing an individual person change, and it sounds like this person ended up being very coachable where they weren't before—they hit a wall. Sometimes that's necessary, sometimes that's needed before you can really make true change. Sometimes you have to hit that wall. I know I've had it 100%.
Let's talk about your time at AIG. Is this where you really moved from underwriting to more of a distribution sales role?
Rich Stamets 26:28
Yeah, absolutely. One quick last comment about CNA, and then over to AIG. So as the CNA branch manager, you're sort of like the chief marketing officer. You are the head of sales, and you have a significant amount of underwriting influence as well. Even going back to my Chubb days, we were called production underwriters, so that meant you didn't have a business team pulling in business for you—you had to go to brokers and go find it and get it. So a little bit of that at Chubb, a little bit of that at Caliber One, and certainly over at CNA as well. Interestingly, when AIG called, I was still the branch manager at CNA. I got a call, and I wasn't really looking at the time. I was very happy, but there were some changes that were going to be taking place at CNA that weren't going to allow me to move to the next level. So I thought, "Hey, I'll listen to this recruiter. I'll go have a conversation and see how it goes." I went in and had the interview, and it honestly took six months to actually get the offer, because I wasn't even sure if AIG really wanted me, and I wasn't really sure what they wanted me for, but we just had some general discussions. But I was open to the conversation. So when I moved over to AIG, it was interesting because I landed the week of Thanksgiving in 2007. So for those of you paying attention to what happened in 2008, my timing probably wasn't the best, because I thought, "Well, AIG, biggest insurance company on the planet, I'm moving in. I'm leaving a great opportunity at CNA. I'm stepping into AIG." A couple of weeks later, we started hearing some rumblings going on at the company. We thought, "We're not really quite sure what's going to happen." Well, I moved from basically a supervisory role, because I was initially brought on as someone who was going to be a mentor to someone taking over the Small Business Directors and Officers Insurance Group. D&O insurance is somewhat of a complex, not commonly understood product. In fact, I didn't know the product when I interviewed. I kind of joked with the person who was interviewing me at the time, and I said, "Well, I said, folks, you have looked at my resume, right? The only line of business that I really have no experience in is D&O, and you actually want me to take over this team?" They had said, "Well, we want you to take it over, but we're going to give you six months of training." Well, when I landed on day one, my new manager said, "Well, I'm leaving the company. I'm going back to New York." I said, "No, I know you're leaving in six months." He says, "No, I'm leaving in six weeks." I said, "Wait, what? I've got to learn this business in six weeks? You've got to be kidding me."
Well, within... so I took over the D&O team almost immediately. A couple of weeks later, the head came to me and said, "Hey, you know, I'm actually leaving the organization. I'm moving on, taking on another role." I got a phone call from the president's assistant saying, "The president wants you in the conference room." I said, "Oh, okay, I'll go to the conference room." So I walk down to the conference room, open up the boardroom door, and there are like 50 people sitting there, and the president says, "Everyone, I want you to meet your new manager. You already know him, but he's Rich Stamets. He's going to be heading up D&O as well." I thought, "Wait a minute, so now I'm running small business D&O. Now I'm running small business E&O. And I've got, like, I don't know, 50-60 people reporting to me, and I'm just this new guy." Luckily, I had some great people around me—very key. Make sure you have great people around you because they knew the technical piece. They knew everything else. But fortunately, I was able to stay in that department for a while. But as you might imagine, things started getting a little bit crazy at AIG in early 2008, and then I got another phone call from the president saying, "Well, the person who was running the sales team is leaving, and we want you to take on the sales team as well." I thought, "Wait a minute. I've got D&O, I've got E&O, now you want me to take over the sales team?" I did that for a while as well, and then I said, "You know what? I think my specialty is going to be on the sales side, not necessarily running D&O and E&O." So they brought in a great person to help take over both sides, and I kind of embraced running the small business sales team at AIG. That was a very interesting time because we were only selling one product—it was a digitally enabled product, which was very different at the time.
So quick story there—most of the business that small business was doing was very traditional. Brokers would send in applications to underwriters, who would then review it, rate it, and then send it out. AIG had a small excess product that was the first digitally enabled product that I think AIG had out there in the marketplace from a commercial perspective. What that simply allowed brokers to do was go onto the AIG website, enter their information, and get umbrella quotes back out quickly. At that time, technology was new, brokers didn't really understand it, and AIG was not necessarily a well-known name in the small business area, so my sales team was responsible for going out to both wholesalers and retailers, training people, looking for opportunities to grow this business, training them, and then basically making business plans, providing them service, etc. That was really my first real foray into running a larger sales team. It ended up being, I think, about 36 or 37 people across the US, which...
Callan Harrington 31:17
...is a good-sized sales team. So actually, I want to chat about that before then. I want to go back to this. So you had a division, you had the D&O division, so that was new to you. You'd never done D&O before. You took on another division. What's going on in your head at that point? You go into this boardroom, and you're taking on another division. What's going on in your mind?
Rich Stamets 31:39
I thought, "You've got to be kidding me. Dorothy, you're not in Kansas anymore." This is a very different way of running an insurance company than what I was used to. I mean, it was basically a battlefield promotion at that point, right? You're not sure what you're doing in a particular area. I was certainly a student of the business too, believe me. I was reading books, learning as much as I possibly could, talking to everybody that I could, but I just thought at some point, the water levels are going to rise to a point where I'm no longer able to take on air. I'm just going to be taking on water. So I did express my concern, saying, "Hey, look, I can do this, but I want to make sure that I want to do a great job, and I can't do all of that. There's too many spinning plates. There's too many moving parts. I really want to be able to focus." They recognized that as well. They knew they were giving me a lot back then.
Callan Harrington 32:20
But you used it as a huge catalyst.
Rich Stamets 32:22
I did, yeah. This is an old story, like one of my first—I was because I was an agent, and then I moved after that. So I started out as a field agent doing face-to-face sales at Northwestern Mutual, and then I started my own company, partnered as an entrepreneur to do completely digital sales for life insurance—100% selling over the phone and digitally. And then I went into the InsurTech side for the first time. They're like, "Hey, so do you have any B2B experience?" I had absolutely none. And, you know, it's like, "Well, you know, I've got a lot of connections in this space." I didn't—I had a friend that had connections. I was like, "I'll help you out, man, just get the job." They said, "Okay, well, we're going to send you to a trade show." So I got the job, they sent me to a trade show. I had never done a trade show. I bought this book—it was the oldest, most old-school book on trade show marketing. I think it was called B2B Trade Show Marketing. I did every single thing in that book. I cold-called every single person there. It set my entire year. And just like, similar to what you just said, I think that's such a good takeaway—sometimes those opportunities happen, right? You don't know when they're going to happen. When you first look at it, it may not even look like an opportunity, and it's like, "What do I do?" Well, there's two things you can do. You can not take it, or you can give it a shot. Worst case scenario is, it doesn't work. It was too much. It was work like you didn't get the resources, whatever it may be. Or it does. And sure, maybe you're underqualified when you first go into it, but if you're a student, just like you said, and you give it a real shot, sometimes that luck will be on your side. Luck, hard work, whatever you want to call it—all put together. It's a little bit of everything. It sounds like you made sure that if you're in that scenario, then you're going to take advantage of it and roll the dice to see how this could go.
Rich Stamets 34:13
Always. Anytime I look at anything that's ahead of me, any kind of challenge, I've always looked at myself as a student. You've got to be willing to admit what you don't know, and then just do the hard work—just reading the policies, or getting into the code, or whatever it might be—learning something new every day. It's not always easy. Not everybody likes to do that, but honestly, that's what keeps me motivated, and it's really what I would say has really kind of helped me through my career. At AIG, that was really my first foray into a larger commercial application in software. Now, certainly at CNA, we had a small business system, which was absolutely fantastic, but that was kind of already made, and when it was created, I basically helped manage the application of that, but my hands weren't really in that mix. At AIG with the XS policies, that system was already created, but myself, certainly the gentleman who was running the division at the time, and the underwriters—they had the ability to make changes to that system. That, to me, was a spark. I thought, "We can really control how our underwriting gets digitized so that we can help make the process of acquiring insurance for our brokers much more seamless and more intelligent, quite frankly." I think the challenge that a lot of folks have in manual underwriting—when I was underwriting or managing, going back to those D&O days, when we had like 50 people out there—you could ask 50 underwriters how they were going to underwrite and assess a certain risk, and you might get 50 different answers. But when you program almost like an aggregate of information, you're going to get a very consistent answer every single time. It's much easier to control the destiny of those decisions than it is with 50 different individuals. That, for me, was the spark that really got me interested in the InsurTech space.
In fact, when I go back to those days, I can remember a conversation that kind of led to where I went next. I happened to be at a QBR—a quarterly business review—with the head of the US operations for AIG. This person asked me—this is before the InsurTech space was there, and I'm a little bit of a geek by nature. I started off being a comp sci major in college for about five seconds before realizing I didn't want to code, but I love technology. So fast forward to those days when I'm sitting in the boardroom at AIG, and I was asked the question, "What does AIG really need to do to get to the next level in this space?" I had said to this person, "Honestly, I think that—I love all my brothers and sisters in IT at AIG—but they've got such a huge job just keeping the systems going." At the time, what you really needed was innovation. You needed something completely new—new systems. Third-party data was really becoming a cottage industry. Opportunities to actually plug in information digitally that could be required in a digital underwriting format that might not have been readily available to an underwriter before was really becoming a thing. So I had said at the time, "What you really need to do is take small business out of AIG, rebrand it, because at some point we're also going to be a direct-to-consumer play as well, not just a business-to-business play. Surround that with a few smart underwriters, digitize their thought process, pull in third-party data sets, and then program it so that it's simple and easy to use for our brokers and eventually for consumers." Those words came back to haunt me because when I was at AIG, I had moved on beyond small business, was in the specialty team, really in a sales and distribution or strategy and distribution role. I was there for a couple of years. Loved every minute that I did. Worked with some great people within AIG. Worked for some of the aerospace, environmental surety, trade credit, some really interesting areas of business. After about, I would say, six major layoffs at AIG, I was eventually one of the babies thrown out with the bathwater. I had to kind of look myself in the mirror and say, "Okay, what's next? You had pretty much gotten to the top 2% of the organization. You loved what you were doing. Now, what are you going to do?" Those words that I had echoed just a couple of years prior in the small business team—this idea of InsurTech was kind of coming together, and I saw an advertisement for a company called Hamilton USA, which was actually in my backyard in Princeton. I thought, "Well, it's a startup. I've done a startup before. I kind of knew where that ended." But Brian Duperreault was one of the founding principals, and I had known of Brian. I had never met him personally, but I knew he was a big player at AIG, previously a big player at Marsh. So his name had a lot of gravitas. When I read and saw what they were doing, which was literally InsurTech, they were creating new systems, I said, "I have to go work for that company. I need to go work for them."
So imagine going from one of the largest insurance companies on the planet Earth to all of a sudden going back to a startup again. But I did, and I was excited to go do it. I called and said to someone—I found Ed Polkinghorne's number online—and I called Ed and said, "Hi, you don't know me, but I want to work for you." With that came an opportunity to go interview at Hamilton USA. I got through some interviews and actually took a job that wasn't really even something that I wanted. I was with the company that I wanted, but it wasn't the role that I necessarily wanted, but I wanted my foot in the door to take it. I was helping to manage a program team, and it wasn't the most exciting thing for me to do at the time, but it was something that I wanted. So I knew I could get an opportunity to work in the InsurTech space, and somewhat ironically, five days after I had started—now again, remember my story from AIG, small business, telling the story, that's what we're going to do—Brian Duperreault was background AIG, etc., and at Hamilton USA. Brian was in our office Monday after I started—he was in the office at 7:30 on a Monday. I thought, "Brian's typically in Bermuda. What is he doing here?" Within a half hour, I knew, because the team and the buzz was that there was a memorandum of understanding that had just been signed by Hamilton USA and AIG, and that Hamilton USA was going to become the small business solution for AIG. I thought, "Wow, interesting turn of events." At first, I was a little angry because I thought, "Wait, I'm working at the company that's now going to be the small business solution for AIG that I kept telling everybody, this is what we need to do." Apparently, my voice wasn't loud enough or strong enough to really be heard, so when I left to go to that company, to kind of be pulled right back in, it was somewhat of an ironic situation.
Callan Harrington 40:33
So did you get pulled back in? What was that like?
Rich Stamets 40:36
Well, I would say, without telling too many tales out of school, there were several ex-AIG folks at Hamilton, and when some opportunities came to work with the folks at AIG, unfortunately, we weren't being brought into the room. I was getting a little bit frustrated. I kept volunteering to say, "Hey, look, I was in small business. If we're going to talk to AIG small business, I really want to be part of that process." Unfortunately, it didn't work out the way that I wanted. So I ended up looking for an opportunity elsewhere.
Callan Harrington 41:04
So from there, well, actually, I want to fast forward a little bit because you mentioned you clearly weren't able to get... you wanted to be in this tech space, and you wanted to be in InsurTech, and you're at two of the major ones. You had to join At-Boom. So At-Boom, for the people that aren't familiar, At-Boom was a pretty prominent InsurTech. They were definitely one of the big ones when a lot of InsurTech was getting going. You had been there pretty early.
Rich Stamets 41:29
I did, so I'll continue the story to kind of quickly come back to At-Boom. When I left Hamilton, I got a call from an ex-AIG friend of mine who was now at Star, who also really wanted to push small business. The way it was described to me was like, "Rich, Star wants to go—they want to continue to grow their small business. This job has your name all over it. We want to bring you in." So I had an opportunity to go work for Star. I was there for 11 months. Some things were happening there too. They really wanted to go direct-to-consumer, and unfortunately, the budgets that were allocated just weren't really enough for the area that we wanted to. Again, this is a lesson learned—never burn a bridge in insurance. Always do your best that you possibly can, and hopefully you have a good reputation to a point where, as Hamilton was thinking about becoming—they were actually AIG, Two Sigma, and Hamilton were coming together to form At-Boom with the backing of AIG, obviously. The team there said, "Well, let's call Rich and see what's going on." I had the HR person come to me and ask me how things were going at Star, and I hesitated to answer, and he said, "Great." Because normally I'm very positive—I'm usually saying, "Hey, things are great." So we knew when I didn't say things were great, immediately he thought, "There's an opportunity." So he said, "Would you consider coming?" Because there's this new company being formed called At-Boom, and we need someone who is going to head underwriting, and we would love for you to come back." I thought, "Wow, again, what an incredible personal compliment to have left the company and for them to ask you to come back," which at the time, that was not a very common thing. So I was very grateful to everyone involved over at At-Boom who was forming At-Boom to come back. Again, startup—I was employee number seven at that point. We literally had an accelerator, and that was pretty much all we had. Within a couple of years, we turned that into a pretty strong—I would consider it to be a very strong underwriting engine, leveraging a lot of third-party data that many companies, even today, aren't using.
Callan Harrington 43:23
You brought up an interesting point—it's so true—and it's about burning bridges. It always amazes me how often those relationships come back around at times when you just don't expect them ever. When you're wrapping up with a company, sometimes it can feel like, "Oh, it'll feel good to go out and just do what I want, whatever that may be." But the reality is, end it as strong as you possibly can, even if you know you're going to go, whatever it is—end it as strong as you possibly can because those relationships come back around. They always do.
Rich Stamets 44:01
100%, 100%. I've never understood why anyone would take their foot off the gas, ever, even if you're unhappy. You know, there are times when I've been unhappy in my career, but I'm still showing up. I'm still giving it my all. I want to make sure that the only thing you really have at the end of the day in insurance is your reputation, right? So if you damage that, you're never going to really be able to recover from that, and why would you? I don't get excited by shorting anybody. I get excited by saying, "I've done my best. I've given the organization everything that I possibly can." Sometimes that's good enough, sometimes it's not good enough, but it's everything that I have to offer. I've never gotten excited by doing that, and I certainly don't want to ever burn a bridge or be crossed with someone because, at the end of the day, we're all trying to do something that I think is positive. If I'm not your cup of tea, that's fine, but I'm not going to spend my time trying to either win you back over if I've exhausted all my options to do that, and I'm certainly not going to be bitter about it. There's no reason to.
Callan Harrington 44:57
I completely agree with that. So you spent almost four years at At-Boom, which I say because in the startup world, you're looking at two or three years, typically, before you kind of go. What were some of the biggest challenges that you ran into just growing At-Boom in general?
Rich Stamets 45:15
Well, a couple of things. One is that we didn't have a name in the marketplace, right? And you're trying to compete with some of these larger organizations. But I think for us, what we had was a strong underwriting platform, and we had really good people. I worked with some of the smartest people ever at At-Boom and certainly Two Sigma, Hamilton, etc. They were just brilliant people all wanting to have a common goal, which was to be the best at what we could possibly do. We did some crazy things—I mean, Two Sigma. The folks at Two Sigma, if your listeners aren't aware, they're a quant hedge fund. They have hired some of the best and brightest people. Just to give you a quick example, even though I was the head of underwriting, I was asking their team one day to help us build a processing system. I looked around the room, and I'll tell you, I would say I'm a B student from a liberal arts college, and yet, every single person that I was sitting around the room with—Stanford, Harvard, Columbia, MIT, double degrees—absolutely top of their classes. I thought, "How's this little kid from South Jersey sitting in front of these folks trying to direct and create something that's pretty magical?" Again, I still pinch myself about those days, but they went out under our direction and input to create some pretty incredible AI-driven underwriting systems. Pretty amazing.
Callan Harrington 46:28
Yeah, absolutely. And that's kind of the beauty of InsurTech—you see some really cool things getting pulled off. So you left At-Boom and went to Thimble. You went to another InsurTech. What was that transition like, just in general?
Rich Stamets 46:43
The transition was interesting. I loved everything at At-Boom, but I knew that my time was pretty much up as the head of underwriting. It was time for me to move on to another opportunity. So I was interviewing, and ironically, the chairman of Thimble had actually come to me at an InsurTech conference a couple of years prior to that and had wanted to talk to me. I was coming off the stage, and he said, "Hey, I'm going to be there that day. Can we grab coffee?" He showed me their application at Thimble, and at the time, I thought it was absolutely stunning. I thought the UI was amazing. I had never seen anything as slick as that, but I was still the head of underwriting at At-Boom, and I kind of carried that badge of honor. I thought, "Thank you for the opportunity, thank you for the inquiry," but I really wasn't interested. Well, when the time came to... and again, not so ironically, when I thought my time was up at At-Boom and it was time to move on to another opportunity, Thimble reached out to me again. So the timing could not have been better. I was literally getting a phone call when I thought, "Okay, I think it's time for me to go." The transition was pretty easy, going to Thimble. I had known some of the team there before, had some great interviews with that team, and was very excited to get to know them as well. However, because of non-competes, I wasn't able to do anything on the underwriting side, so I took a business development role, which was very different, again, for me, moving from head of underwriting over to business development.
Callan Harrington 47:58
Yeah, you've made that kind of change between sales and underwriting throughout your whole career. Now you've moved on to Arch. How is it going from—you spent the past, what, four or five years in InsurTech at two really high-growth InsurTechs—and then moved over to Arch. How's that transition been, going into a much larger company again?
Rich Stamets 48:19
It has been absolutely fantastic. The reason—I'll tell you why—is anytime an opportunity pops up, at least I do anyway, I go onto LinkedIn, and I start to see, "Okay, who's at this company? Who's in this company?" When I first went on to LinkedIn, I had over 30-some-odd contacts at Arch already, and literally every person that was on my LinkedIn connection, I thought, "Oh, top of the game, absolutely fantastic person." I've been doing this a long time—30-plus years—so there are going to be some people that you're going to run into that you're not necessarily going to be the most friendly with, or not have had the most, greatest experience with. That was absolutely not the case with me at Arch. Everybody that I knew there was absolutely fantastic. So it has been incredible to kind of get back into the traditional side of insurance. I get pulled into some conversations on InsurTech once in a while, which is great. I'm hoping to contribute because, at the end of the day, I have several skill sets in my quiver, hopefully. I love to build things. I love to create new things. So anytime I can offer any of my information back into Arch, I'm happy to do that.
Callan Harrington 49:21
So for you, it was, you're getting the opportunity to work with a lot of people that you really enjoyed working with. It is true, right? When you think about it, whenever you leave a company or whatever it is, it's the people that you remember. That's a lot of times what it's about. I'm not saying there aren't some awesome, mission-driven companies, but it's the people that make it enjoyable, at least that's the way it's been for me personally.
Rich Stamets 49:47
100%. I'll give you a quick story on that one. Going all the way back to my Caliber One days, I mentioned that there was someone who I had worked with at the time. We were new to the company, had basically a blank slate of how to create something, and that was probably almost 20 years ago. Well, I just brought that person back onto my team, and she's been here now for just about a month. Actually, as of yesterday, we were at lunch catching up over some things. It's amazing that 20 years can still go by, and you can still have what feels like this lifelong friendship and understanding, and this idea of you both wanting to create something that's better than what you had before. When you share that same vision, it's just incredibly rewarding that you can basically continue those relationships going forward.
Callan Harrington 50:28
I love it. So, Rich, the last question that I want to ask you is, if you could have a conversation with your younger self—whatever age, totally up to you—what would you say to that person, and what advice would you give them?
Rich Stamets 50:41
Alright, so I will actually give you two answers. One is a joke, and one is not a joke. One, I should have been an insurance broker. I would have made a heck of a lot more money than what I do working on the carrier side. I've been on many really large, expensive yachts and in some big boats of some insurance brokers, not so much on the carrier side. So half-joking, by the way. The other part is to really remain a student of this business. You have to learn something new every day because things are constantly changing all the time. I think the one compliment that I really appreciate—some of my friends told me recently—is that I continue to reinvent myself, and I appreciate that compliment, but I would almost change it a little bit in that I don't know if I necessarily reinvent myself, but I understand that I'm a student and I have to evolve every day. There's so much to do. I know this may sound a little bit hokey, but that's really what gets me out of bed every day. I get excited to learn something new, to accomplish something, to build something, to re-establish an old relationship that I had. That is who I am.
Callan Harrington 51:38
I love it. This has been a lot of fun. I appreciate you coming on the show.
Rich Stamets 51:43
Thanks, Cal. I really appreciate it. I love this topic, and thanks for having me on. Really appreciate it.
Callan Harrington 51:47
Absolutely.
