Code for Success: Building a Disaster-Resistant Future

Pete Miller [00:36]: Today, we’re joined by Mark Berven, President and Chief Operating Officer at Nationwide. Mark shares his insights on the critical importance of property resilience and how Nationwide is embracing a shift toward a “predict and prevent” mindset.

Mark also shares insights from Nationwide’s commercial lines protection survey, revealing just how concerned business owners are about severe weather impacts. We’ll explore Nationwide’s efforts in advocating for building codes, the role of advanced technologies in loss prevention, and the challenges to implementing these changes.

Stay tuned for a fascinating glimpse into the future of property protection

Pete Miller [01:21]: Mark, I know Nationwide has been a real leader and a champion of efforts to increase property resilience. Can you share why that’s so important to Nationwide and the insurance market in general?

Mark Berven [01:34]: Yeah, Pete, appreciate the question. You know, we obviously we do a lot of property business at Nationwide and it’s been kind of the talk of the industry and beyond the industry here of late with dynamic market cycles, inflationary pressures, but all of the conversation around historic severe weather. And I think that industry has historically we’ve always been more focused on what do we do after an event? Disaster recovery and, you know, repair and replace from an insurance perspective. I think the focus that we are trying to bring in during these unprecedented times is not just supporting our customers after a claim, which is what, you know, it’s core to our mission, but really helping them take more proactive steps to find ways to, to avoid losses from happening to begin with. Never met anybody that wanted to have a claim, Right? So I think collectively as carriers, distribution, everyone kind of moving to that predict and prevent type of mindset, we can mitigate some of the risks associated with these changing weather patterns and avoid losses before they ever happen, which is ultimately a win-win for everyone.

Pete Miller [02:52]: Yeah, I think that’s very obviously forward looking and certainly would agree with that. So Nationwide advocacy and raising awareness of the benefits of these preventative efforts, it’s raising awareness to protect against damage from various perils. So how are those efforts being received? How are they being received by your customers, by your constituents? And in your view, what more needs to be done?

Mark Berven [03:16]: Pete, overall, I think the message has been received positively. And we’ve done some research into kind of where the mindsets of folks and how are they thinking about this. But I would also say we also know this isn’t going to be an overnight change. You know, one of the things that we talk about at Nationwide quite frequently being a mutual company is we are in this for the long haul. We think about not just the dynamics of the market today, but a longer term view of how we evaluate risk and how we work together collectively to solve problems.

What we’re finding as the building code conversation comes up is really just, it’s going to take time. There’s receptivity to it as more research is coming out showing the positive impact that building codes can have. I think there’s growing momentum behind that. And yet today we know we’ve got a long way to go. FEMA had done some recent studies. 65 % of counties, cities, towns across the US today still do not have adopted building codes. So, you know, it’s a long way to go. Yet…

You know, one of the positives coming out of, you know, the dynamic of the industry and the severe weather phenomenon that we’re experiencing is we have more opportunity to talk about that now. There’s a lot more interest in, hey, what can we do? The economic impact of severe weather, really, really significant. So there’s a lot more interest in when you present the facts about the impact that building codes can have. There seems to be a lot of interest. So we’re optimistic and again, we know it won’t happen overnight, but we’re starting to see some progress in the area.

Pete Miller [05:10]: And do you see that with your agents and policyholders as well?

Mark Berven [05:15]: Yeah, you know, in particular, probably more so with that with distribution, you know, as we talk about our customer base nationwide, we talk about our customer of our distribution partners and we talk about that end consumer and we talk about them and use the term members. From a distribution perspective — again, what I’ve always appreciated in working with distribution professionals — is the care that they take to the client, proactive advice, recommendations, things that can be done. And then kind of, you know, really being that voice to carry the message forward in their communities. But also we all know that agents in local communities are well regarded, trusted. The impact that they can have is we’ve kind of shared the impact of building codes with their local government folks and, you know, keeping government is local still. And what we do there to just inform distribution professionals are great resource and in our advocates and we’re again seeing some momentum pick up in that in that space.

From an end consumer perspective, I think it’s really geographic by nature, you know. So if you’re living in Florida, if you’re living in California, if you’re living in, you know, some markets where this hasn’t been a recent thing, it’s been an ongoing challenge with weather. You know, some of the positives that we’ve seen out of building codes in Florida, you know, there’s more public awareness of that. But again, appreciate this opportunity. This is part of the platform to just continue to send out the message about the important work that we all have here.

Pete Miller [06:58]: Let’s just drill down on distribution. So you identified distribution partners, agents as key to your efforts. And you said just a little bit about that, but I think you also did some commercial lines surveys. Can you just help us understand that?

Mark Berven [07:15]: Yeah, we did. We did a commercial lines protection survey. So, core to our mission and vision, we talk about being a protection company. And we really wanted to get better insights as we were kind of seeing an opportunity here, but really understand what are commercial lines clients thinking so that we could also put information in the hands of our distribution partners to assist through what they do in the advocacy efforts and taking care of their clients. And we saw some really interesting insights come out of that.

So from kind of a baseline talking about concern about severe weather and with everything that goes on with a business owner today and all of the different elements that they have to think about, just understanding how important is this to them. And what we saw was, universally, commercial lines customers are very concerned about severe weather. So on a national basis, it was almost two thirds, 62%, identified as being very concerned about severe weather. If you’re in wildfire prone states, it was a little bit higher, 65%. If you’re in a hurricane risk area, 70%. So, really resonated as far as it was a concern.

But then kind of taking it to the next level, okay, it’s one thing to be concerned, what’s driving the concern? And one of the elements was, have you recently experienced any damage from a natural disaster? And 59% in hurricane prone states had suffered some kind of a loss, 38% in wildfire states. So, you know, it’s happening frequently. People are experiencing losses and, you know, the impact to a commercial lines client. When you think about having sustained a loss, it was about half of those that said that they had had a loss, reported losses between $20,000 and $50,000 of impact and more, maybe even more important than the dollars. As you think about continuity of the business, really that the recovery time was between four to six months. So you think about, you know, trying to navigate what you’re doing as a commercial client and being, you know, concerned about the repairs and the issues that you have on recovery and that taking you out for almost six months, really, really impactful.

Pete Miller [09:49]: Absolutely. That’s great statistics and very insightful in terms of the impact. Nationwide certainly is active in working with a lot of technology solutions that help to predict and prevent losses. Can you talk about some of those that you’re most bullish on?

Mark Berven [10:09]: Yeah, so we started some work a couple of years ago in thermal imaging. And really, it started in our agribusiness division and some of our large property warehouses, storage facilities, manufacturing locations. And just the ability to proactively begin to identify hotspots. As you got machinery going all the time, thermal imaging has come a long way.

Being old enough, I kind of remember now, right? Remember when a CD player came out and its first cost and what it was able to do. And now you think about where the music industry has gone today. Same dynamic here. You know, you can get a handheld thermal imaging device where you can actually self scan, go through a property, identify where there may be some hotspots. And we have numerous examples of loss avoidance where we’ve been able to identify something going wrong with the wiring in a wall before the fire manifested. So that whole preventing a loss, really important there.

Ting, another service that’s out there. That again, from a fire prevention ability in a home to be able to go through and kind of identify some unique trends in electricity dynamics and what’s happening in a property to alert that you may have something about to happen, wires that have shorted, and we’ve seen numerous examples of avoided fires in that space.

And then we think about it from a technology around human beings and Kinetic, a work comp wearable device that really is tracking the ergonomics of workers. So think about it, you’re in a warehouse, you’re doing a lot of lifting every day. It will send signals to workers if they’re actually, you know, following proper protocols to avoid injuries. It can alert management on site, hey, we’ve got some potential, you know, opportunities to provide coaching to employees. So avoiding work comp and keeping your workforce in place and without injuries. So lots of different dynamics, technology. It’s awesome. It’s advancing very quickly. And those are just three recent examples that we all see in that predict and prevent type of mindset.

Pete Miller [12:37]: So Mark let me ask you, Nationwide is the second largest mutual, I think fifth-largest insurance company. You must get a lot of technologies and a lot of people trying to talk to you about their different technologies. So how do you evaluate emerging technologies to figure out what has the most potential?

Mark Berven [12:54]: Yeah, you know, we brought a venture group to Nationwide where we actually go through and spend a lot of time exploring and really looking at new technology investments. And we’ve seen an evolution over the last 10 years in that space where I think the mindset early in some of the technology advancements that were going to impact the industry, there was a bit of a disruption type of mindset. Hey, we’re going to come in and be able to figure out how to kind of disrupt the industry.

And there has been a seismic shift. You know, I don’t think folks understood, you know, the complexity of what we do, all of the regulations, all of those sorts of things. And the mindset shift has really been, hey, there’s unique technology that, you know, said firm may have that we think we can come in and help with a part of the value chain. We can help solve some, you know, whether an end consumer problem, a distribution problem, or even as a carrier, maybe some of the things that you look for. So we, within each of our businesses, as we think about our strategic priorities and what we’re trying to do in that predict and prevent space, we’re really exploring what may be some technology that we could plug in with distribution based upon the type of client that we’re looking to serve. And again, really providing something distinctive and a value prop of how technology can help in the risk management process to avoid losses.

Pete Miller [14:34]: You talked very well about what can improve resilience and mitigate losses, but what more can be done in your view in that area?

Mark Berven [14:41]: You know, I think just the focus on adopting building codes and moving forward there. So I know I’ve already mentioned it, but at the end of the day, all of us have an opportunity to amplify voice to really show the impact that simple, you know, it doesn’t have to be complex, but simple changes that we can make to either commercial properties, to residential homes, that really can make meaningful impacts and avoid losses from happening.

I think that rather than trying to distract and come up with other things that we could do, that whole focus on resiliency through building codes, and I’d make a call out to IBHS. I mean, some great work when we talk about technology advancements and cutting-edge research, you know, I think that that organization just embodies exactly what we’re sitting here talking about. The amount of insight that they’re getting by testing different building standards, looking at resiliency, whether it’s through wildfire, whether it’s severe convective storm, it’s wind. I think again, just familiarizing ourselves with that. Everybody can go to IBHS’s website to see they’ve got fortified standards and guidance of, hey, if it’s this type of a structure and you’re concerned about these types of perils, here’s what we recommend.

So ultimately, we’d love to see that adopted into building codes, but even before that’s there, you can see it and what you would advocate. I know I have talked about, as I’m looking at maybe building a property, I know exactly where I’m going to go personally and follow the guidance that’s there because I see the impact of their research.

Pete Miller [16:35]: Yeah, I think the fact that 65% of communities do not have building codes implemented is kind of amazing to me. And I know you were recently at IBHS and you talked a little bit about that, but were there any specific lessons? I know like Roy Wright, he has very good data around if you don’t have anything within five feet of your house or kind of concentric circles or what are the kind of things that impress you? that made an impact on you.

Mark Berven [17:07]: Yeah. So, you know, walking the facility with Roy, really impressive. And I saw demonstrations of what they’re doing with siding and windows as it relates to flying debris from whether it’s a tornado or a hurricane and what you can do to create greater resiliency. They’ve got their roof farm out there where they’re aging different types of shingles and looking at damage ability. And, you know, what happens with that? We were in the main facility watching embers on a wildfire. And I think as you were just describing, they had two structures, one with kind of a five-foot barrier of noncombustible materials and one which I would just say would be like a traditional home that we all grew up with and looked at as those embers came in.

You know, the difference of where that five feet of defensible space was, no fire, nothing ended up happening to that property. Where you didn’t have that? Saw the impact of the property burning. And so, you know, a lot of really interesting insight and research, but I also took away, I had a chance to sit down with Roy and, you know, ask him, hey, what are the things that we could be doing? And this came back to the conversation around distribution. He talked about that oftentimes the challenge that they have with all this great research is, getting it, he said, that last mile. And the last mile being at that local level. And this is where, again, I think insurance distribution can play such a critical part of familiarizing themselves with this information and being able to take that forward to their client who may be thinking about a new building on their site or considering a remodel to the home. There’s some really good basic information that is available. And that’s what I really took away from the visit. There’s a lot we can do today as we advocate for these longer lasting changes, but there are things right now that can have impact.

Pete Miller [19:14]: So Mark, as you go around the country and talk about these types of principles and approaches, what are the challenges that present themselves to you?

Mark Berven [19:26]: I think that there are really two, Pete, that come up. So one is just the lack of information. And then whenever there’s a lack of information in anything, people kind of fill in the gaps with what they think as opposed to real data. And what I mean by that is there’s a thought that, boy, to create the type of resiliency from these exposures that we’re seeing, it must be super expensive, or really complicated and could you even retrofit an existing property? And I think demystifying or debunking that a bit, that that’s one of the pieces or the challenges that are out there is just, you know, getting information in people’s hands because there’s a lot of gaps of what’s out there and then people kind of fill it in on their own. The other potential challenge that’s there. There may be, and I don’t want to go too far with this, but there’s always conflicting interests. As you think about, there are industries set up that really thrive upon damage to properties. And they look at or could look at some of these sorts of advancements and think about the impact that it has to them. And you can see they may not be the strongest advocate for that. So, there’s always a bit of a counter that comes in. And again, I think we can work through that. But those are probably the two things that come to mind most frequently.

Pete Miller [21:09]: Mark, you’ve been a leader, Nationwide’s been a leader, and have been very out front about these types of things. So, if it’s 10 years from now, Mark, what do you think this looks like? What do you think this landscape looks like?

Mark Berven [21:26]: I think the advancement of seeing that I can give a number, I don’t know that I can articulate that will go from 65% of counties, cities and towns don’t have building codes. It’ll be a lot better than that. I hope that we cut it at least by half. But you know, it’s not about necessarily the number.

What I would focus more on is I’ll go back to the IBHS work. When you look at communities that have adopted the building codes. You can see the impact through real-life scenarios of pre and post timeframes of the impact or lack of impact of damage from different types of events. So, I’ve seen category three hurricanes in the southeast part of the US before some of these building codes were adopted in communities. And I saw the impact and damage, and then you look at it afterwards. And while I maybe can’t say that there’s zero damage, in some cases there was zero damage, but meaningful reductions. And so, 10 years from now, whether it’s through building codes, or doing things like this and getting more advocacy out and creating more public interest in things that they can do, regardless of what the building code is, to create better properties, to avoid losses. That’s what success looks like. And end of the day, I’d end with where I started. I’ve worked in this industry for 30 years. I started my career in claims. I’ve never met someone that was happy that they had a claim. So the best that we can do of helping folks figure out ways to avoid a loss from it ever happening. This really resonates and I just want to continue to advocate and amplify that message everywhere I go.

Pete Miller [23:25]: Mark, thank you so much for your time. I’m really grateful and thank you for your leadership. And certainly I think your message is well -crafted and meaningful, right? I mean, you’re right. Who wants to have a loss?

Mark Berven [23:38]: Yeah, we often, I tell my team this all the time, sometimes we get so infatuated with the next cool thing that we could build and the next, and I’m like, folks, hold on a minute here. At the end of the day, our customers want confidence. They don’t want to think about us. And the best way we can do that is through efforts like this. So, thank you very much for the opportunity to do it.