➤ Jim Williamson has been the COO of Everest Group Ltd. since 2020 and assumed the head of reinsurance role in 2021.

➤ He previously led Chubb Ltd.'s North America small business division after starting his career with The Hartford Financial Services Group Inc.

➤ Everest Re rebranded itself to Everest Group on July 10.

S&P Global Market Intelligence sat down with Williamson recently at the Future of Insurance Conference in Chicago and discussed the volatility surrounding the Florida insurance market and the outcome of the June 1 renewal season, as well as Everest's approach to and use of insurance technology (insurtech). The following interview has been edited for brevity and clarity.

S&P Global Market Intelligence: It's no secret that the insurance market in Florida has been in turmoil. What are the main issues you see in that volatile market?

Jim Williamson: There are two realities in Florida. First, there is the actual physical loss environment. The state is going to get hit with hurricanes and they will probably get worse. That's a real one and people have to pay for it. The second reality is there's an environment of loss cost inflation because of fraud and abuse and corruption. That needs to change and I think the groundwork has been laid for that in the reforms that took place. Our view is we need to see that play out in losses. It's not enough to say the reforms are terrific and we support them. We thought the political class in Florida demonstrated a lot of bravery to get that done. Now we're looking for results, and that will affect how we go forward.

Florida also was the center of talk surrounding the June 1 reinsurance renewals. What were the major outcomes of that process?

I think the renewal was orderly. It's still a very hard market, so rates were up somewhere between 30% and 50%, depending on how the specific cedant handled Hurricane Ian. If you had really bad Ian losses, you were paying plus 50%. If you came through that pretty well, and we actually had Florida clients who we broke even with the last year over Ian, they did much better. And you certainly saw everything in between.

You characterized the renewals as "orderly." How so?

There were two reasons. One, the market started taking rate last year, so some of the work, particularly around terms and conditions and basic rate levels were accomplished in 2022. The second reason is that everyone understood what it was going to take to get the market cleared, so we established clearing prices at the Jan. 1 renewals. That was a very difficult process because you had to match expectations with the reality. You didn't have to do that before. I would say people came in with capacity at the right price. They weren't coming in to cut prices.

What influenced Everest's strategy as far as which Florida companies to deal with?

We've been a very consistent supporter of specialists in the state and we've done very well there. The primary underwriting screen we use is financial stability. More companies fell out because of that reason, meaning they've been battered by losses and they didn't meet our criteria. So, we ended up deploying probably a little less capacity this year, but at much higher rates, so we feel like it's a really good outcome.

Most of the buzz about insurtech at the conference has centered around topics such as legacy carriers either acquiring or collaborating with insurtechs. What should insurers keep in mind when considering such changes?

The environment we compete in changes all the time, but the fundamentals of our business have not really changed that much. You have to ensure good risk selection, risk pricing and risk management, so technology investments and innovation need to be approached in keeping with those fundamentals. A lot of the early insurtech noise was about radically transforming the industry while ignoring those fundamentals. What happened was a lot of those companies ended up hitting walls because you can't run a company at a 150% combined ratio. But that's not to say that innovation isn't important.

How has Everest Re approached making those tech investments?

Our approach is to keep those fundamentals as a priority while asking where are people building interesting, useful tools that we can use to do better at those fundamentals. We're not off reinventing the wheel, but we are asking how can we select better risk, control claims costs or be more thoughtful about pricing. What we've done is partner with a lot of insurtechs, but we are very practical about it. It has to have a real application to our business and it has to show results in a pilot. And if it does, we scale. And we don't try to do too many things at once.

Can you give an example of this process in action?

We partnered with an insurtech on a natural language processing model for claims. It was a very narrow application of a specific tool for a real problem that created a measurable result. When we proved it, we expanded it. When we first talk with a new firm that has a capability or has built something that's interesting we say: "Tell us what is true, what is real and what is not. What's on your development path versus what have you delivered?" It's OK to have a balance of the two, but don't overpromise or underdeliver. Show us real results, and even if they're modest, and we can build on them in partnership, that's a great outcome. What we are not doing are moonshots or betting the farm on an unproven idea.