Sound actuarial pricing can be a cornerstone for revenue, earnings growth and, by creating financial models and forming equitable rates, expansion into new markets. Alice Gannon, who's been with USAA for 37 years, currently as chief actuary, SVP, has been a big part of the company's success in all three areas. Gannon's required to stay up to date on catastrophe risks, competitive pricing, the volatile economy and changing regulations. To deal with all of these factors, Gannon has forged a technological trail for USAA.
"Data is the lifeblood of an actuary," Gannon says. "The actuarial role has become increasingly important over the decades because you can replace a lot of the gut-feel underwriting of 60, 70 years ago now with good, hard analytical data," she says. "Writing millions of policies and settling hundreds of thousands of claims - we have to take all of that data and roll it up to enable good business decision-making."
Gannon knows plenty about good decision-making. She's spent the majority of he time focused on actuarial science. Working at the same company for decades, she's armed with a knowledge of the business as a whole. Aside from leading the company in analytics, she determines resource commitments, measures long-term goals against short-term ones, and helps the company achieve as many goals as possible as Chair of USAA's P&C Financial Strength Committee and a member of the P&C Risk and Strategy Committee.
"When you're talking about pricing the product, you have concerns about all the financial metrics and all the market metrics, the acquisition of new policyholders and products and retention and the reputation, etc., as well as obviously profit and expense controls and everything," she says. "It's very fun to be involved in that big picture."
Gannon recently championed enterprise wide economic capital models, using components of the property/casualty, life, bank and investment affiliates. She also worked with IT and business areas to improve the governance of user-developed applications. This experience is invaluable to younger colleagues, and the majority of Gannon's mentor opportunities have been with women. Steering clear of generalizations about gender, she said her most common advice is to speak up. Gannon recalls that, debating with a father and grandfather who were attorneys, she never shied away from conversation, no matter how contentious.
Indeed, Gannon is not afraid to fight the tides to do what she feels must be done, which oftentimes entails going beyond USAA's walls, efforts that shined in the WIL judges' eyes. Perhaps most telling is her work as part of the Florida Modeling Commission in the late '90s, when she was one of two women on the nine-member committee who set out to prove the current models were outdated.
"The models used had been there since Hurricane Andrew, but were not well accepted and were not recognized as the best approach to measuring and pricing that risk," Gannon says. "I'm very proud of the work we did."
Add to this her contributions to the University of Texas' actuarial science curriculum; extensive community involvement, dedicating some of her time to the Methodist Healthcare Ministries, as a partial owner; a stint as president of the Casualty Actuarial Society; and her role, as of February of this year, as chairman of the Board of Directors with the Insurance Institute for Highway Safety, the second woman elected to the position. This led several WIL judges to remark on Gannon's highly active leadership within the industry.
Gannon says success comes from being on the leading edge, which often means working closely with IT. Yet, technology investments require experimentation, courage, and usually, a little luck, which often is tough to sell to upper management, even for someone as comfortable in debates.
"There were points when we tried something that was premature and didn't get much return for it," she says. "One of the challenges is how to get top management on board when there are high costs involved; so we have to build a clear cost-benefit analysis to build credibility around. We take that very seriously, because if I paint a cost-benefit analysis for a new technology and then it doesn't materialize, then I've shot myself in the foot for the next go-round, because I've lost some credibility."
In Gannon's case, however, she has 37 years of credibility built up. But you can be certain any missteps would not keep her from pushing for an initiative just as bold and ambitious the next time around. After all, that's the type of dogged mentality that has gotten her to where she is.
Number of years in the industry: 37
Number of direct reports: 6
Company size: $13.7 billion P&C gross written premiums
Nominated by: The Nolan Company
For photos from the Women in Insurance Leadership Award ceremony, click here.
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