“Culture eats strategy for breakfast every day” – Falvey CEO
“The insurance was great and all of that, but to be brutally honest I was making, at the time, $12,500 a year,” Falvey said.
“My classmates were coming back from sea having made $75,000 a year and having the next four months off, paid vacation – so I said ‘hmm, something’s not right here’.”
The solution was straightforward: Falvey, a graduate of the US Merchant Marine Academy at Kings Point, New York, took to the seas with the US Military SeaLift Command, sailing as a first assistant engineer.
It was a path that led him to London, where, from 1983 to 1984, he served as the liaison officer to the Royal Auxiliary Fleet, shortly after the Falkland Islands War of 1982 that saw Britain and Argentina locked in a fierce and deadly dispute.
It was family – or rather the love of a woman and her response to his proposal – that set the wheels in motion for Falvey’s return to insurance.
“She said ‘yes’, we got married, so I didn’t want to go back to sea,” Falvey said. Instead of looking to stretch his sea legs again, he ultimately headed back to Rhode Island, joining Donald J Rojas in 1984, where he built the foundations for a long-running Lloyd’s relationship.
“I was essentially a cargo underwriter and we specialized in hi-technology – Hewlett Packard, Intel – I was writing a lot of that, and we started writing life science business,” Falvey said.
“I worked with Don for about 12 years, and then he decided to sell the company to somebody else, so I started Falvey Cargo Underwriting in 1995.”
Building the business
Perhaps fittingly, given his London links and marine background, the business Falvey now helms can boast that it is the largest cargo covernote holder at Lloyd’s today. As of 2023, family-owned Falvey Insurance Group includes four MGA businesses – offering vessel pollution, transportation and logistics liability, marine cargo and stock throughput, and all-risk shippers interest insurance – in addition to the wholesale division that launched last year.
In the early days, though, the focus very much remained on hi-tech firms and life sciences, and Falvey worked with some of the biggest names in tech (from Amazon, then a bookseller, to Google) when the businesses were still in their infancy during the dot com boom days.
“I really focused on that and we continued to grow – we added some more underwriters, we opened an office in San Francisco, because most of our business was in San Francisco at the time in Silicon Valley, and then my mantra was: ‘if we’re going to be technology, we need to be in Asia’.”
Prioritising underwriting profitability
The group has 27 years of “almost consistent profit” for its underwriters under its belt, something that Falvey said he believes is one of his biggest achievements along with the group’s continued growth – but it hasn’t always been entirely plain sailing, and Falvey has made big decisions in the prioritisation of underwriting profitability, including the shuttering of the group’s Asian operations.
“The mission of Falvey is to make money for our underwriters, and after five years, I never made money for our underwriters in Asia, so we closed that down and then continued to grow,” Falvey said.
In 2017, Hurricanes Irma and Maria swept a path of devastation through the Caribbean (combined industry insured losses from the two storms, including in the US, hit $59.6 billion, according to Aon), and Falvey Yacht Insurance was at the time the largest writer of charter yachts in the region, according to the CEO.
“Irma, and Maria came through and just wiped it out and it was = a very tough class of business before that,” Falvey said.
“We continued to get support, but I just looked at it and said – ‘we’re not going to make money, we’re just not, we’re against the headwinds in what we’re doing there’, so I closed that, but in cargo and everything else, we’ve continued to make money.”
Looking to the future
With underwriting profitability firmly at the top of Falvey’s list of priorities, agents shouldn’t expect to see the business move too far from its comfort zone – “you won’t see us writing D&O or anything like that, we’re going to stick to our niche,” Falvey said – but it is readily poised for further expansion within its area of expertise in 2023.
It has worked to move with the times in terms of technology, and Falvey estimated the group has around 18 programmers on its staff roster.
“I’ve been huge about technology – we have our own proprietary system, we’re big on that,” Falvey said.
“Everybody that knows me knows we’re big on technology and data, but it’s still a relationship business, and you can’t lose sight of that.”
The CEO has not stopped expanding his own horizons, and in 2020 he graduated from Harvard Business School’s Owner/President Management Program, where he further cemented his views on culture.
“There was a lot of talk about strategy there, and you’ve got all of that and culture,” Falvey said.
“One of the things I’m really big about is culture; culture eats strategy for breakfast every day, I’m a firm believer of that.”
As for what he hopes will be his own next big achievement, Falvey said: “We’ve been growing at about 30% a year now for the last four or five years, so we’re going continue to grow that, broaden that out and do more of that, and we’ve a company that’s built enough so that can continue on.”
Mike Falvey, Falvey Insurance Group CEO and president, on:
Lloyd’s modernization as a watershed moment…
“Lloyd’s has changed so dramatically – the use of technology now and the speed at which things are [done]. I’m sure friends of mine in the market will be saying, ‘oh, it still moves kind of slowly’, but when you look back to where it was, with everyone sitting at the box, and the way people would progress – you would sit at the end of the box and photocopy. I have friends and that’s what they did for two years, and then finally they would get to move up a seat, and they would write in the book. And then they would continue to move a little bit further and they’d be involved in conversations and then 10 years later they would finally be making decisions.”
The return of the personal touch…
“The personal touch will come back a little bit more. I think there are some brokers who are enjoying not having to deal with underwriters, [and those brokers might be thinking]: ‘I just send an email in and then I get back 10 quotes, right?’
“One of the things I’ve cautioned them is: be careful what you wish for, because if your job is only sending an email to 10 markets and getting a response back, somebody in the US can just access London that way, or we can get a computer to access the markets that way. You still need to do that and have that personal touch.”
His top piece of advice…
“Do the right thing. We all know what it is, right? We all sometimes try to take shortcuts. When something presents itself to us, we intuitively know what the right thing to do is. [It’s about] just having the courage to do the right thing, and then everything will play out. Do the right thing, trust in yourself, and it’s going to be good.”