A new day at NJM: Livingston describes change, challenges

NJM Insurance Group in West Trenton. (File photo)

Mitch Livingston will take over as CEO of NJM later this year. – New Jersey Manufacturers

The New Jersey business community was shocked on Jan. 26 when Bernie Flynn announced he was retiring as the CEO and president of New Jersey Manufacturers.

Flynn, head of the iconic New Jersey company since 2008, has been a ubiquitous figure at New Jersey business events, representing the 105-year old insurance firm.

Chief Operating Officer Mitch Livingston was named Flynn’s successor. Little was known about Livingston, even though he has worked at NJM since 2006 and his connection to the company — and insurance industry — goes back much further.

Prior to working at NJM, he represented the company for 10 years as a partner at a Trenton law firm. And, prior to that, he worked in the attorney general’s office, helping to cover issues in the Department of Banking and Insurance.

Livingston discussed his background and a number of other issues involving NJM with ROI-NJ last week, his first wide- ranging interview since being named to the top spot.

Here are eight things we learned:

1: The surprise retirement of Bernie Flynn wasn’t a surprise to a lot of people at NJM.

“It was a secret, but a well-known secret,” Livingston said.

“For the past two years, I’ve known about the succession plan, so I’ve worked with Bernie at all levels of planning and been involved and consulted. He would say we’ve worked together to make every decision in the past year because he recognized that every decision was going to affect me more than him. He’s been very considerate in that regard.”

Those inside NJM offices in West Trenton have seen the transition, too. Livingston and Flynn have done internal town halls together the past two years. It was a way for Livingston to get used to being out front and for those in the company to get used to seeing him in that role, he said.

And it was a way for Flynn to ensure there was a proper succession plan, something that was very important to him.

“Bernie’s a planner,” Livingston said. “His intent from Day One was to make it work smoothly. People were talking about it, people saw it coming. I became the chief operating officer last year, so everybody knew I was the successor; the question became when.

“I can’t say enough about Bernie. He feels very strongly about this company, as most people here do. His concern is to make it successful after he leaves, and he was very accommodating to make sure I was in every meeting and every conversation that ultimately would affect our future.”

Livingston said his personality differs from Flynn, but not drastically.

“I don’t think there’s a sharp contrast,” he said. “I’m probably more analytical, more thoughtful, less outgoing from a personal style. The personality part of it probably comes a little bit easier for Bernie; that’s who he is. But I’m not uncomfortable in that space. I don’t think outwardly or inwardly you’ll see that much of a difference.”

Flynn has not made himself available for comment since the announcement was made. NJM officials have said he wants all the news to be about the company and Livingston.

On April 27, it will be, as Livingston officially takes over.

Of course, Livingston said, because of the smooth succession plan, there will not be any noticeable differences.

“Nothing will change,” he said. “My life doesn’t change day to day.

“The only thing I won’t have to do is say, ‘Are you OK with that?’”

2: Livingston’s background made him the perfect choice to take over as CEO.

Livingston started in the attorney general’s office in 1990, the year incoming Gov. Jim Florio signed an auto insurance reform bill, creating massive changes — and confusion — for the insurance industry in the state.

“It changed all the rating laws in New Jersey and caused a lot of litigation,” Livingston said. “Over three years, I learned 20 years of education on insurance, part of which was because any company that wanted a rate increase at that time had to go to a hearing. I was on the other side of that hearing, representing the Department of Banking and Insurance. You really had to understand how it all worked. I was thrown into that immediately. It’s actually very interesting when you understand it at a 5,000-foot level. It was a great drink-from-a-firehose experience.”

A few years after leaving government, he began working for a Trenton firm that represented NJM. That brought additional knowledge, but nothing like coming in-house, 10 years later.

“The legal department here, because it’s an insurance company, plays a large role in the business operations of the company,” Livingston said. “From Day One, I had an opportunity to understand the business of insurance, not just the legal side of it.”

For Livingston, who got his undergraduate and law degrees from Rutgers University, it was a perfect fit.

“My major was economics; I’m more of a businessperson,” he said. “My plan was always to marry the legal with the business because it’s just more interesting.”

3: The growth of the company will not necessarily be in West Trenton.

NJM employs around 2,500, company officials said, with approximately 1,700 at its West Trenton headquarters, 500 in its Hammonton office and 300 in Parsippany.

Future growth will go to Hammonton, for one reason: It can grow there.

“The Hammonton site has been in operation for about eight years,” Livingston said. “It is a beautiful site down in blueberry country.

“Our ability to expand here is limited because of an impervious surface; we’ve built out all we can. So, our expansion, personnel-wise, will be in the Hammonton office.”

4: NJM will continue to be a fixture in the New Jersey business community, just in a different way.

“NJM will be out there in the same way we have in the past, but it won’t always be me,” Livingston said. “That’s a difference you’ll see immediately.

“There is some requirement for the new CEO to look internal and be an internal presence, so that’s where I’m going to start. But, I’m going to pick my spots. For instance, Choose New Jersey; I’ll play a greater role. Greater Trenton, Mike Van Wagner will probably be our representative. It will be an opportunity for others in our company to step up.”

Livingston said NJM values its role in the New Jersey economy.

“NJM obviously is a New Jersey-based operation. We’ve always been supportive of New Jersey, and we will remain so. One of our values is to support the communities we are privileged to serve. We mean that and that’s why Bernie stepped into that space. That’s not going to go away.

“Economic development and, to some extent, the effectiveness of the business community really affects our bottom line. We want New Jersey to be a thriving economy, we want it to be growing and we want it to be gaining population, so it serves our policyholders to serve that purpose, as well.”

5: The company’s expansion into Pennsylvania will start small, but it could be a big deal.

On Jan. 1, NJM began selling insurance in Pennsylvania, the first time it has left the state in its history. While the company did not make a major announcement at the time, Livingston acknowledges the move is a big deal.

“It is a significant milestone for the company,” he said.

One Livingston said was undertaken to better diversify risk — and thus, ultimately, better serve the policyholders it serves as a mutual.

“When you think about where we are going in our future, and you think about this strategic look at NJM for the next 10 years and, frankly, over the next 100, there’s an opportunity to expand the people we do business for,” he said.

Technology, he said, simplifies the expansion.

NJM has begun advertising in Pennsylvania, but it does not need to open an office there.

“We’ve worked long and hard the last 10 years to make sure we’ve stepped into the (technology) space and do it well, and now we are in great position,” he said. “With that, comes opportunity.

“There’s no reason we shouldn’t add to that policyholder base and grow over time and grow in the mutual fashion. We’re not looking to double our size in the next two years, but, ultimately, we’re looking at opportunities, and Pennsylvania is a great one. Diversification is obviously a big thing in the insurance industry. (Superstorm) Sandy showed us what being (in) a single state can be.”

The company is licensed to write in all of Pennsylvania, but it has started its efforts in its Eastern counties. Growth across the state is coming. As may be growth to other states.

Since it is not a public company, Livingston said, NJM has the ability to move slowly.

“This is our first step into the process, probably a step into becoming more of a regional player, over time, and taking advantages of other opportunities to get there,” he said.

“We have no immediate plans to enter other states on a personalized basis, but what I will say is we are intentionally educating ourselves on options, alternatives and strategies so we do have people looking at all of the possibilities today to make sure we are ready if we ever decide to do it.”

6: Sandy helped the decision to move into Pennsylvania, but it wasn’t the impetus.

“Sandy helped the discussion, but it was always there,” Livingston said. “Since I’ve been here, we’ve talked about the need to change.

“One of the big drivers when you think about growth and you think about the long-term operation of the company is what’s changed in New Jersey. Before 2003, it was a highly regulated state, and no one wanted to write in this state.”

Auto insurance reform in 2003 changed that.

“The ability to grow when everybody is now selling auto insurance on TV made us think maybe we need to expand the runway of our business operations and other opportunities,” Livingston said. “That led to thinking about other states. Sandy helped to make us think about other states, and then, when you think 100 years down the road and how insurance will change with autonomous vehicles hitting the market. So, growing over time is important as well.”

7: Autonomous vehicles will impact auto insurance. Just how is still uncertain.

“There are no easy answers,” Livingston said. “This is putting my legal hat on: Who’s liable when a car that’s self-driving hits something? Is it the digital programmer that designed the program? Is it (the car company) that put the car out? it’s unclear.

“I think auto insurance always plays some role in it, but I think it’s a much-reduced role. Some of the automakers are talking about taking that risk, producing the car and helping the insurance and taking the risk, to the extent it goes there, the question is: Who is going to reinsure them? These are all risks effecting the property casualty industry.

“Flip side, I think these are opportunities for the property casualty industry to figure out what role do we play and where can we step into. We have a group at NJM that is focused on autonomous vehicles. We are making sure we stay paced with this and understand where the opportunity comes out on the other side. With every risk we can identify, there’s a flip opportunity. Making sure we understand both is key.”

Safety devices, he said, are having a greater impact in the short term.

“The better that those devices get, the more cars they get put into, the fewer the accidents that will happen, and that’s real time,” he said. When that happens, it is a wonderful thing: fewer accidents, fewer injuries and, ultimately, fewer auto insurance premiums. But, a big part of our business is auto insurance. So, a part of that goes away. That’s a wonderful thing, but what else do you do, what other services do you provide to make up for that?”

8: The biggest future disruptor of NJM is not another Sandy or autonomous vehicles, it’s this.

“Technology,” Livingston said. “The world is changing on how people deal with each other. We’ve got policyholders that have been policyholders for 30 years that want us to mail them things, and they want to have a conversation when they have an accident, so we have a call center and make sure we fulfill those needs. We also have policyholders who would just as soon never talk to their insurance agency: They want to point and click on everything.

“That continues to change over the next 10 years, and who knows how we will communicate with each other 10 years from now. That applies to all businesses. So, when you go to the insurance conferences, more than the weather, maybe more than autonomous technologies, it’s what does technology look like 10 years from now and how do we respond to the needs of our policyholders and their expectations of we want what I want and I want it instantaneously?”