In this IRMI.com section, learn about successful risk and insurance professionals and how they rose to the top of their industry.
Briefly describe your current position and industry experience.
I am currently working as an independent legal, consulting, advisory, mediation, and arbitration practice, Schiffer Law & Consulting PLLC. Previously, I served as a litigation partner in the international law firm of Squire Patton Boggs (US) LLP. My practice concentrates on disputes and related issues in the insurance and reinsurance industry, including contract wording and insurance insolvency advice. While I have never worked at an insurance company, I have been working on insurance issues since 1982 and have deposed, defended, and interviewed dozens of underwriters, senior executives, claims handlers, actuaries, accounting personnel, brokers, reinsurance intermediaries, and others. I am also active in bar and trade associations that involve insurance and reinsurance.
How did you land in the reinsurance industry?
I periodically teach a class called "Introduction to Reinsurance." My opening line to the class is often: "Raise your hand if you always wanted to be a reinsurance lawyer." The question is rhetorical. I had no background in reinsurance or any knowledge of what reinsurance was.
I clerked at the New York State Supreme Court, Appellate Division, Second Department after law school. When I left the court, I was offered a position at a boutique insurance firm then called Cabell, Kennedy & French (later Werner & Kennedy), led by Dick Kennedy, a well-known insurance lawyer. That opportunity came about because one of the judges knew a retired judge who was counsel to the firm and who had asked another judge at a reception whether anyone knew of a judicial clerk who was looking for a job at a law firm. My judge told me about the job, and I applied. It was there that I was assigned to my first reinsurance case in the mid-1980s. From working on that first case, which was quite extensive, my involvement in the reinsurance industry began, blossomed, and has continued ever since.
What was your most important job as respects your career path and why?
My most important job was clerking at the Appellate Division. While it was not directly related to my current substantive practice, it put me on the path to a successful litigation career. Working at the court taught me to understand what judges want and expect of counsel and how to write succinctly and persuasively. It also taught me time management and the ability to focus on the important facts and legal principles and not get lost in the weeds. It also led to my first firm job, which just happened to lead to my insurance and reinsurance practice.
What do you consider to be some of the most significant industry trends and why?
A large part of my practice over the years has been arbitration. The changes in arbitration, especially in reinsurance arbitration, have been the most significant industry trend in my view. Complaints about arbitration in general and about reinsurance arbitration in particular have grown over the last decade. Critics claim that arbitration has become unfair, too costly, and that too many parties are trying to game the system. This criticism arises primarily from the party-appointed arbitration system that has arisen in the reinsurance industry in particular.
I and others have been advocating for the reinsurance industry to move to a neutral panel system to take some of the perceived bias out of the system. Most commercial and international arbitrations do not allow the type of party-appointed advocate system that has developed in the reinsurance industry. I was one of the people who helped draft the ARIAS∙U.S. Neutral Panel Rules. It is our belief that if the parties and counsel adopt the Neutral Panel Rules, many of the criticisms of the reinsurance arbitration process will dissipate. Nevertheless, there are still challenges, with arbitrations continuing to be overly legalistic, with too much discovery and too many interim disputes.
What do you consider to be the most important challenge facing the insurance industry, and what should it do to meet that challenge?
The most important challenges facing the insurance industry are disruption by technology and by the capital markets. Risks traditionally insured through the industry are shifting more and more to the capital markets through creative mechanisms of risk funding and distribution. This is especially true in the property catastrophe reinsurance space where capital markets instruments now account for a significant part of the risk transfer.
The insurance industry has recognized the competition from the capital markets, and many insurance groups have capital markets subsidiaries. The industry has to continue to recognize that the industry does not have a monopoly on risk transfer. If it wants to keep and grow its market share, it must innovate and provide superior customer service.
Technology, however, is the next big challenge. Innovative use of technology is already occurring, and new insurance companies are popping up that take advantage of that technology. Lemonade, a new insurance company writing homeowners insurance, is a prime example of a company formed on a Web-based platform promising nearly immediate claims payments. Big data, blockchain technology, artificial intelligence, and other technologies are all transforming the insurance industry as you read this. The challenge to existing companies is learning how to embrace and adapt to this new technology and use it to its advantage to maintain market share. Those insurance companies that do not meet this challenge will not be around in 10 years.
What advice would you offer to someone new to re/insurance on how to have a successful career?
My advice to someone new to insurance and reinsurance is to broaden your knowledge and learn all you can about the industry. Lawyers, particularly litigators, are often generalists who learn about and absorb the details of the particular issue or industry they are litigating at that moment. To sustain a successful practice with an industry focus, you have to have a broader awareness of how the industry operates and how your matter fits within the industry. Insurance and reinsurance companies expect their lawyers to understand the industry. Smart lawyers also understand their clients and learn as much as possible about the client's needs and practices.
A good way to learn about the industry is to demonstrate your thought leadership by speaking and writing about industry issues. You can start by helping a more senior lawyer with articles and presentations. I started by writing case summaries on reinsurance cases for a bar association committee newsletter. Today, with blogs and other Web-based means of communication, your ability to show your knowledge and be an influencer in the industry is unlimited.
Finally, to have a successful career, all lawyers must take ownership of their matters. What I mean is that you must work on every matter as if you are the senior lawyer on the project and that everything you do or say will go to the client. You must be proactive and creative and bring a willingness to go beyond the basics to assist your client to achieve its goals. The failure to take ownership will restrict and inhibit any lawyer's chance to have a successful career.
How do you/your firm give back to the community/industry?
The firm has many pro bono initiatives, most prominent being our Public Service Initiative, which provides counsel to those who have been wrongfully convicted and are often on death row. The firm is also active in various aspects of the Lawyers' Committee for Civil Rights Under Law, which was founded by President John F. Kennedy. I have been personally active in the Lawyers' Committee Election Protection Coalition for many years, which provides a hotline and interaction with local election officials to make sure that everyone who wants to vote is able to cast their ballot.
I also have been a pro bono mediator for the US District Court for the Southern District of New York for over 25 years and for the Commercial Division of the New York State Supreme Court, New York County.
Finally, we have been actively involved in leadership positions, industry associations, and bar association committees, most prominently ARIAS∙U.S., where I presently serve as chair of the Technology Committee and a member of the Ethics Committee, and the American Bar Association's Tort Trial & Insurance Practice Section, where I am a past chair and current vice chair of the Excess, Surplus Lines, and Reinsurance Committee and a member of the Cybersecurity Legal Task Force.
What has been the most rewarding experience in your career?
Working for 20-plus judges at the Appellate Division and having the opportunity to assist them in determining cases have been the most rewarding experiences of my career. Interacting with judges and discussing with them the facts and law and why a case should be decided a particular way is something that you cannot experience anywhere other than in a judicial clerkship. My advantage was that I worked for all the judges, not just one, and had an opportunity to interact with some of the finest judges New York has ever produced. It was most rewarding to be treated almost like a peer by many of those judges and to have my draft decisions and ideas embraced and used in the court's determinations.
How do you stay up to date with ongoing developments in your field?
I stay up to date with ongoing developments in the insurance and reinsurance industry by receiving and reading myriad news and case law feeds and by regularly following court dockets and publications by experts in the industry. There are hundreds of insurance cases decided every day, so it is impossible to read them all. I try to focus on important cases and reinsurance cases in particular (a much smaller number). I also follow company changes, acquisitions, promotions, and meet regularly with my contacts in the industry. We also periodically do roundtables or informal discussions with clients on industry developments.
I also moderate the Reinsurance Disputes Group on LinkedIn and follow other insurance and reinsurance groups and blogs on social media. Attending industry meetings and conferences, as a speaker or a participant, is another way I keep on top of developments. Of course, writing the Expert Commentary on reinsurance for IRMI.com forces me to think about trends. (See Larry Schiffer's bio on IRMI.com.)
How have you been surprised by the insurance industry?
The insurance industry is one of the most important industries in the world. I had no idea about the depth and breadth of the industry's reach and no idea about the importance of reinsurance. Most people don't. Most people think about insurance in the context of their car or home, but it is wildly broader than that. And, with reinsurance, you can view it almost like the Wizard of Oz, but you should pay attention to the person behind the curtain because that person fuels commerce.
Another surprising aspect of the insurance industry is the diversity of the issues for a lawyer. Obviously, insurance companies have all the same issues as any other company, but no one thinks about that. In working for the insurance industry, you can be involved in employment issues, antitrust, intellectual property, contracts, technology, real estate, tax, and myriad other issues. And then, on top of that, you have all the insurance issues from risk transfer to regulatory to claims to reinsurance.
How do you describe the insurance industry's impact on the US economy?
The insurance industry's impact on the United States and, frankly, the world economy is more than significant. No economy can develop without a robust insurance industry to help those driving the economy to spread the risk of loss. Insurance is the engine of commerce. Nothing gets made, nothing gets shipped, nothing gets sold, nothing gets done unless the risk of loss is insured and that risk is spread out so that a loss will not have a catastrophic effect on the economy.
The power and resiliency of the insurance industry was seen on September 11, 2001, as well as when Hurricane Katrina struck, and again when the economy melted down. While the press was quick to criticize the industry for not paying claims after Hurricane Katrina, in fact, most claims were paid very quickly. The insurance industry reacted with courage and compassion after 9/11 and Katrina, and continues to do so for each major catastrophic loss. And, while a noninsurance part of an insurance group became one of the focal points for the crash of the economy in 2008, it was the insurance industry that stood strong and absorbed the downturn better than most other financial services components.
I like to tell those who take my introduction to insurance and reinsurance courses to pick up the New York Times and see how many articles on the front page have insurance ramifications. The insurance industry is an integral part of the economy and a key factor to the economic advances that this country has made over the years.