DIG IN: Nationwide’s Mahaffey on digital transformation as a mutual insurer

A mutual corporate structure and a nearly century-long history as a company might seem to be anathema to innovation, but for Nationwide, it actually gave the carrier a leg up. It has come out of the pandemic with $52.9 billion in sales and $295.7 billion in total assets, and high ratings from Moody’s and Standard and Poor’s.

“Despite all the things that went haywire in the world in the last several years, by almost of every one of those measures, 2021 was our best year ever,” said Michael Mahaffey, executive vice president, chief strategy and corporate development officer, Nationwide, in his keynote address at DIG IN, in New Orleans. “We grew faster, we were more profitable. We had stronger capital. Underlying this, it was our highest employee engagement year ever. Our customer retention and customer satisfaction increased. And so all of those things are not because we whipsawed in response to the pandemic.”

In the past five to seven years, Nationwide’s workforce decreased but leveled off at about 25,000 people, as processes were digitized, making its operations more efficient, according to Mahaffey. The mutual nature of the carrier followed the principle that “we can do more together,” he said, but acknowledged “that’s only true if everyone can understand what we’re supposed to be doing together.” The challenge became getting all the employees and operational units to grow in the same direction and coordinate as a team.

Mahaffey sought to pull together various brands and units that were all under Nationwide’s umbrella and rebrand them consistently with the power of the Nationwide brand. By 2019, the carrier had codified its philosophy right before the massive disruption of the pandemic. The main tenets of that philosophy are a corporate mission, vision, strategy and values.

The mission is to protect people, businesses and futures with extraordinary care. The vision involved gaining trust, showing care and having a customer focus as the means to carry out the mission. Strategy and values addressed the vision and carried out the mission, Mahaffey explained. The strategy included enhancing customer-centricity, improving operational speed and efficiency, and managing the business for sustained financial strength. Nationwide’s values, similar to its mission and vision, but guiding principles to carry those out, included customer focus, acting honestly, and working together to achieve results.

Along with its workforce transformation, Nationwide modernized its systems over the past five to seven years, refuting the idea that a large, older legacy carrier could not do so, according to Mahaffey. “We don’t have one line of business. We’ve got a dozen,” he said. “We modernized all of those core systems more or less in parallel. In round numbers, we had $5 billion of technology transformation over a decade, which touched almost every underlying core system we had. We’re on the tail end of that now. Now we have a much better modern digital chassis to harness the power across those portfolios and certainly to make each of those individual businesses competitive technologically.”

Nationwide couldn’t have achieved this as a public company, Mahaffey added. Its mutual structure made it possible to undertake that digital transformation. At the same time, Nationwide had to flatten its bureaucracy, in order to keep the clarity of the mission at hand, he said. The carrier’s size meant it had the capital to make the changes that a start-up would be hard pressed to achieve. As Mahaffey likes to put it, “Two kids in a garage can’t insure all of the Florida coast.”