"Connecticut is on the clock, and we're on the clock from two perspectives: financial stability and economic growth," the chairman and CEO of insurance icon The Hartford said today.
"But the question is, how are you going to finance growth?" Christopher Swift told more than 450 business leaders at the CBIA/MetroHartford Alliance 2018 Economic Summit + Outlook in Hartford.
"If you're not able to finance growth, if you're not able to create good jobs and revenue streams, we're going to get caught in a conundrum where a squeeze is coming."
That squeeze will come when the state is unable to meet its fixed budget costs and provide adequate services, a situation Swift will be working hard to help the state avert in the coming months.
"We understand and appreciate the value of being headquartered in Connecticut," says Swift.
"However, the state must continue responding to challenges and the evolving needs of businesses to remain competitive."
At the helm of The Hartford since 2014, Swift was recently appointed to the state's Commission on Fiscal Stability and Economic Growth, created as part of the bipartisan budget adopted by the legislature last October.
"The concept here is a public-private collaboration," Swift said.
"I am growth-oriented—that's what we're focused on at The Hartford—and it's what I'll be thinking about as I engage with the commission."
State's Cost Equation
Developing recommendations for ways the state can achieve stronger economic growth and fiscal stability will be no easy task for the new group.
Connecticut is facing projected budget deficits of $1.9 billion, $2.7 billion, and $3.1 billion in the three years beginning fiscal 2020, according to the state's nonpartisan Office of Fiscal Analysis.
At last count, the shortfall for the current fiscal year was $224 million.
Those grim budget numbers factor into Swift's belief that the commission must take a hard look at the cost of state government and find ways to control spending.
Connecticut needs to create an environment that people can believe in. We must put some wins on the board.
"And I think by any measure we can as a state improve our cost of goods sold. There could be structural items, there could be priority items, but you can't fund growth without tackling the cost equation we have as a state."
Swift is optimistic about a Connecticut turnaround because he believes the state has many strengths.
"Sometimes we get a little negative at times, a little dark, but I view the state as a very positive environment," he told conference attendees.
"Connecticut needs to create an environment that people can believe in. We have a lot of assets and we must believe in those and start to put some wins on the board."
'This Is Our Home'
In addition to the work Swift is doing to find fiscal solutions for the state, The Hartford has also turned its attention to helping its home city dig out of a huge financial hole.
"The city is a great place, the state is a great place—that's why we're all here," Swift said.
Last March, Swift and the CEOs of Aetna and Travelers pledged a combined $10 million to Hartford each year for the next five years.
"The three companies came up with the idea with the mayor because we felt the need to contribute," said Swift.
"This is our home. We have thousands of talented employees here that have to operate in the larger Hartford area, and we felt an obligation to go above and beyond what we do with our philanthropic organizations, so we made a $50 million commitment over a five-year period."
He cautioned, however, that the financial shot in the arm for Hartford is conditional: It must be part of a larger plan, involving the state, to ensure the city can maintain fiscal stability going forward.
State Budget Questions
"Since we made that commitment, [the legislative process] has been a little bit of a roller coaster," said Swift.
"But the legislature did pass a budget late in the year that looks promising for the city.
"It did provide some funding, but I think there are still a number of questions as the budget actually gets implemented in 2018 and beyond and how firm those commitments are."
Swift explained that details of the city's finances still need to be thought through, including debt restructuring, but he remains optimistic and believes the city can and should avoid declaring bankruptcy.
We should not underestimate the reputational damage and scarring that would occur if the city declared bankruptcy.
"I think we all recognize the importance of a strong capital city.
"I think it would have been horrific for our reputation as a community if the city declared bankruptcy.
"We should not underestimate the reputational damage and scarring that would occur for a long period of time if the city would have to go through bankruptcy.
"That's one point of view, but its a point of view I'm pretty passionate about."
Swift told the summit audience that while the insurance industry was coming off "the most expensive natural disaster season in 35 years," The Hartford would maintain a pro-growth focus in 2018.
He said the insurance sector, like the state's economy, faces two major challenges: The ability to attract the next generation of talent and the pace of accelerating technological change and its implications for business.
The insurance industry nationwide is seeing roughly one-third of its workforce retire annually—that’s 70,000 retirees a year.
Swift also expressed concern that only 5% of millennials—a cohort he said will make up 50% of the global workforce by 2020—view a career in insurance as appealing.
To overcome those challenges, The Hartford is taking several steps, including launching an apprenticeship program developed in concert with the state Department of Labor and Capital Community College.
The program, Swift said, is designed to prepare students outside the traditional college track for careers as skilled claims professionals in what he called "key client-facing roles."
In addition, said Swift, The Hartford understands that it must provide the kind of professional experience millennials are looking for, including a chance to do interesting and meaningful work, have flexible work arrangements, and have leadership development opportunities.
On the tech side, Swift noted that rapid advances in artificial intelligence, robotics, and apps are affecting his industry, changing the way insurers engage customers, adjust claims, and underwrite and price risk.
He told conference attendees he is excited about the InsurTech Accelerator, part of Hartford’s new InsurTech Hub.
Last November, 11 insurance-focused tech startups from around the world were chosen for the accelerator, which is scheduled for launch on Jan. 8 and will be housed in the Upward Hartford coworking/incubator space in the Stilts Building at 21 Church St.
The accelerator provides a way for startups to collaborate with established insurers in Connecticut in a way that benefits both parties.
"The trick is not necessarily to buy and ingest a startup—because culturally, it's probably not going to work—but how you figure out that collaboration, that partnership where you can put two cultures together to work on problems, to work on solutions and opportunities," said Swift.
"I think there are things we can both create together that will benefit our respective organizations."