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What does business planning mean in your organization? For many people, the annual business planning cycle can be the equivalent of getting a root canal – a dreaded ordeal. However, for others, like XL Catlin’s Gary Kaplan, developing the annual plan for the North America Construction business unit represents a strategic opportunity to set goals, build alignment and set priorities based on what matter most to customers. And he’s gotten quite good at it. Since starting the North America Construction business in 2010, Gary has built his stellar reputation on effective business planning by exceeding every annual plan. By 2017, his multi-line construction insurance team reached $2 billion in gross written insurance premium in just seven years of operations. Business planning has lots of moving parts, volumes of data to analyze, and an operating environment with market conditions that constantly change. So, what’s the best approach? “You have to look beyond the bottom line numbers, determine the critical trends, identify what matters most to customers, and then motivate the team to move in that direction,” says Gary. Here’s how he makes it happen.   

How do you develop your annual business plan?  Kaplan: Building our annual business plan is a disciplined process. It’s a team-based approach that comes together during the second half of the year, as part of our project-centric Leadership, Planning and Execution business model. This model is made of two core areas. Simply put – it means “plan the work”, which is focused on the financial targets and operations, and “work the plan” which is 100% focused on executing on your goals. We partner closely with our finance and actuarial teams throughout the process. To get started, we first analyze historic performance to determine the initial business direction. We use graphs to outline important trends over time such as top line growth, bottom line profit, book of business mix, penetration into our target market (ENR 400 & 600), and number of products sold to each target.Of course, assumptions are part of our plan. These could include things like industry market conditions, expected rate change, renewal retention, and the growth potential year to year based on the market opportunity.  We go through several iterations before the plan is finalized.  

How does customer feedback shape your process?We gather ongoing customer feedback throughout our day-to-day operations, our annual customer council meeting and ongoing broker surveys. This is all part of what we call, “ Voice of the Customer”.  We try to think about everything from our customers’ perspective – what do they want most? What is their strategy? What are their goals? What are their biggest challenges? For most contractors, it’s about finishing projects on time and under budget. So, based on this, we need to think about how our products and risk engineering services can help them achieve these goals. We’re a multi-line construction unit, so we bring the full suite of insurance products and risk management services to the table. Some products such as Subcontractor Default Insurance have a higher demand in the market, and some risk management services are needed more than others. It’s our job to figure out where there’s growth and how we can best align our team resources to what our customers value most.  

How do you set priorities?We know that we can’t be everything to everyone. Sometimes, we have to make tough decisions. Often, it’s very clear where the growth is and it’s a no-brainer on where to invest. But then there’s the flip side – you need to pull back, shift resources or simply say “no”.  Setting priorities isn’t easy. You need to weed through a lot of developed information, consider all of the options and the resources required.  Resources not only include money invested to change things but also include people’s time – which no one has enough of. Then we have to weigh urgency against value created.  It’s all about deciding how to use limited resources on the things that will make the most difference for our customers.

We use ongoing, open communications throughout the business planning process and throughout the year as we execute on the plan.

Once the plan is set, how do you execute on it? Every year during the 4th quarter, we develop a strong operational plan.   This is our ‘road map’ that’s used to provide a clear picture of how our team will contribute to the achievement of our overall financial goals. It’s how we translate our “big picture” strategy and objectives into tactics. These are the key projects and initiatives that align resources so that we can stimulate performance and hit our financial targets. And we come up with lots of projects – typically around 50. These operational projects tie back to supporting our overall strategy as well as the top and bottom line financial plan. We focus these projects around our four levers: Growth, Profitability, Expense and Talent – which are all key parts of our financial plan. Having this linkage between our financials and our operations is the key to influencing, owning, and driving our results.

What’s different about your approach?I’d say it comes down to two areas - communications and accountability. We use ongoing, open communications throughout the business planning process and throughout the year as we execute on the plan.  It’s all part of our  open communication team culture.  We use a monthly virtual team call to share results with the entire team. We’ve been doing this for seven years, and it keeps everyone on the same page on where we stand, and makes everyone accountable. There is powerful accountability in having our Profit Center Heads report to the entire team on how they are doing against the plan -- more so than if they had to just talk to me.   We’ve also developed a portfolio of metrics that let us know either monthly or quarterly where we are against the plan.  The top line performance (gross written premium) is the easiest to measure and we review this every month.  Knowing where we’re at every month helps us decide what actions to take.  We have initiated many growth projects over the years to address any shortfalls in the top line. Our profit centers also have at least five metrics that we calculate each quarter that are early indicators of our performance against the financial plan. These early warning metrics allow us to quickly adjust what we are doing and to proactively impact performance for the remainder of the year – which is another way of driving accountability. Have a question for Gary?With nearly four decades in the industry, Gary Kaplan knows that success comes from looking beyond the numbers. It’s about keeping customer needs central to the business plan and driving accountability. Share your thoughts with Gary at or 1-212-915-6646.


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