Alex Green has a lot to say on the subject of change in the insurance industry.
When asked to name momentous changes he’s witnessed over his 25 years in insurance, Green singles out the 2001 collapse of HIH Insurance Group, which went into liquidation with losses of $800m.
“[The collapse of HIH] still sticks in my mind as being probably the most significant market-changing event in Australia,” he says.
But when it comes to technologically driven change, has there been any real transformation in insurance over that time? “Technology is an obvious thing that’s changed massively,” says Green. “But the question I ask myself is, ‘What have we done with it? What impact has it had on us as an industry?”
Green opines that probably less has changed about the industry than the things around it. “It’s still a heavily relationship-driven industry. There have been a few new products that have come in, or a few new areas that have changed in terms of enhancements … but, fundamentally, the main covers, the main premium, the main everything else is pretty stable ...
“We could talk about all sorts of other things that have changed, like the mode of distribution, direct and online, and so forth. Nothing’s really lived up to the original expectations. What’s interesting to reflect on is, why isn’t that the case?”
Green acknowledges that several insurance companies are using technological developments to improve internal efficiencies. But he adds that “… the further you get away from internal applications – the closer you get to the external and the customer – the fewer examples you have of really successful implementations”.
He says the industry is moving forward with respect to technology but needs to be serious about bringing itself up to speed. “Critical mistakes centre on a lack of information-gathering by underwriters from their broking community.”
As an example, he cites online systems that aren’t properly integrated with broker systems, merely shifting the burden to the broker.
“This problem is further compounded when a ‘time-poor’ broker needs to focus on double-keying data at the expense of servicing the insurance purchaser. Brokers need to ‘pull stumps’ on systems that are not user-friendly, and support underwriters that are meeting their needs.”
Green advocates intended end users of systems being involved in the process of deciding exactly how technologies will be utilised to build those tools. He says: “An insurance company typically starts building the system without starting out saying, ‘You tell us what can we build for you to solve your problem’, and I think that only really comes when you’ve got embedded really good-quality people … understanding the business issues and solving them from within the business, instead of trying to solve them centrally.
“There’s an opportunity ripe in big organisations, but equally in small ones, to better harness the technology we’ve got by basically distributing the development and the solutions, empowering the people that will get the most benefit from it, giving them the power to develop solutions for their own problems, instead of trying to develop them centrally.”
According to Green, it’s important for the industry to make a careful distinction between innovation and technology. “I hear a lot of rhetoric regarding innovation in respect to technology. This is, however, only one piece of the innovation jigsaw. Innovation involves the whole ‘box and dice’ – product, price, positioning, marketing, technology, etc. [It’s] the whole insurance transaction.
“To be truly innovative our industry needs to examine each step of the insurance transaction and ‘break the mould’ for the benefit of the insurance purchaser.”
The future of consolidation
Reflecting on other changes in insurance, Green raises consolidation and questions how much more can occur within the space in Australia. “Consolidation has been the way people have delivered earnings and earnings growth. I think it just underlines that challenge in the industry around, well, ‘where do we go from here?’, because when the opportunity for further consolidation is limited, I think there’s a real strategic question for the major players ...
“It’s easy for the small players because we’ve still got plenty of headroom. It’s about outperforming and improving within segments. But for the major players, the issue is, without the likelihood of further consolidation, where do you go? And how does that change?”
Green says the industry is now at a crossroads, no longer able to look at the past pattern of acquisitions and expecting the same to continue. “[There are] relatively few reinsurers, [there are] relatively few major players; things have been mopped up. And that’s not to say that there will be no new small players and no new mop-up. It’s just that there won’t be the frequency and rate and opportunity for all the players to get there … it’s running out; the clock’s running down.”
Turning his attention to the 18 years he spent at Royal Sun Alliance, Vero
, Green recalls that his experience working to create an online underwriting tool was a particular high point of those years. “As an employee of an entity, certainly I always thought the most important part of my role was to deliver great results. But working as part of a team where, not only did you have … a really high-quality group of people but who all understood how they were going to contribute ... That was a highlight for me … building that team and working with those people to not just deliver very successful results for the business but to actually really enjoy work …
“[That experience] delivered results but people saw it as being engaging … I suppose it’s in that environment, that I really enjoyed and thrived in, that we achieved the things like building an end-to-end online underwriting tool … [And] the view is that what was built there became a benchmark or a reference point internally for other people to aspire to, in terms of an end-to-end support tool.”
Green attests to the importance of assembling the right group of people in order to achieve outstanding results, and says, “Some teams … struggle to get the right engagement of the team because they can become concerned about their role or the position or their performance, or they become disengaged because the targets are unrealistic or whatever else … [I]t’s hard to achieve big things when people are more focused on the small, less important things.
“Having your people feel supported and comfortable and confident in their day-to-day stuff means that they’re empowered effectively to go the extra mile and put in that extra care, passion, ownership, whatever it be, to achieve the extras, which I think is what differentiates the average performers from the outperformers …
“It’s actually about performance. And you can’t control where the market’s at. You can’t lift pricing by yourself; you can’t make brokers place business here … [B]e focused on what you need to do to do it better than others so that, at the end of the day, if you’re outperforming the market consistently, you’ll be rewarded, and throughout the cycle that’ll eventually get recognised.”
Green also pinpoints other significant benefits that have flowed from his career in insurance.
One particularly rewarding aspect in recent years has been assisting others with their own career development. “I’ve been involved in the NIBA mentoring program for quite a few years now,” he says. “I do really feel good about sitting down and trying to help others and give back a little bit or assist and provide direction, because I think there is great opportunity within the industry for people with talent and capability.”
As well as mentoring, Green’s tenure as an insurance industry professional has given him an abundance of opportunities to do one of the things he loves most – solving problems. “I absolutely respond best to a challenge. I live for a big project or a big challenge … the bigger a problem I get thrown, the more I throw myself into it to pull it apart, work out the answer and get it fixed up.” He suggests a stint as a contestant on The Block could have been a good move!
“There’s always a new challenge and there’s always something coming up,” Green says. He mentions Austagencies
’ acquisition of a 75% stake in Asia Mideast Insurance and Reinsurance, announced last July. “When those things come up, there’s always a problem associated with them … Either there’s another competitor or more than one involved, or someone wants something that you’re not quite willing to give and you have to find some middle ground …”
Green shares a view common in insurance that the industry needs to act to attract and retain more talent. “I think there is great opportunity within the industry for people with talent and capability. We need it. We absolutely need it as an industry. We need to nurture and support that,” he says.
He’s of the view that properly managing talent was a practice better undertaken by the industry in times gone by. “I think they used to do it better. As an industry, 30 years ago … the industry brought far more people in out of school and as graduates. It did far more around training and development of people …
“[For example,] the first thing you’d do is go to insurance school and you’d work through the manual and it was much more formalised, in terms of what you did. And I think the way information gets distributed now – whether it be online training, whether it be third-party stuff or whatever else – people have just tried to cut costs and drop it out or they put it online … so now there’s a training manual that you can access online. Instead of having to be trained, the expectation is more you just look it up and refer to it. It’s not the same …”
He adds: “There’s far more focus on consolidating and offshoring and streamlining than there is around having a talent flow … I know companies have made decisions to increase graduates … but I think if we wound the clock back 30 years there’d be many more companies with a much more regular intake of both school-leavers and graduates on a much more formal basis.”
Green says companies are making short-term decisions in order to improve margins and deliver better returns to shareholders. He’s concerned about what the next step will be for the industry, in terms of developing, once that has happened. “It’s one of these things that you don’t want it to die on the vine. If we milk and milk and milk and you can’t squeeze any further, what are the other consequences of this?
“I think that’s a challenge for the industry leadership … Where’s our next level of talent coming from? Where are we going to recruit from? How are we going to develop people?
“Even during this period of consolidation, there’s still a massive breadth of opportunity, whether it be in sales, technical, compliance, leadership, technology … there’s still all these problems to be solved and it’s still pretty exciting stuff.”
Looking ahead and contemplating the next 12 months for Austagencies
, Green says: “I think we’ve got to do what we do better. I think get clearer about tailoring our propositions better and making them more purpose-built. So [I estimate in] probably about a quarter of our businesses … we’ve really got some work to do to lift their propositions to the level of the rest of our businesses. It’s a great challenge for us to have because it means there’s opportunity to simply improve the way we’re doing business, to improve performance.
“The reality is we’ve got a few businesses where just doing them a little bit better will really help lift the overall objectives of our business to improve the result.”