Insurer Roundheads and Broking Cavaliers

Three blokes – a journalist, a CEO and a PR - were having a beer in the pub. The journalist bemoaned the increasingly difficulty he was having in getting insurance company CEOs to engage with the media beyond set pieces such as results, trading updates or formal interviews. One or two, such as Axa’s Amanda Blanc, stand out as being prepared to mix it on issues management, but she is very much the exception. Perhaps she’s making up for her boss, Paul Evans, who is almost anonymous, notwithstanding his position as the Chairman of the ABI GIC and thus the de facto leader of the UK insurance sector.

In contrast, within the broking and insurance services sector, CEOs are far more dynamic and engaging in their relationships with the trade media.  They are altogether more colourful characters, many with a strong individualist streak . Mark Bower-Dyke, David Ross, Stuart Reid, Derek Coles and Peter Blanc are all growers of businesses. They are sometimes prepared to make big bets to get the success they want, and they are not afraid to work with the trade media, who, after all, are on the side of the industry they write about. Why is there such a contrast between this cadre of entrepreneurs, and risk-averse insurance CEOs?

Industry watchers with longer memories go back to the ‘noughties’ when, like their broking counterparts, insurance company CEOs were far less bashful. For sure, they weren’t raving demagogues, but they were prepared to put people’s noses out of joint to make a point. One CEO I worked for cited knitting degrees at Aberystwyth University in a speech to underline his concerns about skills shortages.

A day or two afterwards, he received a snotty letter from the University Dean inviting him to take back his remarks. A dozen media outlets contacted us to ask whether said CEO would be prepared to debate the issue further. Absolutely, came the reply. Another insurance hero was Sir David Prosser, then CEO of Legal and General, who in 2005 took on and defeated the then FSA over its handling of a mis-selling case involving L&G.  Sir David fully deserved his knighthood.

The most successful UK insurance CEO of recent times, Tidjane Thiam, was nearly ousted after his audacious bid for Asian Insurer AIA in 2010 was kyboshed by shareholder squeamishness and regulatory heel digging. Mr Thiam’s relationship with the FCA never recovered. I pointed out at the time that, had the Pru been a French Insurer, the bid would have had full backing, covert and overt, from both the French Government and the French Regulator. The French would have recognised that creation of an international insurance champion was manifestly in the national interest. 

The entrepreneurship and fun that is still prevalent in broking and some (though not all) insurance services business does not seem to be mirrored within insurers. Balance sheet management, compliance skills, cost cutting, discipline and – crucially – keeping the right side of the regulator, are the attributes insurer chairmen now look for in their chief executives.  

Since the GFC, the regulator has emerged as by far the most potent force in the insurance industry. It has altered the culture within the sector and created leaders in its own image. And it is true that, while banks nearly bought the UK to its knees, and deserve all the regulatory medicine they get, insurers had a good war. How are insurers going to grow and prosper in the digital age if their imagination runs only to balance sheet management? I’m not underplaying the importance of a strong balance sheet, but there also must be space in the boardrooms for a slice of derring do.

If brokers are the cavaliers, insurers have become the roundheads. Prince Rupert vs General Fairfax.  Does this make the FCA a modern day John Calvin, stressing the sovereignty of regulation over all earthly things?