Zurich Personal Insurances managing director David Roper reveals to Alison Boyle the company's plans to change, grow aggressively and target new markets
AFTER WORKING FOR more than 30 years in the same industry, waning drive and enthusiasm could be forgiven, yet Zurich Personal Insurances managing director David Roper sees himself as just getting started.
With 20 years at Prudential under his belt followed by an 11-year stint in marketing positions at Zurich, Roper was promoted to managing director last year and describes that appointment as a "wow moment".
"Becoming managing director was something I had worked towards. It is spooky to be here, but not to the extent where I will become complacent. It now means that some of the things that I wanted to achieve, but felt I couldn't, I am now in a position to do something about."
Those things must be making a difference as Zurich Personal Insurances picked up the Personal Lines Insurer of the Year award at the Insurance Times Awards last month. And Roper has further plans afoot, which include customer service and new target markets. Talking of which...
What are your plans for personal lines this year?
Our main priority is to aggressively grow the business and there are plans to re-engineer parts of our operation. This does not mean throwing out the baby with the bathwater, but focusing more on what brokers and customers want and shaping ourselves for the future.
A lot of people see Zurich as a bit pedestrian as it deals with low-risk motorists. Yes, a large proportion of our business might be the over-50s market, but one of our target markets is young drivers - the under-25s.
We think that we will be able to make money, as we believe we know which part of this market to attract. The over-50s is a well-fished market and is becoming increasingly competitive. Young drivers might be promiscuous and tend to shop around the marketplace, but we want to say we are here to help them right from the start, because we think we will be remembered as they move through different life stages.
How can brokers help?
What we are trying to do is help the broker help himself or herself by coming up with products that differentiate Zurich from others in the marketplace. One of the biggest frustrations though is getting brokers to spend time explaining the product.
Some brokers are much better than others and this comes across patently when we deal with them. Those that value the customer will go to the expense - and this is really a time-based expense - to explain differences in policy literature and what an insurer can provide. Some of the better brokers will even say they back a particular company because of the service it provides. At end of the day if there is an accident, it is the broker that will have to deal with it.
How do you make sure your service standards are tip-top then?
We don't set our standards by the rest of the industry. We can't afford to. We try to make sure that everyone in the company is geared to deliver a world-class service by ensuring they know what is expected of them and have clear objectives on how they are going to achieve this. The focus is on understanding the customer.
Sounds good. But how can insurers make customers understand them more?
Many customers see motor insurance, for example, as just another form of income tax. They resent it as they just get an increasing bill. Insurance is a component part of owning something that gets you from A to B. You have to have it. But you can make that component part have more value and a bit more relevance.
This is what we attempted to do by adding car breakdown in our Car Solutions product at no extra cost. You add value outside the distress scenario. When we asked customers about the trade benefits against price and to rank these benefits in order of what appeals - then insurance came about fourth on the list. It is switching the product on its head and this should give brokers more to talk about.
The debate surrounding the demise of the personal lines broker still rages on. What are your thoughts on this?
Every time a new piece of legislation or regulation is brought in, it fuels a debate about whether the personal lines broker is going to the wall. Some brokers lack the skills to cross-sell in personal lines, whereas some are very good. Also customers - particularly those who have not had claims - can sometimes view a traditional personal lines operator as just the guy who asks for an increasing amount of money now and again.
Back in the mid-1990s it was predicted direct writers would have 80% of the market. Yet they still don't have as much market share as the broker channel does and our broker personal lines business is a lot bigger than our direct operation. There are some issues though that might cause some brokers to sell up, like some firms will have a succession problem, others might be pushing the wrong business in the wrong location.
Does this mean you are expecting to cull some agencies this year?
Some companies are closing their own agencies because they are going out of business. When making a decision on closing an agency, we put a lot of effort into making sure we do this right. Some companies might have very little business on their books. In many instances they are winding down the business or retiring and haven't got around to cancelling the agencies themselves. It is a process of tidying up.
Do you think some brokers have a better future in the commercial lines market?
The market is very much cyclical. Whenever you get a bullish commercial lines market then people always start talking about closing personal lines accounts. When there is a soft commercial lines market, then personal lines becomes more interesting.
What some brokers might have done, though, is look at the cost of technology and consider whether they are prepared to make an investment in this side of the market. I think this will drive the business decision for brokers more.
What effect do you think the internet will have on the personal lines sector?
The internet has probably not moved fast enough in this sector because of lack of investment in broadband technology. People can't be bothered to wait two and a half minutes for a page to download; they would probably just pick up the phone. This will change, however, when customers can download in a jiffy. I think brokers can use it to develop relationships with insurers.
How do they know what to invest in with so much choice currently on the market?
It is difficult for brokers, especially as a full office system can cost as much as £35,000 to £40,000. It is not an insignificant investment. I still think Polaris [owned and controlled by the UK insurance industry, this focuses on improving the efficiency and reducing the costs of transacting business involving insurers and intermediaries] has a lot to offer the market. What it has tried to do is get a common language in broker systems and work in a way that drives efficiencies.
Insurers, though, have been slow to use their muscle to make it work. Going forward it has to make sure that it doesn't make the same mistakes again. Given a blank sheet of paper I don't think the software houses would have organised themselves the way they have and insurers would not have organised themselves the way they have.
Insurers need to invest in their own systems too. The industry has been slow to invest in some areas and too quick to invest in the wrong things in other areas.