A new team has banished Allianz Cornhill's sleepy image and sharpened its underwriting. The aim now is annual premium income rises of £100m with £5m more profit each year. Andrew Pring reports...
Last year was a time of major change for Cornhill, and not just because it declared its innings closed with English cricket after two decades of high-profile success (for the company, of course, not the team).
In the £540 million regional division that serves Cornhill's brokers, the changes took many forms. New general manager - Andrew Torrance. New name - Allianz Cornhill. New senior team - including Chris Hanks, previously general manager at AGF. New separate divisions for commercial and personal lines. New regional structure - underwriting in the region not just at Guildford. And most important of all for brokers, a new attitude to risk and underwriting.
Together, they have helped achieve a cultural transformation at a company which some critics had previously characterised as sleepy and non-creative. They most likely have also helped the company's push for profitability. Cornhill was £18m down at the end of 1998, with a 99% loss ratio. Better than many but not what parent Allianz had in mind when it took over 14 years ago. The stated goal now is incredibly ambitious: increase premium income by £100m each year, and profit by £5m annually.
Cornhill Allianz's new general manager is crucial to the process. Andrew Torrance came on board from his position as chairman and chief executive at ITT London & Edinburgh Insurance. He acknowledges that the big strategic decisions were made before he began talking with the group in November 1998 - but it's he who has been pushing them through.
A new philosophy
"It was clear Cornhill was thinking of re-organising when I started talking to them," says Torrance. "It wanted to have a more aggressive game plan in the UK. And part of that was improving the access of our intermediaries to decision-makers within the organisation."
To achieve this, six regional centres were established, each with fully empowered underwriting teams. Many of their personnel came from outside the company - an important factor in creating the new culture Cornhill has been striving to build.
Market research carried out just before Torrance's arrival last April revealed the scale of the challenge facing Cornhill. It showed that brokers and intermediaries viewed the company as traditional, middle of the road and undynamic.
But there was a PS, too. We actually rather like you, said the distributors. You're technically competent, financially strong, efficient at claims handling and you give competitive premiums and commissions.
Winning street cred in the market
To Colin Bates, national sales manager, and the man charged with broker channel management and development, it meant one thing. "We were clearly respected, but equally clearly there was more respect for the harder-nosed insurers. The challenge became: how do we give our people more street cred in the market?
"We told ourselves we had to be smarter on our feet, and better at dealing with the bigger brokers. They may be harder to deal with and more aggressive, but we've got to understand what makes them tick and how we can help them."
When 50% of Allianz Cornhill's regional business comes from seven per cent of its 3,800 strong broker base, it was clear these people needed very careful handling. But at the same time, Allianz Cornhill had also to sharpen its dealings with the bulk of its brokers - the 2,500 firms which deliver 62% of its business. Though more profitable in sheer underwriting terms than most of the bigger players, their servicing costs were disproportionately higher. More cost-effective ways to maintain these links had to be found.
A change programme, known internally as "Delivering the Solutions", was set in action. Using the research to analyse Cornhill's "brand attributes", Bates and his team produced an analytical model that pointed the way forward. "We looked at what we were good at - we called these the threshold attributes - and then looked at what we needed to be attractive to brokers - the motivators - and then what we needed to do to stand out from other insurers - the differentiators. (See table far right).
"Basically, we had to become more hungry for business and far more commercially oriented and partnership focused. In a word, more entrepreneurial. We also decided to cut our key-partner brokers from 270 to around 200, and aim to get ten per cent of their accounts. And we introduced a new segment - a top tier of brokers with £10m-plus turnover. "
As in any change programme, there's a danger of losing the baby with the bathwater. "You can get the whizzy things right," says Bates "but mess with your traditional strengths like claims handling." It's something they've guarded against zealously, and they believe successfully.
Broker research carried out this January - a year on from the previous study - will reveal just how successfully. Torrance is hopeful the feedback is better than last April's annual Biba survey, where its "second quartile" ranking was just another confirmation of the need to change.
"We've been able to offer realistic rates and been able to do business as we haven't had the backlogs that some others have had to deal with. So we've been able to keep focused on our clients."
Employing quality staff
If Cornhill is not alone amongst insurers in re-engineering its business, it's bucked the trend by recruiting more staff rather than downsizing, or more accurately, "over-downsizing".
Forty managers went, but more were brought in to take their place. "We were given the opportunity to get some really good people who'd lost out in the mergers that were going on elsewhere in the industry," says Bates. "We knew we couldn't move ahead if we cut our staff by ten per cent and annoyed our brokers."
As well as trying to improve service levels, Allianz Cornhill has aimed to improve its commercial underwriting skills. Chris Hanks' input has helped establish a new approach to risk, and the way it is handled. "We had to change the skill set of our underwriters, and the framework within which they operate. We set about recruiting some key underwriters from our competitors.
"Eight of our most senior positions were filled from outside the company. They've really helped us form a new philosophy."
He says brokers have noticed a big difference. "We're seen as open-minded and willing to take risks. And brokers now know we have clearer priorities.
"The scatter-gun approach of the past confused people - they can see now where our strengths lie."
Yet no one at Cornhill Allianz is under any illusion that everything is now right. Says Torrance: "You don't achieve great changes overnight. But we've made great strides forwards."
