Briefing by Saxon East

We forgive and forget quickly in the insurance industry.

It’s remarkable how people and firms that have had scrapes with the regulator can carry on unburdened.

Barring anything extreme, shareholders are rarely too bothered as long as the financials, dividends and share price hold up.

It’s often too remote for customers. Meanwhile, rivals shrug their shoulders, accepting that they too could easily be on the end of an FCA fine or rebuke one day. Schadenfreude is not the game here.

But sexist, bullying and racist behaviour is different - Lloyd’s of London can testify to that.

Abusive and racist comments

Now let’s examine Gallagher in the wake of the court rulings. The High Court judge in the Gallagher v Ardonagh case states, that Nawaf Hasan ‘was the subject of abusive and racist comments’.

David ross

David Ross and Gallagher have now had two court confrontatoins 

 

Some of Gallagher’s most senior management were the perpetrators of these comments against Hasan, who left to join Ardonagh and was one of the central figures in the staff poaching and client solicitation claims.

Gallagher has said these comments were taken out of context and management have deep regrets.

Okay, but why make them in the first place? It is remarkable that with a staff poaching case potentially around the corner, Gallagher management made these pejorative comments on electronic communications.

What were they thinking? This is 2019, post #metoo and a new diversity awakening. They are meant to be the leaders, setting an example, not the perpetrators.

Furthermore, how will Gallagher now treat more junior staff in similar conduct issues? Is it a case of all are equal, but some are more equal than others, as George Orwell once themed?

Elsewhere, Islamic customers may think twice about having Gallagher place their insurance. These could be challenging issues to unpick.

Pat Gallagher has not dismissed anyone, probably hating to concede any ground to David Ross. Maybe he thinks the crimes would not justify such an action.

Perhaps the real punishment will come when they might find themselves persona non grata for all those lucrative non-executive director roles. 

Their names will forever be on Google search associated with those comments. 

Although they may be sincere in regretting the comments, there is a price they will have to pay. 

The Gallagher Way 

Pat Gallagher talks a lot about Gallagher’s excellence – its entrepreneurial spirit, customer care and ethical behaviour.

It’s true one bad episode doesn’t make a bad business. People who work at Gallagher, speak highly of it as a company. Its financials are excellent.

There is still a fragmented intermediary market in many countries.

There is ample opportunity to consolidate, and Gallagher with its strong free cashflow for acquisitions, will become an even bigger global broker player in the future. Not quite as big as an Aon and Marsh, it can sneak between the two and offer a differentiated customer service and serve different segments. There is much to look forward to.

But what Pat Gallagher must address is the culture in certain parts at the top of the business.

Senior management must realise that they have to set an example, at all times, both in private and public, when they work for Gallagher. Pat Gallagher must hammer that message home.

They say a good culture is doing the right things when your boss is not around. Everyone, not least the top management, should remember that.