Chris Hanks has been in the industry for 40 years, but his enthusiasm hasn’t dimmed one bit. Even now, he’s smacking his lips over prospects in a difficult market and e-trading. Lauren MacGillivray asked him about the future – and why he’s like Madonna.

What do Madonna and Chris Hanks have in common? They’re both in their fifties, they both live to work and they both have more energy than most teenagers.

Hanks, general manager of Allianz Commercial, isn’t exactly a diehard fan. But after attending a recent Madonna concert on a work night out, he couldn’t help but notice the similarities. “Clearly, I don’t have that level of energy,” says the 57-year-old. “But on a comparative basis, I have more energy than anyone at Allianz.”

He’s probably right, given he lives in the Cotswolds but spends his weeks shuttling between London, his office in Guildford and elsewhere, often returning home for only a couple of nights during the week.

When he’s not on Allianz business, he is keeping busy as chairman of Polaris, which runs e-trading platform imarket, chairman of the Insurers’ Fire Research Strategy and chairman of the CII Talent Initiative. Oh, and he’s chairman of his local football club (one of his sons plays) and a member of his local skittles team.

But Hanks is no martyr to work. With an understanding wife and three grown-up children, the long hours he clocks up with Allianz are mostly by choice. “The day I wake up and say, ‘Oh, I don’t want to do this’, I’ll pack up. Every day I wake up bouncy. I love it, love the people – it’s a real challenge. I’ve been very lucky, I have a good job. I manage a lot of people and have a lot of responsibility, and I have new challenges almost every day.”

One of the biggest challenges is the financial crisis. Hanks has been in the business for 40 years but says he’s never seen anything like the current conditions.

“We’ve seen some isolated things like when Vehicle & General went down around the 1970s, and when Independent went bust [in 2001]. But they weren’t worldwide crises,” he says. “We’ve seen some pretty tough times when Britain went in and out of the ERM, when the mortgage rate was at 17%, but I’ve not seen a time when so many financial institutions have been going bust or changed ownership. The lack of confidence that brings is unbelievable.”

Allianz itself has been making headlines, amid speculation that it might be interested in RBS, RSA and AIG. Hanks, however, declines to comment.

He could retire comfortably whenever he wants. But he says the difficult climate motivates him to work even harder.

Others have speculated that one of the reasons Hanks is hanging on is to replace Andrew Torrance as chief executive.

But Hanks says: “Andrew’s a great chief executive and I like the job of running a trading business. I think he does a first-class job and I’m very, very happy to be working for him. I have no aspirations on his job whatsoever.”

In Allianz’s commercial business, floods were the biggest cause of claims last year. This year, fraudulent and theft claims are growing areas of concern.

The biggest claim so far was for £13m after someone tried to steal a cash machine from a supermarket. The ambitious thief used a torch cutter to try to remove the metal box, but accidentally burnt down the entire building.

Another concern is broker commissions. Igal Mayer, chief executive of Norwich Union, recently said 30% was the ideal rate for commissions plus insurer costs, but Hanks has declined to name a target.

“What we have seen in the last few years is quite a significant rise in commissions,” he says. “I’m with Igal that they’ve come too high. With some SME business, 40% of a client’s premium goes to commission and 10% to our costs. So half the premium is gone in administration before the client gets protection. That’s not good value.

“The day I wake up and say,I do not want to do this, I will
pack up. Every day I wake up bouncy. I love it.

Chris Hanks

“I do see broker commissions coming down to a fairer level. But, equally, some of the commissions for smaller brokers might need to come up. It’ll take several years to work through the system and I think it’d be wrong to specify a definite amount.”

A big part of Hanks’ job is negotiating with consolidators. While the individuals are fine to deal with, he says, the consolidator business model has been wreaking havoc on insurers by driving up commission at a time when profitability has been under pressure.

But he adds: “They are very difficult animals to deal with, but they have some interesting business models, and each is different. We find certain business models more attractive than others. Because they’ve been buying up brokers who used to have really good accounts with Allianz, we have found a way of dealing with them more to a larger or smaller extent.”

Hanks believes there will always be a demand for commercial brokers. But he also expects the direct market to grow – albeit slowly – each year.

“You’ve got kids growing up who’ve spent their whole lives in front of a TV screen, or on the internet. The idea of going out to a broker to do their business insurance would be alien to them,” he says.

As chairman of Polaris, technology is high on his agenda. “It has been a tough road in getting businesses to the level where they can first computerise and then trade electronically,” he says.

“In the last four or five years there has been quite an uptake, partly driven by the software houses that brokers use to run their businesses, and partly through Polaris and imarket getting standards agreed and a common means of transmission.

“There are some competitors, but imarket is a non-competitive transaction route – it is the open-market solution. So if all software houses saw it as a connectivity tool, that would create consistency and lower costs.”

Lloyd’s has also been working on an e-trading tool and Hanks believes imarket could eventually link to the London market.

“Then we’d have what I’d call a grown-up market,” he says. “You should be able to gain access electronically to lots of companies’ products, and not rely on paper or ringing somebody up or sending five faxes to get a quote. It’s ridiculous.”

Meanwhile, like everyone else in insurance, he’s anxious for markets to harden so that Allianz can become more “adventurous” again.

“If we’re not making money, we’ll get afraid of risk. If you think of the new risks emerging – some credit crunch issues, some technology businesses – all these risks the industry should legitimately cover. But we need to make sure we’re making a return on that. That’s why this soft market needs to turn as soon as possible – so we can make money and continue providing protection.”

Like so many others, Hanks fell into insurance. Eager to earn some money, he left school during his A-levels and got a job as a trainee underwriter with National Employers Mutual, which was taken over by AGF then Allianz. He has been in his current role for five years and says it’s the best job he’s ever had.

What he enjoys most is working closely with people. That might seem to conflict with his keen interest in technology, which could result in fewer broker relationships.

But he says there will always a need for personal contact. And there will always be insurance: “We touch every aspect of life. It would not be possible for you to drive your car or own your house, or for a business to start trading, unless you have insurance.”