John Castagno has peopled his team with non-loss adjusters. So can he run GAB successfully with staff who have never adjusted before?
Despite last week's indifferent spell, can you remember a summer as glorious as this one?
Unfortunately, the sunshine has not brought sunny smiles to all in the insurance industry. The good weather has brought fewer claims, and while property and motor insurers will be heaving a sigh of relief after some terrible weather in recent years, loss adjusters have found themselves twiddling their thumbs.
New GAB Robins chief executive John Castagno cites good weather as one of the reasons GAB's profit and loss account has been under siege, and why the company has followed Capita down the road of office closures and redundancies. In fact, he reckons the adjuster will be lucky to make a net profit margin of 10% this year.
Last month, GAB Robins announced the closure of seven offices in Carlisle, Ayr, Edinburgh, Bradford, Guildford, North London and Birmingham. And, says Castagno, the number of full time equivalent staff will fall to 750 in the UK from the current 800.
Times are tricky for GAB. Popular chief exec Clive Nicholls left last year and was followed out of the door by operations boss Benedict Burke. Then talented financial director Peter Hardy and liability chiefs John Heaney and Jeff Stagg left in quick succession this spring.
Not surprisingly, Castagno has spent a lot of his time arranging a new management team - which pointedly lacks adjusting experience. Loss adjusting managing director Derek Coles was recruited from the insurance intermediary division of Barclays (with which Castagno's former company Legal & General (L&G) had a strong affinity relationship), financial director Colin Mason came from Woolwich, - another affinity partner of L&G - and former Royal & SunAlliance (R&SA) personal lines boss Steve Broughton joined as a non-executive director.
The changes herald a new era for loss adjusting at GAB. Robins Claims Solutions (RCS), the risk management business that won the high profile McDonald's account earlier this year, and the Sergon building repair network both report directly to Castagno under the structure announced last week.
The new chief executive sees a bright future for RCS and Sergon. Loss adjusting represents 85% of Robins's current income. Castagno sees this falling to 75% as Sergon and RCS increase turnover, but is quick to point out that this doesn't mean Robins will be doing less loss adjusting. The core business will grow, but will be outstripped by Sergon and RCS, he says.
So just how will these businesses grow? Castagno has some innovative ideas. Sergon, as reported in Insurance Times in February, will launch as a business-to-consumer building business and Castagno says it is also looking to enter into partnerships with loan providers.
"Many loans are used for home improvements, so why not provide a building service tied in?" he asks.
As for RCS, Castagno is confident that the biggest hurdle has been overcome: "Winning the McDonald's account was a great achievement." Indeed. Just winning an account as prestigious as McDonald's worldwide has put RCS on the map. Now all that is needed is evidence that it is working before other accounts are won. Castagno says: "This is not a long-term issue. The evidence of the first few months' claims shows that the model works."
Focus on service
Although profit margins in loss adjusting, especially on the high volume, low value lines, are small, Castagno does not think the market needs more consolidation, arguing that by concentrating on service, GAB can rise above the crowd and make a better return.
He says that GAB's current service rates about 8/10. He wants the company to aim for 10/10, but recognises that 9/10 is likely to be the best that can be expected.
And the area of service that receives the most attention is complaints: "We must adopt zero tolerance to complaints," says Castagno, whose other key performance targets are:
One of the biggest issues facing GAB is its pension deficit. While such deficits are now part and parcel of corporate life, the gap at GAB was reportedly so large that it represented a massive barrier to the potential exit of its venture capital backers.
A new contribution has now been worked out. Castagno has been working hard on this (one of the joys of being a chief executive rather than managing director) and, while he protests that the deficit is "not that serious", he says the rise in contribution will be significant when it comes into effect in a couple of months' time.
So what is life like on the other side of the fence? Castagno is certainly more animated than he was when managing director of L&G's general insurance business, and he claims to be enjoying the autonomy. Whether some of his staff have been sharing in his joy is another thing, but Castagno can not be faulted when it comes to making his mark on the business - and ruffling feathers in the loss adjusting market to boot.
And as to whether you can run a claims company without loss adjusters at the top, the industry is watching with interest.