Why branding is much more than a logo

The world of insurance is renowned for its old-fashioned values. Often these are seen as a central part of a unique, historic and successful market culture. Even in the post-9/11, post-Equitas, post-Independent world, this view remains. But in my view, few insurers have truly updated the ways they structure, direct and market their businesses to compete in the modern brand-led world; and many are badly in need of a different approach, of modernisation and behavioural change.

Business the world over these days is dominated by strong brands with – and this is crucial – well-articulated sales messaging and profile. Knowledge of one’s business model at the top of an organisation is one thing, but all our businesses are built on the combined strengths of our people.

It is important that every employee believes in and lives your ethos, your brand. Only a business whose employees are clear from the bottom up what its leadership and shareholders are trying to achieve, and are motivated to support that, will be able to grow its revenues in a sustainable way. That is what having a strong brand means: having a well-communicated and carefully explained business strategy.

So where does this go wrong in insurance? In my view a strong insurance business model has two key parts: the aforementioned effective sales model and a strong focus on maximising returns for shareholders. The challenge here is to be able to foster a culture of growth but only where high return on equity (RoE) hurdles can continue to

be met. Further, while almost all insurers realise they must deliver a strong ROE, many do not focus on the need to foster a well-directed sales team as part of their business model. Many spend far too little time developing this aspect of a modern business.

And for good reason. This is not an easy area for an insurer. Capacity constraints can often mean that insurers look only inconsistently for new business, while the role of the market in setting rates breeds a helpless market-following mentality among many.

We prefer to think differently. With the right information, rates can be different for different insurance businesses. That means a well-informed company can build a true sales culture, one that goes out to the market in search of the right sort of profitable risks.

At QBE, we have spent much time growing our analytical skill and expertise. By segmenting accounts and analysing each class, we can build a profile of profitable and less profitable risks.

By developing this quality of management information, we can shape the business underwritten, based on the appetite and balance sheet we have, prevailing market dynamics and the needs of our insureds.

This should succeed in finally moving us away from the circular discussions about market rates and direct our attention to developing our own pricing and risk profile, based on our individual business dynamic.

It is my belief that insurers that understand their clients, the market and their own business, are best placed to effectively and accurately price risk. This would certainly be a move away from the bureaucratic one-size-fits-all mentality that currently prevails. It’s also a much more modern way of driving a business.

Moving to this way of working requires a company staffed with empowered underwriting and claims teams, operating across flat management structures, who have the accountability to deal responsively and directly with clients and brokers. This approach is more likely to encourage real, client-orientated cross-selling than one that is centrally directed and driven by internal targets.

But empowerment cuts both ways. If front-line teams are to be able to deal direct, they need to understand the impact their decisions have on the corporate bottom line and see individual risks accepted within a group risk framework.

This comes straight back to getting the internal culture right. It is only by developing targets that are fully understood and supported internally that this approach can be appreciated by clients and brokers.

So the process of developing or renewing must start with the employees. Initial marketing spend and investment should be focused on internal education and objective-setting, rather than external advertising and sponsorship.

Only when these values have survived the scrutiny of staff – and hopefully benefited from their knowledge of the business – should they be presented to clients and brokers, and the wider world.

In the end, this is a two-way process of education that allows a vision to be asserted from the top, but with input from a bottom-up realism, helping to fashion an achievable and client-focused reality.

To many in the European insurance industry the word “brand” seems to be about little more than a logo. But a true brand starts with a strong business model. It is this misunderstanding that has failed to deliver the modern, responsive insurance companies that business desperately needs. Building strong insurance brands that can innovate and respond to evolving client needs in these tough economic conditions is becoming increasingly urgent. I believe now is the moment to deliver. IT