Dragging French reinsurer SCOR Re back from the brink and restoring the company’s credibility and financial security was an achievement many in the market thought impossible. So when their CEO Denis Kessler, who engineered this much lauded comeback spoke about the emerging economies at the AM Best Conference last week, as reported in Insurance Insider, his comments were not without significance. His rallying cry for reinsurers to commit for the long term to places like China and Brazil by deploying local people on the ground to develop relationships goes some way to redress the popular perception that reinsurance is fast becoming a numbers game best left to quants on small islands far away from the audience they seek to serve.
Interestingly at the same time RSA have come to much the same conclusion in the consumer facing end of the industry. In announcing the closure of all their Indian call centres and transferring 350 jobs back to UK, a chapter of off-shoring client relations that RSA did so much to pioneer might just be closing. Judging by the comments attributed to their management, attaining a consistently excellent level of customer service has proven elusive for RSA, despite years of trying, because they failed to recreate at a distance a cultural identity with the customer.
With their history and international reach as a foundation, deepening customer relationships is a fertile source of competitive advantage for the Lloyd’s market. Hosting a Cover-holder forum recently near Vancouver was a good reminder of just how far Lloyd’s has come in Canada by carefully nurturing an impressive network of empowered Managing General Agents (MGAs) on the ground. An annual premium volume in excess of $2 billion is being generated and better still, a significant part of this is mainstream commercial business, normally inaccessible in most other countries.
Opening underwriting offices in regional hubs is a strategy that the larger Lloyd’s firms are pursuing to get closer to customers and understandably so. Where it is possible, however, cultivating MGA partnerships can compliment this direct approach and be just as lucrative. With regulation biting at home, delegating authority to third party companies is not without its challenges. The lesson we might take from what SCOR and RSA are doing though is to not let this stand in the way. Investing more time, money and effort in deepening MGA relationships to access customers is the Lloyd’s way of “going local” and over time the market’s loyalty to this channel will surely be rewarded.
One thought on “On Keeping Customers Close”
Coverholders are key to Lloyd’s access to local markets but the FSA was never able to understand their role. Understanding coverholders is essential to understanding Lloyd’s model and regulation of coverholders cannot be one size fits all but has to respond to the local environment. The FCA needs to find a way to ensure approiate high-level prudential controls are in place but allow local custom and practice to define day to day operating and not seek to regulate these local businesses (either directly or via the syndicate) as simple extensions of London.