Executive Spotlight: Pat Regan

Back to Basics: How QBE is Staging a Comeback in North America

In this Q&A, QBE Group’s CEO says underwriting talent will drive organic growth, but harnessing data and technology remains a challenge.
By: | May 23, 2018 • 5 min read

QBE, like many top-tier insurers, has grown largely through acquisition. While that strategy has helped the company establish footholds in markets around the globe, it’s also led to various businesses operating parallel to one another, rather than truly working together.

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“The business I inherited is very different from what my predecessor inherited five years ago,” said newly-minted CEO Pat Regan. “The separate businesses were operating the way they had been pre-acquisition. We want to integrate our operations so we’re recognizable as a unified QBE no matter where we are in the world.”

Since taking the helm as CEO of QBE Group in January after a rough 2017, Regan has lead the company’s strategy of simplification, which entailed divesting some smaller business units in the Asia market and exiting Latin America altogether, while reshaping the company as an integrated specialist insurer in the North American market.

“North America has been the home for our core programs for the past few years, which include crop, programs, and commercial specialty along with commercial P&C. Altogether, they represent a $5 billion business in North America. We’re especially focused on growing our specialty business for the middle market, which we’ve built up to almost a $1 billion business over the past five years,” Regan said.

Regan sat down with R&I to discuss his plans for streamlining the company and growing its North American specialty arm — and the challenges that lie in his path.

R&I: How do you plan to grow the specialty business in North America?

Pat Regan: Our core businesses have previously been run very separately, but many clients need coverages that overlap, so we’re integrating those units to better leverage our underwriting talent and data, and ultimately better service claims.

It’s not just about doing the basics, but doing them brilliantly.

We’ve hired talented teams of underwriters with expertise in specialty lines, whether that’s D&O, aviation, marine, etc., and the business comes with them. We’ve grown organically on the back of strong underwriting talent, and that’s our growth strategy going forward. We want to continue to be magnet for talent.

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The other piece of that is investing in innovation. Technology is changing the way we do business, and we have to harness all of the data and tools that are out there to support and augment what our underwriters do.

Streamlining internally can also help us achieve a more competitive expense ratio, which we need to improve in order to thrive in this market. It’s a very competitive market, so we have to be good at what we’re doing. Ultimately, I want our hallmark to be that were as good as we possibly can be in what we call the “brilliant basics.”

R&I: What are the brilliant basics?

PR: Underwriting, pricing and claims. We have to be better at understanding and accurately pricing risks and more thoughtful about selecting which ones we want to take on our portfolio. After heavy natural catastrophe losses in 2017 and underwhelming performances in some emerging markets, along with continuing soft market conditions, it’s more important than ever to maintain our underwriting discipline and build long-lasting relationship with our clients and broker partners.

Pat Regan, CEO, QBE Group

To do that, we have to be the best. I’m going to be a zealot on this. It’s not just about doing the basics, but doing them brilliantly. And the definition of “brilliant” will change every day, because our world is evolving so quickly.

R&I: How does QBE invest in innovation and stay up to speed with new tech?

PR: None of us can innovate as fast as we’d like to. It’s just the nature of being a pre-existing, highly regulated insurance company. But we do have a few wheels in motion.

We are investing in some Insurtech startups. We launched QBE Ventures, our venture capital arm, about a year, through which we’re making small investments or buying minority stakes in different tech companies. We’re dipping our toe in. There are lots of ideas out there, and we want to make sure we have a full view of what’s going on. Usually they’ll take our data to improve their own processes, and then we’ll try to adopt their processes to improve our workflows.

Ultimately, we all have to relearn how we do our jobs in this new environment. We have to challenge the way we do things. There are tons of opportunities, but we can’t do it all ourselves – hence the need for investment in partnerships.

We have a separate internal arm called QBE Labs, where we’re experimenting with lots of different ideas and innovations, but keeping it separate from the mothership.

Over the last few years, we’ve invested a lot of money into drone technology and data science, which we’ve been applying heavily to our crop business. If you’re providing crop insurance, you try to pick farmers who’ve had consistently good yields, and there’s tons of data behind that. We’re using drones a lot to survey farms with huge acreage.

R&I: Where can digitization and Insurtech solutions bring the most value for the industry?

PR: As an industry, we’re still so manual, so the biggest benefit is in digitizing our processes. Take for example the exchange of information between client, broker and carrier. Everything is on paper. Collecting that data digitally would be a boon for productivity and could cut potential down on human error.

Data can also provide a more granular view of risk and help underwriters price risk more accurately. Machine learning algorithms could help us collect and categorize information more efficiently.

Again, this would augment what our underwriters do, not replace them.

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The biggest area of early wins has been in claims. We can apply predictive analytics to help detect fraud and direct the right level of resources and expertise where it’s needed.

Ultimately, we all have to relearn how we do our jobs in this new environment. We have to challenge the way we do things. There are tons of opportunities, but we can’t do it all ourselves – hence the need for investment in partnerships.

R&I: As CEO of a global company, you do a lot of traveling. What’s your favorite city?

PR: I like them all — Sydney, Hong Kong, London, Paris, New York, Singapore — they all have their own flavor. I never imagined I’d get to do a job that lets me travel the world. For more than a decade now, I’ve taken my family to Santa Monica, California every year, so I am partial to California.

The biggest challenge with so much travel is not knowing what the weather will be. I never seem to have a coat when I need one. &

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.

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But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.

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Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &

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Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, clarity of vision and passion.

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]