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

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.

“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.

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.

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 a freelance editor and writer based out of Philadelphia. She can be reached at [email protected].