StrategicRISK sat down with Australasian boss Chris Colahan to find out what the insurer’s report card looks like 12 months’ in and what’s in store for the year ahead
“I’m getting quite good at this blind dating thing – meeting strangers in coffee shops. I must’ve done it hundreds of times over the last 18 months.”
This is the opening line of Berkshire Hathaway Specialty Insurance (BHSI) Australasia regional president Chris Colahan. It’s quickly followed by an explanation: “We’ve been doing a lot of it with our hiring. We’ve started up a business from scratch and that just means getting out there and meeting lots of people.”
Safe to say it’s been a busy 12 months since Colahan officially started in the role on 23 February last year. And a big focus has been his recruitment drive.
“We’ve all been at companies in the past where there’s legacy [issues] – legacy IT, or processes, or people issues – and so we’ve been incredibly thorough about making sure we get the right people from the outset,” Colahan explains. He himself moved from RSA, where he was most recently the insurer’s Asia chief executive.
“In order to hire for any individual role, we would meet at least five people and we’ve hired 53 people [to date], so 53 times five means we’ve met a lot of people,” he says.
Some 265, in fact.
That’s more than one recruitment interview Colahan has done every working day since he started. It’s no wonder he’s getting good at them.
So has Colahan had to lure staff from the more established players with big salary promises?
“We’ve not given pay increases to anybody to come here. We’ve been able to get the best people [by offering] the opportunity to come and build something from scratch,” he says.
It seems the Berkshire brand opens doors – not just for employees, but for brokers and clients too.
“We’ve opened more offices and hired more people than we intended, [and] all of that is in response to customers and brokers wanting to see more of us,” Colahan says.
“If you had asked me [a year ago] what 2015 would look like, we probably would have said: a few lines of business, two offices in Sydney and Auckland, and around 20 or 25 members in the team.”
In fact, BHSI has secured 500 clients across Australia and New Zealand, opened four offices – in Sydney, Auckland, Melbourne and Brisbane – set up in six lines of business, and employed 53 people from 20 different companies.
“Compared to any initial expectations that we had, we’ve done a lot more,” Colahan says.
That’s not to say the past 12 months have been without challenges.
“The power of incumbency in our industry is incredibly strong: incumbency of broker relationships, incumbency of people, and incumbency of insurer relationship with the end customers,” he says.
“If I look at that through a positive lense, I’d say that’s great because customer loyalty is important and it takes time for insurers to earn that relationship with their customers.
“If I put a more negative lense on it, I’d say that people are resistant to change and there’s an inertia that means there is not much change in our industry. But, either way, incumbency is very powerful and we have had to deal with that.”
The BHSI model stands out in today’s corporate insurance world, with its lean business structure backed by a big balance sheet.
Colahan says that by “setting up with no legacy and by being relentless about the way we prioritise simplicity over complexity, we should end up with the lowest expense base in the industry”.
One only needs to look at the recently announced annual results of AIG and Zurich, to see that expense ratios are proving the downfall of some of the industry’s long-standing players.
“By having less complexity, we’ve got more empowered people who can be more responsive to the needs of our customers, who can make decisions more quickly, [and] who can genuinely create bespoke solutions to respond to the needs of customers,” he says.
“You end up with clearer ownership and accountability.”
So what’s in store for the next 12 months?
More staff and more products within its six core lines of business: property; casualty; financial lines (known within BHSI as executive and professional lines); marine, transport and logistics; healthcare; and accident and health.
The latter is the newest of BHSI’s offering in Australasia, with a new team starting in March.
Within each line of business, there are new products planned to come online, including a cyber product early this year, and an M&A insurance product, hailing from its New York office.
In addition to new products, BHSI, along with many of its competitors, is looking to grow its book of mid-market client business.
“We go into it with our eyes open … we’re very respectful for the long-term relationships that are there already, but we think we’ve got something different to offer,” Colahan says. “We think that our broad product offering and our highly responsive way of deploying it is going to be attractive.”
Colahan wouldn’t disclose his premium targets for the year ahead, insisting that the business was taking a more long-term view. “We certainly don’t want any of our team chasing GWP because of targets that were set,” he says.
It might be line from Colahan’s blind dating playbook, but it’s certainly a refreshing take on the often stayed world of Australian insurance.