With QBE Australia’s financial performance a bright spot in the company’s global results, CEO Colin Fagen has spoken in-depth about how he sees the recent offshoring strategy paying dividends.
Late last month, QBE Group announced a net loss of $US254 million last year but Group CEO John O’Neal singled out the Australian-New Zealand results as “sparkling”.
Although the division’s Gross Written Premium dropped 4% to $US4.79 billion, the combined operating ratio improved from 90.6% to 87.4%.
Fagen says he is very happy with the result, given the scale of operational transformation undergone last year.
“This level of change is significant in the business, to bring in this level of change on top of growth and on top of a very good profit result means we’ve performed particularly well these past 12 months,” he says.
“However, any change in this level has teething issues and takes a little while to get through these teething issues, but we’re very happy the way it has gone.”
Around 700 jobs have been created in the Global Shared Services Centre hub in the Phillipines, taking many back office functions out of Australia.
Although the changes were initially criticised and likely contributed to QBE’s first loss of the NIBA General Insurer of the Year title in more than a decade, Fagen says the changes will ultimately benefit their relationship with brokers.
He says the intermediary market is being attacked by direct players and updating the their service offering is part of a strategy to protect brokers.
“What is particularly important in this change is that it creates scalability, so as we grow we will obviously be able to bring more economies of scale into the business, which will help us protect on price,” he says.
“It is often discussed that this is a cost push only, but it isn’t. It is very much about consistency and predictability of service – about what’s expected by people, particularly in claims issues but also in underwriting.
“Already we’re getting some feedback in some parts of the business where we’re able to turn around quotes at a much faster rate. We can win business because we’re getting prices into the market faster than we ever have before.
“Our core business is in underwriting claims management distribution – it’s not running finance teams, it’s not running IT teams, it’s not running HR teams. These are the background functions.”