A sense of perspective

David Bailey, Finance Director for Hiscox UK and Ireland, talks to James de Mellow about the importance of a collaborative approach

As a London-dwelling American who speaks French and has spent much of his insurance career living and working in Europe, David Bailey has experienced the industry from many different perspectives.

Among those is the time David, who recently took on the role of Finance Director for Hiscox UK and Ireland, spent as a reinsurance broker for Guy Carpenter in San Francisco. “I think everyone in the insurance industry should experience life on ‘the other side’ – if you want to call it that – at some point in their career,” David says.

That time on the broker side is something that David has carried with him throughout his career as a consultant in the UK retail sector and his last job as Hiscox Europe’s FD. “Anyone who’s had that experience will have empathy with where brokers are coming from,” he says. “When you go into a conversation with a broker, you have to realise that their job is to fight for their clients’ best interests and they should never be punished by the insurer for doing so.”

David’s strategy has been to make sure that the insurer’s and broker’s mutual goals are clear. Hiscox relies on its broker partners for both information on trends and market intelligence, and knowledge about what clients are asking for. Quite rightly, it is the broker’s job to present choices to their clients. However, if an insurer’s broker portfolio is consistently losing money, that relationship can’t be maintained at the same price. “That’s why a transparent partnership that allows both parties to prosper is important,” David says. “I’ve shown certain brokers their loss ratio with Hiscox and pointed out that it’s an unsustainable relationship unless we put rates up or make underwriting changes.”

On the whole, he says, brokers’ reactions to this type of situation have been positive. “They were surprised to see the loss side of things from the insurer’s perspective when I showed them that sort of management information at broker meetings,” he explains. “It helped set out the profit improvement plans we were trying to put in place.”

This collaborative approach can help brokers explain potential price rises to their clients. “If we go through the data to show why we’re putting up rates, brokers can pass that information on to their clients with a full understanding of the issues involved,” David says.

During his time with Hiscox Europe, David dealt with broker segmentation, helping transform what was a very broad broker base into one that was more focused. “Hiscox had a relationship with 2,000 brokers, compared with 400 to 500 in the UK, while the UK was three times the size in premium terms,” he says. “We decided to part ways with some brokers in order to spend more time with those with whom we had a profitable working relationship.”

After more than three years with Hiscox Europe, David is looking forward to a fresh challenge in the UK and Ireland. “The task for Hiscox in the UK is to grow in a mature market,” he says. “The European operation is a third of the UK’s size, but the target market is four times as large. We’ve far more competitors here and the market, while not yet at saturation point, is crowded.”

David enjoyed his period with Hiscox Europe, dividing his time between offices in different countries. “I like to say I was based on the Eurostar!” he says. “I speak French and received my MBA in France, which certainly helped me deal with the different working cultures.”

He’s found, however, that Hiscox’s culture carries over from country to country. “There are a lot of ‘Hiscox-isms’, such as ‘profit is sanity, growth is vanity’ that get mentioned in every office,” he says. “There are local cultures but, at the same time, it’s all very much Hiscox.”

It’s the ability to see the industry from many perspectives, though, that David believes will help him in his new role. “Between my broking days and joining Hiscox, I was a consultant for about three years in the UK retail insurance sector,” he says. “I’ve seen the business as a broker and a consultant, and now I have an insurer’s perspective.

“A lot of what I did at Hiscox Europe will also apply to a larger, more mature market,” he adds. “But the decisions I make come from all my past experiences, and previous jobs and challenges allow me to see the business through different eyes.” It’s this depth of knowledge that means Hiscox will continue to work for its broker partners so that both are successful.