15 Minutes With... Pen Underwriting’s Jon Turner

Matt Scott: You have been CEO for 18 months now. How would you assess that first year and a half?

Jon Turner: I took over a business that was in good shape anyway, and was on a journey in terms of strategy with a clear vision about becoming a virtual insurer. The last 18 months have been getting on with that and ticking the things we wanted to do off the list one by one.

A lot of that has been inward looking and about building a 21st Century MGA. There has been investment in tech and people - we have a team of actuaries, a great claims handling team and a risk and governance framework that allows carriers to have the confidence that we deal with customers in the right way, and that those that deal with us are in a stable, strong and well-managed business.

That was necessary, because a lot of the businesses that came together [to make Pen Underwriting] were historically under-invested in, and Gallagher has been hugely supportive in allowing us the time, space and money that was needed to make the platforms fit for purpose and give us a fighting chance of trading in an ultra-competitive market.

The Legal & General capacity deal is the culmination of a couple of years of really hard work for a lot of people, and that is a really great vote of confidence from a highly respected brand with a lot of tradition in the UK insurance sector that was willing to come in and put down a five year commitment on a large book of business.

We wouldn’t have been able to do that type of deal if we hadn’t done the hard work in the background over the last couple years.

MS: And how do you ensure the future continues to be prosperous for Pen Underwriting?

JT: We have to recognise technology is our friend not our foe, and make sure that we have the right systems so we can quote-bind-issue policies instantly and provide our brokers with the level of service they expect of us in the modern age as opposed to being an old, slow, dusty, traditional business. We have to move with the times, and we have embraced that over the last three years.

This time last year we launched Pen Central, our online portal, and now we are trading £350,000 to £400,000 gross written premium on that portal every month. We have put a number of products on there already, and will continue to build products for that portal so it becomes a one-stop-shop for brokers.

MS: What does this rapid growth of e-trading mean for more traditional distribution channels?

JT: We distribute in a number of different ways: a sub-cover holder model, face-to-face with brokers, online, broker software platforms – we have a myriad of ways we can get to market.

That is wonderful for our insurer partners, like Legal & General, because it means if they back us we provide that distribution for them and deliver meaningful portfolios at appropriate loss ratios in their sweet spot.

We have a very slick and easy to use platform, and brokers like that. They want to trade with people it is easy to do business with - and that is our mantra. The e-trade world is certainly part of our future and we will continue to invest in it.

Gradually over time, e-trade will move up the food chain in terms of complexity of risk and the number of underwriting considerations, but face-to-face still has a place. People still like relationships, knowing the people they deal with and seeking advice - it can’t all be faceless and done online, there is still an advisory piece that we expect our brokers to be doing.

MS: And what are your plans for the future?

JT: We can’t stand still, and the challenge that gives me and our underwriting teams is around hitting the target loss ratios we have agreed with our capacity providers. The reality is that every class of business in every territory is competitive, so for an MGA that means you have to run hard to just stand still so you can spot the right opportunities to underwrite instead of just getting a flood of business that won’t hit profitability targets.