‘My goal is to build a world class insurance company’ - Esure CEO David McMillan interview

There was a time when you couldn’t escape the sound of esure. Michael Winner’s clipped British accent would boom out from TV telling you to ‘calm down’.

Elsewhere, competitors, investors and journalists would scrutinise the publicly-quoted insurer’s results.

It’s been a bit quiet of late though. Last year, esure delisted and was taken private in a  £1.2bn deal with Bain Capital. 

So what is the vision for esure? 

David McMillan has been at the helm since May, and now he tells Insurance Times of his determination to succeed in his mission. 

World class insurance

“My goal is to build a world class insurance company. In my mind, all the world class insurance companies are built on really solid foundations, really solid basics.

”I call them the brilliant basics - brilliant claims, brilliant underwriting, brilliant pricing and brilliant customer service. But I think there is an opportunity to combine brilliant basics, our DNA, with digital and analytics,” he says.

“I think that is one of the recipes for success particularly in personal lines.”

McMillan believes insurance will face some significant disruption as customers become more demanding.

His mission is to lead a team that ensures esure is well equipped for the new era. 

“It is quite interesting that when I started in the market all those years ago, if you were a customer and you were thinking about customer service, your benchmark would be esure, or Aviva, Admiral or RSA or whoever. 

“The benchmark for a customer now is Revolut, Hive, Amazon etc etc. More and more we see that kind of demand for the customers.

”We see a lot of really good work done by the insurtech sector in terms of really re-thinking the customer experience. I think that’s going to lead to quite profound change in our sector.”

As well as investing in the digital, analytics and core functions, McMillan today has unveiled a top team.

McMillan wants esure to evolve rapidly and be part of the disruption, ‘so that means I’m going to need some insurance people, but also have a strong cadre of people who experience outside of the sector.’

Strategic blueprint 

Since arriving in May, McMillan has kicked off two important pieces of work. One is ‘brilliant basics’, which identifies how esure can become even stronger in the core basics of insurance.

Lots of ‘positive changes’ are already made, he adds.

The other is a strategic blueprint, an ongoing piece that will outline the pathway for the whole business in this disruptive era.

Esure will continue to use price comparison sites as the primary distribution method, barring any major unexpected market shift. 

“Channels will evolve and things will come up, lots of things on the horizon that will change the market, but we think that is a pretty solid bet for us,” he says. 

Esure’s pricing was a hot topic with certain analysts before McMillan joined, some believing esure was being too competitive. 

Last year esure fell into an underwriting loss of  111.8% and a its solvency deteriorated to 108%.

Asked about this, McMillan says: “To be fair, we were doing quite lot of work before I joined. Pricing is a bit of an arms race, and maybe we had fallen behind in the arms race , but that is not the intent going forward. We believe in the basics of being a strong insurance company.”

McMillan has a proven track record of achieving sub-100 combined ratio and this is something he is determined to mantain. 

While at Aviva, where his roles included chief executive of UK general insurance and head of Europe, he achieved consistently solid underwriting profits, not being afraid to sacrifice selected pockets of volume if it meant better profits. 

Discplined business

“There is no doubt we will be managing this company in a disciplined fashion. By disciplined fashion, I mean, building the value of the company for the long term by doing the right things.

”What does that mean? Holding our discipline on pricing, investing in the science of pricing, investing in world-class claims handling. Staying efficient and becoming more digitised.

 “There was, obviously before my time, a reasonably difficult year for the company. We strengthened the reserves quite substantially on bodily injury, which was the main feature of the results, and a little bit of adverse weather from the Beast of the East. 

 “When we strengthened reserves, we also moved our solvency ratio target range from 130 to 150, up to 140 to 160.

”The board are keen we keep it in a prudent range from a capital perspective. That’s the range we have been this year and that is how we would expect it to be going forward.”

 Optimistic, excited and ‘delighted to be back in the UK’, McMIllan is fired up by the challenge of reloading esure for a new era. 

As well as having run numerous different international markets at Aviva, McMillan, while he was chief operating officer, at QBE, visited Sillicon Valley and got close to developlements there, gaining a deeper understanding of insurtech. 

The experience underpins his belief that insurance is changing rapidly and esure, now in private hands and able to take decisions rapidly, can emerge a winner. 

 “We think insurance as a sector is going to go through massive disruption - its probably behind other markets and other segments in terms of that disruption. We think there is a really, really exciting opportunity to be at the forefront of that disruption.”