Esure has hinted it might look at an outsider to head up the business. But such a move comes with risks
As Esure continues its hunt for a new head following Stuart Vann’s sudden exit from the business, interim chief executive Darren Ogden has hinted it might look outside the industry for a digitally-savvy and customer-focused new chief executive.
The prospect of an outsider coming in has some advantages.
“If a senior executive from Amazon walked into Esure, they would get respect, just due to the brand association,” Idex founder Matt Green says.
As well as the respect, an Amazon-type digital leader would have a different outlook on customer service, perhaps finding new and innovative ways to service customers faster and simpler.
Some of the most innovative digital starts up being run by people with little or no insurance experience.
Lemonade makes a big deal that it is a tech company not an insurance firm. Daniel Schreiber had little or no experience before taking the lead role.
Peter Hancock: Ex-banker struggled at AIG before finally quitting last year
He drafted in famous behavioural scientist Dan Ariely to help build Lemonade’s customer proposition.
Although Lemonade has its sceptics, it appears to have captured the imagination of customers and insurance carriers such as Allianz who have invested in the company.
AIG boss struggled
Some outsiders have taken the reins at insurers and had great success. Former retail banker Paul Geddes has steered Direct Line Group out of the depths of the banking crash to a Stock Market listing and strong financial performances.
And Geddes’s former boss at Royal Bank of Scotland, Stephen Hester, has piloted RBS through some stormy times over the past few years.
But while there have been some successes, there are numerous examples of outsiders who have struggled in insurance.
Former AIG chief executive Peter Hancock came in as a banking supremo but quit in August last year after suffering four losses in six quarters.
There were too many lurking claims issues in AIG’s business.
A more insurance savvy chief executive might have used their underwriting and pricing experinces to iron out the problems.
“It’s a funny one to bring people in from the outside,” ACORD chief executive Bill Pieroni has said about chief executives brought in from banking.
“They tend not to do well. I’m fact-based. I’ve seen it. Nobody has pulled it off.”
Stuart Vann: Posted some solid results in a tough market. His exit is a mystery.
Regulation burden
The toughest test could well be dealing with the restrictions of a strongly regulatory environment.
Technology firms such as Google and Amazon have far less regulation than insurance.
Experienced executives are already grappling with the regulatory burden.
A recent PwC survey found that 95% of insurance chief executives worldwide are concerned by over-regulation.
The new hire must also wrestle with the conundrum of how to drive profit in a tricky industry, though this may be less of an issue at Esure.
Vann’s sudden departure came despite the insurer reporting soaring profits and sizeable growth in 2017.
Esure founder Peter Wood will have high expectations of his new CEO, and that will be particularly tough for a newcomer who has to learn the esoterics of car and motor insurance.
Ultimately, hiring an outsider with tech savvy skills would have a great PR look, but the harsh reality of running a UK personal lines insurer in the most competitive car and home market in the world would quickly take its toil.
Esure will have to find a very brave and exceptionally talented outsider.
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