QBE Insurance Group, the Australia-headquartered insurance giant, announced a strong increase in profits on Friday. For FY24, profit after tax moved up to almost US$1.8 billion from about $1.4 billion in FY23.
The personal lines ingredient in those profits is very small. Group CEO Andrew Horton (main picture) told Insurance Business that its under 3% of his firm’s premium base. This suggests brokers play a very important role bringing in their portion of the remaining 97% of premiums.
IB asked Sydney-based Horton, what brokers can take away from the FY24 financial results?
Horton pointed to longer term changes at QBE and two quite recent key appointments.
“I think one of the things we've been doing is building deeper relationships with our key broker partners over the years and trying to be much more consistent with them,” said the group CEO.
He said in line with QBE’s “vision” announced three years ago, his firm’s aim is “to be there” for brokers “at all points of the cycle.” He expressed confidence that this is happening more often than it was a few years ago.
Horton flagged the appointment of two former Marsh leaders, both US-based, to important broker-facing roles. In September 2023, Julie Wood was appointed CEO of the insurer’s North America Division. Wood is a former member of the global broker’s US executive committee.
“Then last year [in June], Julie Minor joined us from Marsh,” said Horton.
Minor, for two decades a Marsh managing director, is now QBE’s global distribution head. According to her LinkedIn in profile she is “focused on enhancing our key brokerage partnerships.”
“She's really focused on ensuring that we listen to our broker partners, are consistent in delivery, want to innovate with them where their clients want new products and really focus on being responsive on the underwriting and ensuring we pay claims well,” said Horton.
He said just doing these “basic things” consistently across his firm’s footprint can help differentiate the insurance giant from some of the competition.
IB asked Horton what he sees as a couple of big challenges in QBE’s relationship with brokers that need improving?
He reiterated that maintaining and improving broker relationships is about consistency.
“What is a real challenge, I think, is when markets become more competitive,” said Horton. “That’s when underwriting companies can appear to be less consistent and not as committed to some of the broker partners and clients.”
There are also other insurance challenges, he said, particularly in countries where natural catastrophe risks are increasing.
“The challenge we have here in Australia is this focus on trying to lower the risk,” he said. “The risk has gone up with the natural catastrophes over the past few years - we continue to build on floodplains and therefore the amount of housing stock that's now on a floodplain is greater.”
Inflation and increasing repair costs have also played a part in pushing premiums up for consumers, he said.
IB referred to a QBE byline - “Enabling a more resilient future” – and asked Horton, what’s one significant move governments could make to help build that resilience?
“I think not adding to the problem would be a good thing,” he said. “So not continuing to build in areas which are high natural catastrophe risk because then we don't add to the problem.”
Then the issue to solve, he said, becomes how to mitigate the challenge we already have.
“We're getting better balance in the portfolio and we weren't impacted by prior year claims top ups, which we've historically had a track record of,” he said.
Horton said the investment side of the business also did well.
“Obviously interest rates held up for longer in 2024 than people thought,” he said.
Difficult decisions, he said, were also made.
“Like pulling out of the mid-market business in the US during the year,” said Horton. “That just sets us off being very forward looking in 2025 because we have very few books to remediate.”
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