It was last February that Seb Simmonds (pictured) was appointed MD of Pen Underwriting’s public sector division – at the time a completely new challenge for him. Yet in the year that has passed since, he has quickly learned why the area is the “best kept secret” in insurance.
Simmonds highlighted that the biggest surprise for him has been how neatly the public sector serves as a microcosm for society more broadly, and the depth of social purpose that being its risk management and insurance partner brings. There are many misconceptions about the public sector, he said; mistaken beliefs he has observed first-hand as the husband of a secondary school teacher who is more likely to still be working at 10pm at night than signing off with the school bell.
People tend to think of the public sector as slow-moving and hampered by red tape and regulation. Instead, he said, he sees a fast-changing, hard-working, adaptable sector, which demands those within it have in-depth understanding of the diverse range of risks they manage and mitigate and one with sophisticated buyers of insurance.
“For example, local authorities will invariably have an insurance officer who is responsible for managing the insurance placement along with procurement,” he said. “They understand the ins and outs of a policy and in some instances may be responsible for claims. Lots of local authorities have very high self-insured retentions so some will handle claims in-house, while others will handle claims with our third-party claims provider, Gallagher Bassett.
“They will always be looking at how to make improvements on the price and the coverage of their insurance, and the relationship they have with their insurer. In the private sector, you will have brokers involved who work across a multitude of clients. But these are people who do this solely for the organisation they work for.”
The other surprise has been the buying power of some local authorities, Simmonds said, which would put them in the FTSE 250 or FTSE 500 territory with a large local authority commanding between £1 billion and £2 billion in spending power. These are significant entities which need a high level of rigour in how they’re buying insurance and who they’re buying it with because it’s covering such a vast range of risks and liabilities.
From children’s services, to local amenities, to research projects, to fine art collections, there’s little that the public sector doesn’t touch on. In fact, he said, everything you see across the whole UK commercial insurance market, can sit within a single local authority.
Pen’s team has to respond to that breadth of coverage, he said, and to actively work with capacity providers to ensure they understand the full gamut of the risk involved. From cladding-related fire risks following Grenfell to the new terrorism threat venue considerations coming in under Martyn’s Law as a result of the Manchester Arena bombing, the team has supported its public sector clients through many “shocking events”, and continues to be actively involved in helping them manage ongoing or emerging risks such as toxic mould for housing associations or the challenges for blue light services around e-bikes and e-scooters.
Not many insurance providers operate in this tender-driven, hugely complex area of risk management and transfer, and Pen is proud to have built up and diversified its public sector division to now manage premium in the region of £200 million.
“What really stands out for me is our loss ratio stats for insurers, which are all within target, not just on a year-on-year basis but across a sustained period,” he said. “This is a phenomenal business and one I’m pleased and proud to be trusted with.”
Its public sector division comprises two core parts: its social housing specialism, led by Simon Perry, and its specialist in local government, blue light services and higher education Risk Management Partners (RMP) which turns 30 this year and is led by Stephen Halsall.
“With such a huge amount of expertise in the team, I’m certainly not coming in to teach them about the public sector; in fact, I’m absorbing everything like a sponge,” he said. “My role here is to help them unlock their potential operationally, to look at new things we might be doing, new territories we could operate in and to link in some of the broader Pen products and relationships to make sure we add as much value to them as they add to us.”
For Simmonds, who has served with the underwriting giant since the very beginning of its growth journey and held senior leadership roles in three of its five divisions, having that understanding of how Pen works and the ability to “join the dots” is why he felt equipped to embark on this new venture. Still, he had to carefully consider both the opportunity and the challenge unfolding in front of him, having not previously worked within the field of public sector insurance.
“I thought about what I could give back to a team which is just full of experts who have been doing this all their professional lives,” he said. “You always go through a bit of self-doubt with these things but it wasn’t very long until I recognised the reality that, while there will be slightly different aspects to how you trade insurance, the underlying principles of running any business are all the same.”
