Interview - Colm Holmes, Allianz Holdings

The brand behind Colm Holmes might have changed in the last three months, but his mantra remains the same. During our 45-minute conversation he mentions the customer roughly every 90 seconds. Back in 2016 when stepping up to the Aviva GI CEO role he told Post: “This is about building relationships with our customers, and building a lifetime relationship rather than just the kind of transactional relationship that has typified insurance in the past.”

Holmes echoes that view 100 days into his new role as CEO of Allianz Holdings: “I’m not going to change my approach. I am strongly of the view that insurance is still very much a relationship business. We have strong relationships with our brokers and our customers, so you won’t see any change from me. It will be absolutely a focus on building deep, strong relationships with our broker partners, so that they can trust that we are the company to go to when they need support, and when they need help.”

Holmes expands: “Then there’s consistency. We’re not in and out of the market. When we commit to a line we’ll stay there. I’m very committed to building a digital capability, which digitises that broker channel and ensures we make it easy for our brokers and our customers to do business with us.”

He started his role at Allianz in December 2021, after taking over from Jon Dye, who had successfully overseen the takeovers of LV and Legal & General’s general insurance business. Holmes explains that when he got the call he couldn’t refuse: “Allianz has massive strengths and it’s a great privilege. When you get a telephone call from a company like Allianz – the biggest insurance company in the world – you pay attention.”

“I’ve known Allianz – and competed with them – for many years. It’s a company I’ve always hugely respected, and I already knew senior people from previous roles. I was a huge admirer of Jon, and he did a fantastic job while he was at Allianz.”

Holmes continues: “What attracted me to Allianz is not just that it is the biggest insurance company in the world, but also its ambition. When I spoke to Chris Townsend [member of the board of management of Allianz SE], it was clear the ambition for Allianz in the UK is huge. We’ve seen that with the acquisition of LV and L&G. Very much it’s about growing the business here in the UK, and we’ve got a fantastic opportunity to do that.

Market leaders

“Across the general insurance spectrum, we lead in large parts: we lead in electric vehicles, we lead in pet insurance, and are one of the top providers of motor and home. In commercial, we’ve always had a very strong SME presence; our AGCS business is a global leader; and Euler Hermes, which is now rebranded as Allianz trade, is a leader in trade credit.

“The ambition we have is to grow and become  the clear number one in the market. With Allianz, you have the tools, the ambition, and the capital support from Munich that to do that. I’m really optimistic about the future for Allianz here in the UK, because the market is there, brokers are really looking for stable capacity, expertise, consistency and continuity. Allianz – probably more than any other insurer in the world – can actually do that.”

This growth trajectory was a clear focus when Holmes reported the insurer’s 2021 operating profits of £318m, which is up from £290m in 2020. But he admits that the UK market is facing several headwinds after Allianz Commercial’s gross written premiums fell 2.7% to £1.25bn in 2021, with the insurer attributing this to economic uncertainty, remediation of unprofitable lines and underwriting action on property accounts, in addition to the effects of the soft motor market.

Holmes comments: “Undoubtedly, inflation is the big talking point. We’ve seen that inflation plus disruption in supply chains, and specific inflation around energy and commodities feed directly into how we operate as an insurer.

“As we go through 2022, and into 2023, inflation is something that we will be extremely focused on, and you will see that impacting the underwriting environment in commercial and personal lines.”

Hard market isn’t a tough act to follow

However, he believes the hard market can offer welcome relief: “I welcome the hard market, and hope it continues. I expect it will. Whatever expectation that there might have been of some level of softening, the impact of inflation, supply chain disruption, and other geopolitical disruptions, means the hard market will likely continue. There’s no such thing as a hard market where all lines are hard. There are parts of the market that will see a hardening, and parts that will start to soften. That’s the nature of insurance in the UK. It’s probably the most competitive insurance market in the world.”

As well keeping this mantra the same, Holmes doesn’t plan to throw the baby out with the bath water in terms of strategy for the brand. He explains: “We have a very strong franchise, and we are very strong in personal lines – pretty much all channels – and we’re strong in commercial. You may see some shifts in emphasis, but my preference is to build businesses around customers and our brokers. Hopefully what [brokers] will see is a continued and an accelerated focus on partnerships and delivery of service. We need to decide what is right and then focus on delivering that. Our people are our greatest asset, so if we can get our people motivated and loving working for Allianz then the results look after themselves.

“Profit and loss, and growth are outcomes of what you do with your people and what to do with your customers. If we can get those two things right then we will get to where we need to get to. Focus on the customer, and focus on your broker. Of course you need to have a good product and price, but a company the size of Allianz will always lead the market in those key areas – and, frankly, always has in the UK. Couple that with the front end, and then I’m confident that we can get there.”

Room for improvement

But one area of improvement will be the increasing responsiveness for brokers. Holmes explains: “When I speak to brokers, they tell me that one of the things that irritates them is responsiveness of insurers, and the speed at which people respond or how quickly we can underwrite.

“One of my absolute priorities is speed of underwriting and ensuring that, with the availability of data and the systems that are available to us, we can improve. That’s all about accelerating our underwriting process, and taking the manual parts or the administration out of that, so our underwriters can focus on what’s important to the broker and the customer.”

Brokers have also been vocal about the management merry-go-round experienced in the market recently and as well as a change in CEO, Allianz also saw its chief operating officer Stephanie Smith, director of broker markets Sarah Mallaby and director of engineering, construction and power Chris Little all depart in 2021, and then this was topped off by a regional restructure in January.

Holmes, however, is unperturbed by this, and comments: “There is always going to be change. People choose to move on in their careers – I’m here because I moved on, and others do the same. I have a reasonably straightforward philosophy that our goal is always to build the strongest team we can, to be the best. We will constantly be looking to see how we can operate better and there’s no doubt that people will come and go, but we will stay constant in our values and culture.”

That said though, he adds: “There has been a lot of stability in Allianz, and our relationship with brokers has been extremely strong. I want to build up that same relationship I’ve had previously with broker partners, so they tell me what we need to be, instead of me telling them. We will implement change where it’s necessary to keep building that trust, building our net promoter scores, and building our engagement scores.”

Holmes expands on this: “Customers tell us that trust is the biggest issue. They really want to have greater trust in insurance as an industry. Insurance is complex. We got to work hard in bringing transparency into what we do. It’s going to be really important as an industry that we’ve got to get it right in terms of what we need to do to build trust in the industry.

Testing times when business was interrupted

And he admits that the Covid-19 pandemic and the markets’ response to business interruption and the Financial Conduct Authority’s test case might have impacted this: “In terms of the pandemic, Allianz had limited impact from it in BI, but we’ve all been heavily impacted in terms of how we operate in this market. From working from home, right through to what protection companies need, and the impact on the economy generally. We very much supported the FCA and the work it did in the test case. Allianz is certainly one of the leaders in the market with 97% of payments made compared to an industry average of 81%,” he says.

Holmes won’t comment on the court cases that are coming up this summer including Various Eateries v Allianz, but he explains: “There’s a number of other cases that still need to go through the legal process to determine the interpretation of language because nobody anticipated that language necessarily being applied in this circumstance. What Allianz will do is as soon as we have those definitive outcomes, we will work extremely quickly to ensure we make payments to our customers.”

Holmes says that there are other challenges facing the UK market: “Climate change is probably the greatest threat and potential opportunity for the insurance industry. We’ve got to do as much as we can because we understand risk. That’s not about creating products, it’s about ensuring that organisations take the lead.

“We’ve got to be careful that we don’t create too many [pooled funds of last resort] and insurers are able to provide insurance. If you know exactly what risks are going to end up in claims then you don’t actually have insurance. It is important that we recognise our role within society, and we do provide coverage to everybody. “

He believes bringing all this together will lead to success: “If I can bring the best of what I believe I’m good at to what Allianz has, then I’m absolutely confident that we can build a much stronger business.”

The measure of success

And what does success look like? Holmes concludes: “If my net promoter scores are the highest in the market – as rated by our brokers and our customers – if our engagement scores are the highest in financial services, and if our growth and profitability are the highest in the market compared to our peers, then that – to me – is success.

“I go back to that formula. If I can get it right for our people, and our customers, I believe the outcome is growth and profits, and I believe we can do that. A lot of the heavy lifting in terms of capability and distribution is done. In the next three to five years we will achieve this. I’m absolutely confident that we will.”