With almost 40 years’ experience in the insurance market, you could say Ash Bathia knows a thing or two about the industry. His latest challenge sees him building a world class business at Probitas 1492 from a zero base. He takes some time out of his day to share with us his secrets of success.
“Some of this may seem obvious, but I genuinely believe in keeping things simple” Ash prefaces. “There are a handful of key areas to focus on to not only survive in tough trading conditions but, to thrive and succeed!”
I believe it all starts with the right people.
Leadership is often underestimated and certainly not fully appreciated. Leadership to me is not about ‘managing’ but inspiring and motivating. If you provide the right environment, then people will create their own opportunities to make a difference, which in turn positively impacts the business. Good leadership defines the corporate culture, in the same way that poor leadership can stifle it.”
“When it comes to hiring the right people, I look for the 3 A’s – Aptitude, Ambition and most importantly Attitude!” Ash reveals. “But, we have to recognise and reward these attributes. Both financially and by creating an inspiring environment. I want my team to walk the extra mile because they want to, not because they have to.”
Of course, the right talent doesn’t come cheap, and can influence the bottom line. “Distribution and operational costs across the industry are now running at unprecedented levels. Direct and facultative business in the London market is running close to 45% combined costs which are simply not sustainable. If we’re not careful the market is in danger of sleep walking into a brick wall” Ash warns.
So, how does Probitas intend to tackle this?
“For us, the answer lies in a combination of technology, distribution, analytics and our appetite for deal making.”
“Technology is not just about online auto rated products that eliminate the human interaction completely. Of course, there is an opportunity for us to build systems to transact efficient SME and specialist business. Learning lessons from what has happened in the more advanced personal lines market. If we are not careful, there is no doubt that large technology companies will disrupt the commercial insurance market and move large volumes of business from the traditional markets.”
“We must play to our strengths,” Ash recognises. “At present, the low hanging fruit is the use of technology to make the pre and post bind processes more efficient, more cost effective and ultimately significantly reduce frictional costs. Underwriters and brokers can then pass on some of these benefits to the customer.”
Which leads nicely into Ash’s second point, the topic of distribution.
“There has been a fundamental shift over the past 10 years where we’ve seen intermediaries using their distribution leverage to extract more and more revenue from insurers and reinsurers. It’s gone past the point of real value to become a cost burden, which will not go unnoticed by the regulators. We could see them intervene if changes are not adopted across the market. So, we need to see intermediaries reviewing their business models to ensure they are providing added value, managing their own cost base and mitigating the risk of disruption.”
Ash is quick to identify that it’s not all down to the intermediaries, “Underwriters have their own role to play. Not only do we need to support Brokers, we also need to get close to the origination of the business” he says. “Leverage our capital and underwriting expertise by building robust partnerships with select distribution partners and creating a more equitable and long-term solution that delivers value to all shareholders – but particularly the customers without whom we simply do not have a business! We can’t forget this.”
The next area that Ash cites as playing a vital role in success is analytics, which has had a huge impact on commercial insurance and reinsurance.
“As an industry, we have access to, and capture, an enormous amount of data, but traditionally we use a very small fraction of this to price our products and monitor performance. As it has traditionally been largely focused on reserve and capital management, there is still too much tension between underwriters and actuaries, it is often adversarial than collaborative” Ash notes.
“Analytics must sit at the front and centre of the business, as a genuine enabler to underwriting, rather than a back-office function hidden away in a darkened room churning numbers.” And, Ash is a man of his word, with the Analysts at Probitas playing an integral role to the underwriting teams.
“Collaboration enables underwriters to avoid unprofitable business, turn marginal business into profitable business and make already profitable business even more so. There’s an extra level of intelligence that data provides to give us an edge.”
“The personal lines markets have taken data and analytics to a completely new level, whilst the commercial insurance market has not even scratched the surface. We need to embrace the knowledge our Analysts provide to empower our decisions.”
“However, there is a word of caution,” Ash points out. “We must not let rating models take accountability away from the underwriters. There is a real danger of this happening if underwriters and actuaries operate in a parallel universe.”
“And, if we are individually working in silo’s then we’re not maximising our opportunities to ‘doing a deal.” Ash observes.
“As business becomes more corporate and weighed down by regulatory demands, they become less responsive and more reactive. The entrepreneurial spirit can easily get sucked out of the business as a whole.”
“I’ve built my whole career on being a ‘deal maker’, looking at opportunities from different angles to see how to make it happen, rather than walking away from the table and taking what many would consider to be the easy route.”
It’s this entrepreneurial spirit, that gets Ash out of bed every morning and is a central part of Probitas as a business. “Part of the success of Probitas will be down to the team living and breathing the entrepreneurial spirit, which, of course, has also been the hallmark of the Lloyd’s market for over 300 years.”
“And so, it circles back to having the right people, with the right attitude, building the business.” Ash concludes.