QBE group chief talks insurer’s stability

QBE Insurance Group is “much more” stable now, according to group chief executive Andrew Horton (pictured), who recently sat down with Insurance Business to talk about what sits at the top of the agenda for the global insurer.

Replicating success

Being an international business has its advantages, including learning from different markets and potentially replicating a division’s success. This is something the company is keen to benefit from, as part of its “bring the enterprise together” strategic priority – QBE has six, the other five being portfolio optimisation, sustainable growth, business modernisation, and the respective focus on its people and culture.

“I’d like to get the cyber business running everywhere across the world,” Horton told Insurance Business. “We have very little of it in Asia and here in Australia and New Zealand, so I’d like to do that. We’re just trying to utilise the skills we have on a combined basis.

“A simple example is getting the financial lines underwriters together and talking about what financial lines underwriting is like in Australia versus the UK, Europe versus the US – historically we haven’t done that well – and they just learn so much from each other because, not surprisingly, they’re seeing similar things. And that can be across financial lines, or property, or casualty.”

For its cyber offering in the US, QBE has rolled out a new technology-driven process. If successful, the plan is to deploy the same automated underwriting assistant for other markets and business lines.

Leveraging tech

QBE, which wants to accelerate its data-centric capabilities, has turned to artificial intelligence in line with the insurer’s modernisation strategy.

“I think it’s a great opportunity for the insurance industry at large because we’re dealing with a lot of unstructured data coming in on both the submissions and claims,” Horton said. “This tool looks like a great tool to be able to do something relatively quickly that humans take quite a long time to do – reading 10s of pages of information and trying to distil what is important for the underwriting and claims decision.

“We’ve just started, and we’ve launched it with our cyber team in the US. It’s looking at all cyber submissions and summarising the key points of a submission. When the underwriter comes in, in the morning, they can look at the various submissions, see what’s actually come in, look at the ones we’ve got most chances of success at, and it just speeds up the whole process.”

Horton noted a 65% improvement speed-wise, with the process spanning from the initial submission to getting the quote out.

“It’s a really good position to be in, and then it’s scalable,” he said. “So, if it works for cyber in the US, there’s no reason why it can’t work for cyber in the UK. And if it works for cyber, why can’t it work for property, liability, and so on.

“We’re really excited about it. I’m sure eventually everyone will have it and it’ll just make insurance companies more efficient, which, in many people’s views, it’s about time that they are. So, I’m looking forward to being more efficient going forward.”

Remediation and stability

As reported last week, QBE’s combined operating ratio (COR) for 2023 stood at 95.2%. Broken down per division, COR in North America (NA) was 103.7%; in Australia Pacific, 93.6%; and for international, 89.5%.

The international division, which includes QBE’s UK and European operations, had a “really good year,” Horton said.

“Almost everything went right for it. It’s been a very stable team over there. So, it just shows [how important it is to have] stability, which we haven’t really had in the US as much and is something we’re focussing on – getting to the same level of stability in the US that we have here in Australia and also with our team running out of London.”

Speaking about the NA operations, Horton told Insurance Business: “North America had a combined ratio close to 104%, and that had quite a large drag from some of our discontinued businesses… Actually, the [NA] businesses, which we break into commercial, specialty, and crop, all had combined ratios under 100% once you take out those discontinued businesses, so they’re definitely improving.

“We have a large crop business, and it was still quite tough in the crop world last year with a number of weather events; mainly drought impacting a number of states. The crop performance was worse than it has been in years gone by, so we continue to focus on that. North America is still a drag for us, and we need to get that down. We’ve said our aim is to get it down to 95% by 2025. We expect it to come into profitability in ‘24 and then march down to the 95% for ‘25.”

For the CEO, who came on board in 2021, what’s crucial is finishing what’s been started in the US in terms of remediating the business.

“We’ve made the business a lot simpler than it was, and it’s having this consistency and continuity,” he said. “We’ve talked about adding cyber expertise in the US, and we’re adding healthcare expertise there and complementary things we can do. So, it’s coming out of a remediation cycle, then into more growth mode, and then ensure we show our broker partners and our clients more consistency than we have done historically.”

Similarly, to some extent, QBE’s business in Asia has undergone some form of remediation.

“Now that work has been done, and we’d like to look at our Asian business as to how we can grow it,” said Horton, who is happy to have internal hire Rob Kosova taking charge of QBE Asia from April.

“I think one of the things [I want to highlight] is the stability of leadership – broader leadership and not just the top 10 people. We’ve got much more stability in the company.”

In 2023, QBE’s net profit after income tax grew from US$587 million to US$1.36 billion. 

What do you think about this story? Share your thoughts in the comments below.