He started in insurance in the time of telexes and telegrams but even in today’s digital world, IAG’s outgoing executive general manager of risk and underwriting says you can’t beat the human touch.
Armstrong retired May 31 after 47 years with the company.
He was appointed EGM risk and underwriting in December 2016 and undertook responsibility for pricing, product and underwriting across all brands of IAG New Zealand. Armstrong was responsible for the closure of Canterbury earthquakes claims and the direction of Kaikoura claims. He was also part of the due diligence team when IAG acquired Lumley Insurance in 2014.
His accolades include a fellowship with the Australian and New Zealand Institute of Insurance and Finance (ANZIIF), having served as president until recently. He was given ANZIIF’s Lifetime Achievement Award in 2017. During his nearly five decades with IAG he won Insurance Leader of the Year and led NZI to multiple wins as Intermediated Insurer of the Year.
From Blenheim to Britain and back
Armstrong joined what was then NZI straight out of Marlborough Boys' College in 1971 during a period in which brokers didn’t exist in the provinces and insurers dealt directly with customers. He first worked in Nelson then went across to Blenheim, where managers soon wanted to send him to a larger centre. Instead, in 1977, Armstrong agreed to “broaden his horizons” at the London Business School, with further training at the Wharton School at the University of Pennsylvania.
Armstrong says there was a personal benefit to the British adventure – it was there he met his wife, Jane, got married and the two began a family, having two boys together. However, after 18 years, Armstrong found himself looking at being deployed to Scotland and chose a different direction instead. “I said what about Australia or New Zealand? So I brought the family back. From my time in the UK, that was my major reward.”
Armstrong’s potential was noted by NZI. After returning to Wellington in 1994, Armstrong was in 1996 transferred to Auckland to set up Marsh Bonus and the CPF Aon facility. There followed the 1998 brief privatisation of ACC, resulting in Armstrong setting up the Accident Insurance division of ACC, the 2001 ACC overhaul, and NZI was acquired by IAG in 2003. Armstrong was appointed CEO of NZI 2008-2014.
Technology: not a total game-changer
While the 1980s was an age of telexes, telegrams and “a whole floor of computer hardware which might only power your PC,” Armstrong believes the Jetsons-like technology available today hasn’t changed the game entirely, and not every customer wants humans factored out of insurance service. “Sure you can do simple stuff, look up stuff on the internet, and even though a new generation coming through relies on their own investigation [of insurance policies] through the internet, we’re funny creatures, we like to talk to people at the end of the day.”
Roles were different not only 47 years ago, but as recently as the 1990s. “Even just 20 years ago, general life insurance companies didn’t have actuaries. We had business analysts.”
Today Armstrong works with 100 business analysts and statisticians, not to mention underwriters, claims settlers and relationship managers.
While gadgetry may not be a game-changer, data is. 2018 is seeing more data available than ever, and the cost of risk treated more realistically. With 2017 labelled the most expensive year on record for weather-related losses, according to the Insurance Council, insurers are today working with external third party organisations, especially local and central government, and recommending improvements in legislation, funding resilience and use of data to balance NZ’s estimated $1.6 billion annual cost of natural disasters.
“The major change is our ability to play and work with big data,” Armstrong says. “For example, erosion mapping with NIWA. That sort of relationship allows us to advise government where they should and shouldn’t build.”
The better the data, the better the evidence backing up an insurer’s justification around coverage. “As we have seen in the press, people who live in risky zones will pay a price,” Armstrong says. “As insurers, we’ve become more vocal about risk. People understand now that not everything is covered, no matter how good your policy is.”
While cycles can dictate the rise and fall of premiums, it was the period 2012-2013 which saw reinsurance costings in some cases triple. “The reinsurance market has borne a $30-$40 billion event. It will take NZ a lot of years to recover anything. It’s about realistically starting to reprice the risk.”
The Christchurch quakes: a `Once in a lifetime event.∫
The earthquakes which ravaged Canterbury on February 22, 2011 were so significant that 167,000 dwelling claims arose as a result.
Seven years down the track, Armstrong’s team of more than100 IAG staff is hoping to resolve the final 1.5% of land and dwelling claims outstanding, numbering around 1100 claims.
“Christchurch, to my mind, was a once-in-a-lifetime event,” Armstrong says. “I know we’ve seen subsequent events – Kaikoura – but prior to that earthquakes were isolated and minimal, for example in Gisborne and Edgecumbe.” The Christchurch quakes “dwarfed anything we’d come across,” Armstrong recalls. “On day one we didn’t comprehend the scale. There was the impact on business, and NZI and IAG’s workflow was challenging. Number one, there was no access to the city centre and there was very limited access to parts of the wider city. Number two, people were still traumatised. We had challenges all around. That put pressure on everyone. As it unfolded, we started to see the size of the event.”
As EGM of NZI, Armstrong was in Christchurch every week for 12 weeks. “I spent my time seeing brokers and customers and got first-hand great hearings because people aren’t as fixed in their views as they are seven years later.”
“I had the opportunity to walk through the city centre. It was cordoned off by martial law. Six of us were allowed through on special permit and had to walk on a white line. I think what you got was an unbelievable perspective of the damage done. There was damage to inferior buildings, yes, but even quality buildings were damaged. There was clothing, there were sheepskin rugs blowing in the wind, no protection. It was something I’d never seen or experienced. It must have been like Beirut. It felt like a bomb. Jaw-dropping. A reality shock.”
Armstrong again spent time at Ground Zero when a 7.8 magnitude earthquake struck Kaikoura on November 14, 2016, creating 38,000 residential claims. IAG and fellow insurers, thanks to a Memorandum of Understanding with the Earthquake Commission, were able to settle the vast majority of claims directly, and the workflow was more efficient than the Christchurch caseload, Armstrong says, leading to the resolution of 98% of Kaikoura quake claims after 16 months. The move away from open-ended no sum insured policies helped make it easier to agree values and close claims.
“Kaikoura was quite different – the customer had one point of contact, compared to Christchurch where there might have been multiple points of contact [to have claims resolved] so there was less claims fatigue and customers didn’t have to ask for three engineering reports.”
Farewell and handover
The ANZIIF judging panel which presented Armstrong with the Lifetime Achievement Award acknowledged the years of mentoring and development of young professionals he has given to the industry, as well his constant advocacy for the industry.
Armstrong is pleased to note he managed to get the constitution of the ANZIIF changed. “I was the first NZ president, but the constitution said you had to be permanently resident in Australia. That was just an oversight! But on the board I play the New Zealand card regularly.”
Looking back, Armstrong credits immediate managers from Blenheim and Nelson for giving him the opportunity to develop professionally. Armstrong’s advice to live a more rewarding career is to “grab whatever you’re offered with both hands.”
“Get outside your comfort zone. Act as a sponge. Absorb as much as you can. Down the track it’ll stand you in good stead.”
Armstrong will be spending retirement with four grandchildren, two of whom are in Sydney. Armstrong says he defines retirement not so much as being about not working, but about being in charge of his own time. He’ll remain on the board of ANZIIF as Immediate Past President, will offer consultancy services and will fit in as much travel as he and Jane can manage.
Garry Taylor takes the reins at IAG
Garry Taylor, who was most recently General Manager claims operations at IAG, took over the role from Armstrong on May 1. Armstrong describes the decision to appoint from within as “fantastic.”
“It will send a superb signal. I always say every leader bring something different. Garry has got a lot of understanding. He’s bright, considered, and understands the market and relationships.”
IAG New Zealand’s chief executive Craig Olsen described Armstrong’s contribution to IAG and the insurance industry as “remarkable” and praised Armstrong’s “willingness as a leader to always encourage and mentor others within our company and the wider industry.”
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