Lowe, who makes way for new CEO Craig Buckle in January, shared his thoughts on 30 years in the insurance industry, the future for the sector, and advice for young brokers.
You are retiring at the end of the year; how has the broking market changed over the course of your career?
The most significant change during my career has been the evolution of the insurance market into a respected member of the financial services industry. This evolution encompasses advancements in risk management, emphasising the value of understanding business risks, and how the broking industry has adeptly addressed the ever-changing national and global risk issues.
What have been the biggest achievements of your career and time at Lockton?
One of the most exciting periods in my career was when I was asked to move to Hawaii to initiate the captive management office for Marsh. Over the course of ten years, we established a domicile, built a client offering, and played a pivotal role in evolving legislation for the Hawaii State Government. Witnessing Hawaii rank in the Top 10 captive domiciles globally is immensely satisfying. This experience, where I built a business from the ground up, provided invaluable lessons that I applied to the Lockton New Zealand challenge.
Establishing Lockton New Zealand stands out as a significant accomplishment, given that we introduced a new brand, a new and unique client service model, and a client/employee-first culture to a traditional insurance broking market. We were the first to challenge the status quo and disrupt the corporate insurance market for the benefit of New Zealand businesses and our clients.
Today, Lockton New Zealand has terrific momentum and the capabilities and expertise needed to drive innovation and growth, deliver critical client solutions, and create value for shareholders across the country. For example, we have forged strategic partnership agreements with several aligned businesses across New Zealand and the Pacific region including HealthNow, a healthcare company making it easier for New Zealand employees to access healthcare.
What will be the biggest challenges for the broker market in NZ in the coming years?
The foremost challenge will be managing regulations and assessing their value for the client. New Zealand is currently experiencing a significant amount of compliance and regulation, resulting in added costs that must be passed on to customers for relatively minimal client benefit. Another major challenge is ensuring that brokers communicate the value of advice throughout a transaction. Brokers must ensure that clients comprehend and appreciate the advice, understanding how it improves their risk management concerning business risks.
Where are the biggest opportunities for brokers?
The most substantial opportunity lies in becoming an advice driven broker. The challenge for the majority of brokers in New Zealand will be to enhance client operations by understanding their business and providing tailored advice.
The New Zealand insurance market has been overly transactional, focusing on insurance costs rather than
the benefits and protection derived from insurance advice. From the perspective of Lockton New Zealand, local businesses are no longer seeking just insurance solutions but also want us to strategise with them around
mitigating wider risk. We are structured in a way that enables face-to-face time with organisations.
At Lockton, it’s personal. Insurance buyers are now looking for business partners, not merely service providers, so Lockton’s individual and consultative approach is a highly appealing proposition. We also want to push the boundaries of what’s currently available in the market.
There are also opportunities for brokers to make a bigger impact on the community. For example, at Lockton, we support the 'Trees that Count' initiative managed by the environmental charity Project Crimson across Aotearoa New Zealand. As part of this initiative, Lockton donates native trees in the organisation's name for every new client, resulting in a total donation of over 700 trees
to date.
In addition, our team has been partnering with Cystic Fibrosis New Zealand to raise much-needed funds and awareness for their charity and community.
What will the future of broking look like? Give us your prediction.
We will witness a split in the broker market. Some brokers will focus on transactions, ultimately becoming agents of insurers. On the other hand, there will be brokers who prioritise providing high-quality advice to clients, even if it means recommending against purchasing insurance.
In the hard market at the moment, when will these conditions change? Any sign of the market softening?
Predicting a shift in market conditions is challenging. In the current market, clients who planned for risk and insurance 5 to 10 years ago and adopted the right long-term strategy are faring well. Such clients have insulated themselves from market fluctuations, gaining a competitive economic advantage over their peers. Conversely, those reliant on transactional procurement-driven renewals are continually at the mercy of market behaviour.
How will brokers have to adapt to deal with ever more complex and evolving client risks?
Brokers must forge close collaborations with their clients, fostering a deep understanding of the client's business and industry. This understanding empowers brokers to identify risks proactively, enabling clients to adjust their business strategies in response to emerging challenges. A notable illustration is in the realm of cyber risk.
Through years of close collaboration and a deep dive into the client's risk profile, a comprehensive analysis was conducted. The optimal solution involved the creation of a cyber insurance product utilising alternative risk financing techniques through a captive insurance company.
What’s next for Lockton in NZ? Will you be moving into new product areas?
Lockton New Zealand will continue to build on the momentum we have created under the leadership of Craig Buckle (incoming CEO of Lockton New Zealand). Over the past two years, we've dedicated significant effort to establish a robust platform, placing us in an excellent position for further development.
A shared understanding of the business plan, strategy, and goals is crucial. From my perspective, the consistent achievement of objectives and flawless execution of our strategy are paramount. Maintaining focus is critical for Lockton. Our success is rooted in engaging the right people and fostering meaningful conversations with potential clients.
Despite six years of challenging conditions in the insurance industry, our approach has set us apart as disruptors, distinguishing us from other firms in NZ. Additionally, we are exploring how to leverage the global capabilities of Lockton. Adapting successful strategies from the Pacific region and applying them to New Zealand is a focus, leveraging our unique selling points as valuable conversation starters.
Our discussions extend beyond pure insurance, exploring ways to engage clients in risk discussions that often lead to a broader spectrum of opportunities. As a region, we aim to align ourselves strongly, ensuring that our positions of strength are leveraged across the region.
Do you have any advice for young brokers and people starting out in the industry?
Firstly, prioritise making regular visits to your clients. Establishing a personal connection and understanding their environment firsthand can significantly enhance the quality of your service.
Practice active listening. By carefully tuning in to your client's needs and concerns, you can provide more targeted and effective solutions.
Develop a comprehensive understanding of your client's business. This knowledge is essential for tailoring insurance solutions that align with their specific needs and challenges.
Similarly, familiarise yourself with the intricacies of your client's industry. Being well-versed in industry trends and challenges allows you to offer more informed and strategic advice.
Do not hesitate to ask questions. Embrace curiosity as it demonstrates a proactive approach to problem-solving and ensures you have a thorough grasp of your client's requirements.
It's crucial to remember that the solution to your client's needs may not always come in the form of an insurance policy. Explore alternative approaches and be open to creative problem-solving.
Lastly, recognise that the insurance industry is global, presenting opportunities to work in various locations worldwide. Embrace the potential for a diverse and dynamic career path.
How will you be spending your retirement?
By taking a long sabbatical, exploring governance roles where I can add value, consulting with clients, and travelling.
