Steve payne

10 February 2010 2:27 pm | By Lee Jones

For a man who deals in risk aversion, Bupa director of individual protection Steve Payne likes to take risks in business. “I prefer the just do it attitude in business, working with firms that offer you the freedom and responsibility to experiment but that only works if you know you can fail,” he says.

That is a lesson he learned early. After leaving university, Payne began his actuary training at UK Provident and had first-hand experience of the demise of an independent mutual after it was taken over by Friends Provident.

“A number of unfortunate coincidences happened at the firm and quite early on that allowed me to learn that things can go wrong, which I have found to be quite a good lesson but I also learned that, in a sense, it is good to fail.”

He took these lessons to London when he joined Skandia Re, taking the chance to get in front of people and sell products and services rather than number-crunch in a back room. Here he learned that some of the most successful companies he worked with were the firms that took risks and were not afraid to fail. He took his next position at Gerling Global Re for that very reason.

“I regard myself as a bit of an underdog and I like to take on some challenges that other people may not want to take on.”

He says the firm’s mantra was “It is no use being everyone’s second choice”, so the small team used their skill set to pick and choose clients.
“We needed to work out where we could win and where we could lose. We had to make sure we put something into the market that has real value. If you win some and lose some, you get some business, if you are always second you get none at all.”

One of the clients Payne did win was Bupa. He had worked on its critical-illness proposition and when the chance arose he joined the firm to bolster its individual protection business.

“I had got a real feel for the values of the company when I worked with it. I thought it was genuinely trying to put a proposition into the market that was beyond some of the other offerings out there at the time.”

Bupa, while a giant of the UK private medical industry, is a smaller player in the protection market but Payne has taken on the lessons he has learned in his career to help grow that business in a unique way.

He says Bupa’s innovative flex products and attempts to develop that side of the business have helped it stand out.

“You can see that the flexible benefits’ agreement is going to be a strong growth area in both individual and group protection.”

Payne thinks flexibility is key to success. “If there is a flaw in some more innovative products of late it is that they are fixed constructions. We want to offer flexible constructions that will allow intermediaries to put together a package that is very similar to these fixed offerings but tailored to the needs of his or her client. Advisers need to be given the ability to have some input into the construction of products and not told what to sell.”

Payne says it is this pick and mix of products alongside stronger ties with its PMI proposition that will help the group and individual business to come together and help close the £2.3tn protection gap. “We can each contribute to our own bit of the business to close the protection gap - you have to eat the elephant bit by bit. For example, if we cannot offer a group, then we may be much more able to join up a combined proposition that is part employer-funded, part flex, part personal provision. We are not the biggest office in the market but we can do our bit for our sector and with those intermediaries who regard us as their number one supplier. Producing products like these is just another way of taking a little bite of that elephant.”

But Payne warns that innovation alone will not bridge the protection gap. He says the industry must join together to lobby the Government to recognise that many issues they face, such as long-term health care, disability issues, can be solved with the help of the insurance sector and the wider promotion of the products on offer.

“When the Government looks at certain issues it is equally as likely to go to Tesco and Marks & Spencer and ask how they would solve problems if they got into the sector. The Government has historically enjoyed the revenue and the prestige of a strong UK insurance market, it does not have high regard for the industry as we stand today.”

Payne says Bupa will continue to shout as loud as it can on protection regulation and the development of bespoke and flexible products. He believes that if the protection industry falls on the right side of the retail distribution review, then new enhanced regulation could improve the sector.

“The fact that Icob will allow the ongoing payment of commission and factoring is positive and we can sustain a component of the marketplace in something like its current form. We have also had a focus within our inter- mediary support teams of raising their professional qualifications ahead of the RDR, so we know we are going to be a more professional outfit on the other side.

“Whether or not we find a net gain or a net loss for protection after the RDR remains to be seen but it is possible that we benefit from advisers deciding to become Icob and actively look to promote protection products on a specialist basis.”

Born: Hereford
Lives: Bromyard, Herefordshire
Education: Hereford Sixth Form College, Imperial College, London
Career: 2008-present: director, Bupa health assurance; 2004-08: director, Bupa individual protection; 1995-2004: deputy chief executive and head of client management and development, Revios Reinsurance (formerly Gerling Global Re); 1988-95: marketing actuary, Skandia Reassurance (now Hannover Life Re); 1985-87: finance actuarial role, Pioneer Mutual; 1982-85: actuarial development, UK Provident
Likes: Positive thinking, winning against the odds
Dislikes: People who don’t think for themselves - the ’we’ve always done it that way’ mentality
Drives: Jaguar XKR
Book: Flashman by George MacDonald Fraser is pure escapism.
Film: Lawrence of Arabia
Album: A Night at the Opera by Queen
Career ambition: To improve the public perception and use of insurance
Life ambition: To prepare my children for a happy future
If I wasn’t doing this I would be…A designer or architect

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