For all the financial clout of the reinsurance market, it remains one of the lowest-profile businesses of the City. RGA Re UK managing director David Gulland recalls that just after taking over as MD last year, he was recruiting to fill several jobs at the firm when he was told by a recruitment consultant that they were “the best kept secret in UK financial services”.
Gulland says he is not sure if this is a good thing or a bad thing but the number of people employed in reinsurance belies the impact of the sector.
RGA may not be a household name in the UK and, like most reinsurers, has relatively low staff numbers for the size of the business, with 72 full-time staff, but last year it overtook Swiss Re to become the biggest writer of new individual protection business in the UK. The UK is one of the key markets for RGA and is generally the company’s second-biggest earner after the American business.
Gulland says he is determined to use the size and influence of the business to drive innovation as well as greater take-up of individual protection.
He joined RGA in April 2009 after 25 years as a consultant for Deloitte and he says he is passionate about helping to drive the evolution of the industry. He says the decision to move to RGA was the desire for a new challenge. “Being a boring actuary, when you have a mid-life crisis, you can’t get a mistress or drive a motorbike, so I thought I would go for a job change instead.”
The decision to move to RGA was also driven by a desire to improve the industry. “As a consultant, you are always trying to implement things but you are on the outside. I feel I am getting a bit closer to the sharp edge. I am not getting as close as IFAs, who are doing a really good job of selling, but I am getting closer to increasing the level of protection in the UK because that is what I really care about.”
Part of that evolution is for RGA to continue to help provide IFAs with innovation, both in the type of service they receive and in product design.
“As a company, we are trying to find ways of streamlining the process. We are looking at the underwriting, does it have to be so long, or how can we find a way of getting the time and the cost down so people want to sell more protection?”
He says RGA UK is looking to expand its share of the income protection market. “Strategically, we are looking at the need to diversify away from term insurance and critical illness. We need to look more at income protection or simplified income protection and at group business as well.”
The company is also looking closely at the long-term care market. With a new Government commission on long-term care and insurance looking like the preferred option, he says there may well be significant opportunities in the coming years.
“The hard, fast facts are people need to make bigger provision. It may take us a long time to get there but we are doing the research now and whether it is three, five or 10 years, I want to make sure we are there when the market does take off.”
In the meantime, he says the need for life cover, critical-illness insurance or income protection has not gone away.
He cites the recent example of a near neighbour, a self-employed entrepreneur, who died suddenly without sufficient insurance cover. His wife had to sell the house, move into council accommodation, take the kids out of private school and get a job at Tesco.
“Why didn’t his adviser make sure he had enough life cover? Cases like that bring it home to me.”
Benefit and welfare cuts mean the need for income protection is increasing.
“With the state changes and employers holding back, people need to understand that an inability to work will hit people. You cannot rely on an employer or the state to make good for you.”
Gulland says he is frustrated with the lack of awareness of protection generally and is keen for the company to help keep it at the front of advisers’ minds when it comes to giving advice. But he says the need to educate the public and continue to make them aware of protection is key.
“Before the demise of child trust funds, I was trying to persuade the last Government to change the literature to simply say, ’Now you have another child, you need to review your protection.’ The Investment and Life Assurance Group and HM Revenue & Customs said it was too difficult. How is it too difficult to put two lines on a piece of paper? Whether through child trust funds, through Nest, or through changes in employment, we need to make sure people are aware all the time of the need to revisit their protection needs.”
He says the RDR and a change of emphasis from up-front sales to ongoing service should help keep protection needs updated. “It should do, if it works well. The risk is we may well happen is we get fewer advisers in the market. But, conceptually, yes, we should move to a system where it is not just the sales it is regular reviews and we have seen that in other European countries where people have moved away from initial commission.”
Gulland says he has some concerns over continued consolidation in the protection market as too much concentration in a small number of providers can stifle the market.
“It is a shame when you have innovative players such as Bupa and Royal Liver who have moved away from the market. You need choice. I would hate to see a situation where there are four or five companies with the whole market because that can stifle things.”
But Gulland says Solvency II is potentially a bigger risk to the protection industry. “Solvency II is going to be a big force for consolidation, even more so than all the UK industry issues. It is quite ominous, it will force people to look at their risk profiles and economies of scale and will drive more consolidation.”
He says there is a lot that can be done to improve products, quality of service and public awareness of protection. “I do not think there is a silver bullet to resolve the lack of protection in the UK market. I think it is finding a whole array of small things we can do to improve awareness, to improve the distribution, make it simple so everyone wants to sell protection and everyone wants to buy protection.”
Born: Ditchingham near Lowestoft, 1962
Lives: Epsom, Surrey
Education: St George’s English School in Rome, studied maths and economics at Durham University
Career: 2009-present: managing director, RGA Reinsurance, 1983-2009: joined Bacon Woodrow as an actuarial trainee and stayed with the business through its evolution to become an associate partner at Deloitte
Likes: Positive thinking, creativity, finding ways of helping people grow, team players
Dislikes: Egos, pessimism, people who enjoy creating barriers, monotony
Drives: Toyota Prius
Book: Catch-22 by Joseph Heller
Film: Paris, Texas
Album: Who’s next by The Who
Career ambition: To increase levels of protection in the UK
Life ambition: To take a really stunning photograph
If I wasn’t doing this I would be…A better husband and better father