‘Whoever owns the customer can own the business’

Tomorrow will be Andy Warren’s final day as head of claims Supply Chain at RSA. It was announced on Monday that he was leaving the insurer after nearly two decades, but he says he has no intention of leaving the industry.

bodyshop magazine reported the news of his departure on Monday morning, which Andy confirmed in an exclusive interview later in the day.

He said, ‘It’s a bit of life decision. I’ve been at RSA nearly 18 years and just thought it was a good time to move on. RSA has been very good to me and we part on very good terms.

‘But I will definitely be going back to work. I’ve been in the industry for 18 years and I like the changing dynamic within the motor business – if I didn’t I’d have jumped ship many years ago. I’m pretty sure in the next few years we’ll see further change and that’s one reason I’m staying in the industry. I enjoy those challenges.’

As head of supply, Andy’s remit at RSA covered more than just motor insurance. However, he believes that sector is where the market is toughest. He said, ‘The motor market is so challenging for the big insurers. I’m head of supply chain so I look after the home, commercial and pet world as well, and that wasn’t so financially constrained. But the auto insurance market is really, really tough.’

He says one of the biggest challenges is cutting back on expenses, and admits the pressure on insurers had been turned up a notch by the retail models in the market. From a sales perspective, Andy believes the aggregators are a growing influence. He explained, ‘To be successful in motor insurance you have to expose your wares in ranked order against all of your competitors. It’s a tough market when you’re trying to sell an already-marginalised product. But to sell it you have to show the world where your strengths and weaknesses are.

‘Going forward, I think the aggregators are going to control the market; most people I know when they want get motor insurance don’t phone up the insurers, they go straight on money supermarket.

‘And then you’re up against all of the associated businesses within the industry, like accident management companies and claims farmers. There are a lot of noses in the trough, a lot of people feeding off an insurance claim. I’d like to think I was one of the most effective supply chain people in insurance but, as fair as I am, there are only so many times you can go back to a supplier and ask for money off. You have to look at your own internal expenses as a company and ask if you’re efficient and effective.

‘When you’re up against the smaller operators who outsource everything, you have to be really nimble. But in an industry that’s so heavily regulated it’s difficult to do that quickly.’

It’s not just the smaller companies making life difficult for the big insurers. Andy also believes some of the biggest companies in the world will enter the market further down the line.

‘The playing field is becoming more level and there are more and more people coming into car insurance. It’s not the most profitable line of business in the world, and if you’ve got profit sheets like Amazon and Google have, why would you want to go into something where for every pound you get in you’re paying out 98p or, in some instances, for every pound you get in you’re paying out 105p? But they’ve entered so many other sectors, why wouldn’t they go into financial services, like supermarkets did?

‘I absolutely see those companies entering the insurance market, 100%. I don’t know if it will be any time soon, but underwriting and pricing is all about experience, looking at the form of the driver, how they drive and where they drive. With telematics and onboard diagnostic technology, that data will be a lot easier to get and once you’ve got it you can estimate the probability of a car crashing.

‘It’s access to data and access to people that makes the difference. Whoever owns the customer can own the business.’

The battle for that data is only just now beginning, but Andy believes that, ultimately, who controls it and how they use it will shape the industry going forward.

He concluded, ‘I think there is a big change to come and I don’t think we’ve worked out how it will manifest itself yet. But motor is just the toe in the water to the general insurance market. We should all be looking how we can gain customers with a more holistic proposition. How can we insure your car, and your wife’s car, and your kid’s car, and your house, and your dog and your travel? We’re all trying to move towards that.’