As both an underwriter and a broker, Austbrokers founder and CEO Lach McKeough has been at the forefront of the changing suburban and regional general insurance markets.
How did you get into the insurance industry?
When I finished my HSC, I was looking at what I was going to do. While a lot of my friends were going into banking and that sort of thing, I looked into becoming an insurance inspector, as they were called in those days. I had heard that if you became an inspector, you would eventually get a company car. That sounded pretty good to me.
How did the change from underwriting to broking come about?
There were no 'suburban' brokers when I started. Nearly everything was handled directly by the underwriters. I’m showing my age now. And it wasn't just one underwriter either – they all had substantial branch networks. In the mid-1980s, I was working for Mercantile Mutual – which became ING and is now being rolled into QBE – as the manager of its northern NSW operations. These substantial branch networks I mentioned were still well entrenched. To paint the picture, I was responsible for Bathurst, Dubbo, Tamworth, Lismore, Grafton, Taree, Coffs Harbour, Newcastle and Gosford among others. We went to a senior management meeting one day and the idea of buying into insurance brokers was floated. I thought it was a pretty good one, so I went out and bought into a couple of brokerages. I very, very quickly found I had a large conflict of interest so I had to make a choice. That was the starting point of Austbrokers. I founded the company back in 1985, so, really, the majority of my working life has been spent developing and building it.
How have the suburban and regional markets changed since then?
If you look at all of the suburban brokers operating today, most of them started off in insurance and progressed from there as well. As the underwriters started to withdraw from the regional areas, they handed over or sold their business to local representatives. That really was the foundation stone for the suburban broking industry in Australia.
How important do you think the suburban broking sector has become to the whole insurance industry?
It’s become crucial, really. The whole game has changed – brokers now handle all of the distribution in the commercial area. It is a complete change from where it was. I don't believe underwriters could return to direct distribution in that space, even if they wanted to. They just don’t have the resources. It’s hard enough to get good people into broking let alone underwriting. It's a big issue for us all.
What are the biggest influences that have shaped your career?
My career itself has always been a very large part of my life. I think I've been very fortunate that I have had the opportunity to build a business that, in 26 years, has grown from a two-man operation to a publicly traded business [Austbrokers was floated on the ASX in 2005]. I've been very fortunate to have that experience.
What advice would you give to youngsters starting off in the industry?
I think it is a great industry. If you put your head down, it is really up to you where it takes you. I think it's underrated, because it's an industry where you can specialise. It's unfortunate that the industry hasn't really recruited well. It is an area the industry has to focus on a lot more. We all talk about it, but we have to do more.There were no suburban brokers when I started. Nearly everything was handled directly by the underwriters.
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