Steadfast MD and CEO Robert Kelly’s contributions to broking is widely acknowledged, judging by the awards and trophies that adorn the company’s reception area, and his creation of the cluster group has been hailed as an inspiration for the sector. Insurance Adviser talks to the man about his achievements and where he sees broking headed in the future.
Insurance Adviser: Winning the Lex McKeown trophy, it’s a recognition of all your contributions to the industry. What do you consider your biggest achievement?
Robert Kelly: The maintaining of small to medium enterprise broking in Australia as a powerhouse for two decades is a big achievement.
When we started this, there was a lot of pressure on this section of the industry… Small to medium size brokers came together and realised that they needed to change the way they individually operated, to work more as a collective and work more consistently to achieve best in practice compliance, policy wordings, and training.
Everyone thinks that I had this grand plan. I had no grand plan. I had a survival plan for small to medium size brokers located in Sydney to make sure that if we grouped together we would survive. It was purely about survival and excellence. Let’s do the best we can. Let’s provide to our clients the best in class in everything we do.
At the time, I was circumspect that it might not happen, that brokers would not pull together but they did; and they continue to and that’s kept the strength. That’s why, commercially, it is the best thing we ever did.
We started with 43 brokers in the Parramatta Bowling Club and we thought that if we could get a couple hundred million dollars in turnover we would become relevant in the market and our brokers’ sales last year was $6.5 billion. It just shows you that if people pulled together and have the same desire about what they want to achieve in this country they can achieve anything. There are no barriers.
That is what we have achieved and something that when I eventually leave the industry I’ll look back on and say that was a game-changing position for the Australian market at that time.
IA: What are the biggest changes to the industry that you’ve seen in your time?
RK: The biggest change happened in 30 June 1986, when the Insurance (Agents and Brokers) Act became law (and as amended in 2003). What it did was it allocated responsibilities for the selling of general insurance by intermediaries and gave responsibility to the various participants in the chain.
We have always been strong supporters of NIBA because we’ve seen that one voice representing the industry is going to be more powerful than individually trying to do it ourselves.
We’ve had an extremely robust form of legislation that gives us the ability to say that insurance broking is a profession rather than a sales conduit. It put responsibilities and sanctions across all participants in the process and gave a clear pathway for developing relationships on a stable basis. In other words, people knew what they had to do and if they didn’t do it they knew what the sanctions were.
In light of all that is going on in financial services currently, the fact that we have been able to keep under the radar is testament to two things:
- The bringing together of the two associations [Confederation of Insurance Brokers of Australia and Insurance Brokers Association] to form NIBA. The growth of NIBA through three decades as an astute organisation that is representative of all brokers and that government listens to is crucially important because as a group of individuals, to try and lobby and go to government in a fragmented, fractured way would be a big failure. That’s why we have always been strong supporters of NIBA because we’ve seen that one voice representing the industry is going to be more powerful than individually trying to do it ourselves.
- The government legislating correctly and insurance brokers adopting and using that legislation appropriately, means that we don’t have a lot of the issues that other sectors of the financial services industry have. We are lucky that we’ve had a very strong pathway – the framework is strong and robust and has been around for three decades.
IA: Where do you see Steadfast in five years’ time?
RK: I think in five years’ time, we would have rolled out all the programs that we have been working on. I think the future for us is to keep consolidating our network and to keep offering cutting edge services. And to be fully aware of the digital change that is occurring.
Our London operations will be very strong for the network. We started our London office two and a half years ago and we’ve just been expanding over the last six months and are about to launch the bigger office. We’ve built our London operations for Steadfast brokers… it’s an office for the Steadfast network to do business on behalf of the network in London, representing them.
Our footprint in Asia will also be stronger. For example, we’ve been operating in Singapore for three years and are now about to roll out a Steadfast Singapore network very similar to what we have in Australia. It’s been well-received by brokers and insurers up there. Singapore is our first move into Asia in a more structured manner and then we will probably look at a couple of other jurisdictions.
We are being pushed… to look at China – and we will probably do that… but with a view of just being informed rather than to form views. In the short term, we have no plans for China… To do business there, you have to have a really strong partner, and you have to pick your partner carefully. You really have to understand the way people think and that the structure of how they do things is different to the way we do things here. The way insurance is done there is also quite different. However, we’re crucially aware that if you are going to survive in Asia, you have to be in China eventually, but there are carcasses of many Australian companies up there.
IA: With all the changes that the market is undergoing, particularly with digital disruption, how do you think it is impacting brokers and how do you think they can continue to thrive?
RK: I don’t see digital as a disrupter; I see it as an enabler. I define digital as the ability to collect and move data effectively between all the partners who need to access the data to do business.
With the help of big data, insurers will be able to collect more concise information, which will be more relevant in evaluating their risk appetites, and will be more convenient for the insureds because there will be fewer questions… And those questions will be absolutely salient and will plug straight into the insurers’ protocols for pricing and risk appetite so efficiencies will be gained.
People should look at the performance of the general insurance industry and particularly the intermediated side of it and form their own views about us rather than lob us in with the whole.
In terms of players such as Lemonade and Trove, I see them all as enhancers of how the consumer gets to know about insurance. There will be sections of the market that will love it, there will be sections that will be prompted to think, ‘oh I need to do something about my insurance’ and there will be a section where people will want to speak to people and get advice. We will fulfil that section of the market particularly well. And we will work on what we can do digitally with our client base to facilitate them getting insurance through us.
Lemonade or Trove are designed for people who know absolutely what they want to do. For the most part of the last 328 years that insurance brokers have existed, the consumer still likes to ask a question and get an answer… Think about everything that we’ve done that is digitally enhanced… for the most part… you’ll come to a point where you’ll be vague about whether something applies or not and that’s when you will need to press the button to speak to a real person.
IA: Steadfast has gone from strength to strength, and this is a question that has been asked before, but do you see Steadfast becoming an insurer?
RK: Consider this: we took over Calliden, an ASX-listed company and an APRA approved insurer, and then I sold them. So… people should look at the history of what I’ve done personally.
I have no illusions of what Steadfast is: it’s a network of intermediaries that provide advice for a fee for service, some is commission, some of it is fee. We are not capital managers of insurance companies. We think our strategic partners do a very good job of being insurers, we think we do a very good job of being intermediaries that sell their products.
We have 23 underwriting agencies so that would be 23 small insurers, and really when you look at that, why would we ever consider being an insurer when we get the capital of the insurer and we use it without risk, just fee for service.
IA: How would you change the industry?
RK: What I would like to see, when people talk about financial services, is that they actually delineate between the banks, the life sales people, wealth and general insurance broking. And that they don’t form the view that we are all the same or that we all come out of the one pot. There are two regulators – ASIC and APRA – and people should look at the performance of the general insurance industry and particularly our section, the intermediated side of it, and form their own views about us rather than lob us in with the whole.
I’d also like to see process duplication removed. For example, you have a loss assessor, a claims preparer for the insurer, a lawyer, the insurance company claims department, the broker, and the client. They all have to interact for a claim. There are simpler ways to do that. I think the lack of expertise across all of these disciplines in process and efficiency could be resolved. There are so many different levels of expertise across all those individuals, so if we could somehow all agree on the expertise that is required, and work within that framework, the consumer will be better served.
IA: Do you still get your hands dirty broking, so to speak?
RK: I haven’t worked in [my brokerage] for 12 years, my sons run it now. It’s not possible. [Steadfast] is a monolith.
In reality, we run a fairly strong triage team on insurance placements and claims here – so the experience we have here, including mine, which is quite vast in general insurance broking – means we get to look at problems and solutions across the whole range of the network.
So… if I were a pilot, I could still fly the plane.