Insurance & Risk Professional: Last year was a particularly large one for Gallagher in Australia. How complete is the integration
Andrew Godden: We’ve worked very hard on getting the client-facing aspects integrated. There are still some back-office, behind-the-scenes things that need to be completed. But I think the thing to remember from 2014 for Gallagher and Australia is we actually did three more acquisitions post-OAMPS. We’re not only integrating OAMPS, but also three more businesses with another five offices between them.
IRP: Were there any lessons or innovations you learned from these acquisitions?
AG: We go in looking for things that we can add to their business but equally that we can adopt and transfer over our network or our business. The lesson is really to have an open mind.
Being an American company there are some non-negotiables. You have to use certain systems. But there are only a few and everything else is really about fit-for-purpose, so we’re in a unique position. If we find something really good that we can transport across our business, we’re able to do that. That’s what we go in looking to do.
IRP: The OAMPS purchase brought a huge amount of new people into the Gallagher family. What has the transition been like?
AG: One of the things we found really positive is that you’ve got a 700-strong insurance broking business, that has previously been run by a retail conglomerate, now owned by a business that has as its core function doing the exact thing they do every day. That is really quite exciting.
I firmly believe that this is a relationship business. It is all about people.
I made a pledge to visit all of the branches in the network and meet everyone in the first 60 days. There are 31 now with the acquisitions. I managed to do it and it took me 66 days; I like to point out there are 14 weekend days in that.
Universally, I found a genuine excitement among staff about the prospect of being part of a company that understood what they did; a company that can talk the language and help them with problems, bring them greater resources, global reach and all the things that a global broker can bring to the table.
Also, in Australia, we were the small buying the big. In some ways, the original Gallagher people were probably more concerned than the other way around, which is natural in such a game-changing transaction.
What was OAMPS is now a very big part of Gallagher. We’re all about growth and efficiency so we like it when one plus one equals more than two. If we can share rather than have to reinvent the wheel or do things in different ways, that’s got to be smarter.
IRP: What’s Gallagher’s appetite for acquisitions in the near future?
AG: We have four dominant priorities, and two of them are about growth. The first is growing organically, through our → existing people and customers, and attracting new customers.
The other one is growth by acquisitions. Globally we have appetite for it. It’s really one of the core capabilities of the company but it has to be about geographical specialty or something that adds to what we’ve got, rather than just being bigger for bigger sake. It would have to be a strategic fit. Again, we see ourselves in quite an interesting space because certainly, we’re probably not quite like the other internationals in terms of the type of business we are. We’re not like the cluster groups. We see ourselves in a sort of a nice middle ground, having a big business balance-sheet and resources delivered in a local environment with a small business culture.
I’m not trying to be cheeky and I’m sure some of the others would say the same. I mean, we’re not a cluster group. We’re bringing ownership, as well as global resources and international opportunities to the table.
Essentially, you do a deal like OAMPS and people all of a sudden know you’re on the map and other opportunities come as a result of that. I hope we do some more but, again, we want to make sure they fit and they add value to both businesses.
IRP: How strong do you see the trend towards consolidation in the broking industry?
AG: I think there will be more of it. As compliance continues to impact resources and costs, combined with the soft market, the challenges of running a small business increase. In most businesses, owners are looking for succession, and they are looking for a safe haven for their staff and their clients. We see ourselves as a really good safe pair of hands for those two groups, the staff and the customers.
IRP: You yourself sold your business to Gallagher before becoming CEO. How does that perspective help when acquiring new businesses?
AG: It’s a nice position to be in when I’m having discussions with potential vendors. You can really talk about what it was like, the process, the pros and cons, the things to be aware of.
Having done it myself and now having been involved in a few, you are better prepared for the actual transaction. It helps both you and the vendor have a better idea of what it’s going to be like after.
I think the more the expectation is met on day one, the better the integration and the marrying of the two companies. That fits us because we’re really looking at a cultural match.
IRP: Given the broader soft market, how do you see Gallagher achieving organic growth?
AG: Well, it’s a pretty simple business really when you get down to it and our main focus is really getting back to basics. It’s making sure we’re always focusing on the client and everything we do is with their best interest at heart.
It’s about having the correct coverages, the correct deals in place to make sure we can be competitive. But really it’s about listening, communicating and servicing the end customer, because at the end of the day, they are the people who turn the lights on.
Gallagher has been building its niche practices and specialties. Being able to provide services to the client in as many ways as they need means you’re becoming a more important supplier and that in turn creates a greater level of client and company benefit.
The other thing about the OAMPS acquisition is that we’ve cross-pollinated well. We didn’t cross over too much and we weren’t just two companies doing the same thing in all areas. It’s been very complementary.
IRP: With competition strong and premiums headed south, how does growth occur?
AG: I think the example I would use is in a couple of the acquisitions we made. They’re growing at exceptional rates because they stick to their knitting, they do their job well and they are connected to their clients.
I’ve said before, unless we can bring something to the table, why would someone use a broker? We need to add value.
People will buy off the internet if it’s cheaper and easier. To some extent, we are competing with the insurers in some of that space because they think they can get a better return by e-trading or direct marketing. That’s fine, but they still have a challenge with distribution which brokers do well.
I think in some ways, we’re at risk of commoditising ourselves a little too much. In a soft market, some of us in this industry chase the price down and maybe forget to add value.
If you’re only focused on the price, something has to give and it’s usually the quality. When you talk to clients who have had a loss, it’s so obvious to see the value in what we do.
IRP: What would say were your goals for the year ahead?
AG: We’ve got a big team of colleagues where we need to invest in through training. At the same time, we’ve got some of the very best brokers who we can use for mentoring and leadership.
For me, it’s really about doing the basics well, giving people tools in their kitbag to help them be able to deliver to clients and some training to back it up. Then there is the challenge of finding the next wave of insurance professionals. As an industry, we haven’t done enough here, although we are doing better in terms of making insurance a career of choice.
In my era, most of us fell into the industry one way or another but you can make a good career. You can make a difference. People say we sell insurance but really, insurance is designed to put people’s lives back together. It’s an honourable and rewarding profession.
What I would love to see is a university offering a tertiary course specialising in insurance. We touch law, finance, compliance, HR and IT. You can apply it all in a great industry that really is one of the few that has transcended all time and economy. The financial world really is underpinned by insurance. Nothing moves or gets built without insurance. If you’re looking for something that has a chance of longevity that has stood the test of time so far, insurance is the thing.
IRP: What are some of the challenges you’re foreseeing?
AG: I think depth of the talent pool is going to be a challenge. The question is whether the ageing population in insurance is being replaced quick enough by the up-and-coming brigade. There’s a lot of great people who attend these conferences and gatherings and it’s really impressive to see the quality of people in our industry now. There’ll be potentially a knowledge gap and a time gap to replace these long-term high-grade insurance professionals, but we will.
I firmly believe that this is a relationship business. It is all about people.