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SENIOR LEADER INSIGHTS

It's not very often that as young professionals we have the opportunity to get to know and ask senior leaders for advice. With ‘Senior Leader Insights: an interview with…’ young professionals have the opportunity to hear directly from market leaders and ask the questions that we really want the answers to.

In this edition, we interview Steve Hearn, CEO Ed Broking.

An Interview with Steve Hearn

Did you always want to become CEO, when did you realise you were on track to become CEO, and did you take any pivotal steps to get there?
I first declared that I wanted to be a CEO was when I was working at Marsh, quite early on in my career. Marsh had an Accelerated Leadership Programme and I was one of the guinea pigs. Part of the process was to be interviewed about what our aspirations were and interviewed by psychologists. Some of my peers from this programme included Dan Jones, former Marsh vice president, Mike Hammond, recently Chairman of Lockton International, and a whole group of people who went on to be very successful in their careers. So I think that it is there that I would root the decision. 

How did I know that I was on track to achieve my aspiration? Actually, that was really only when I first became a CEO. I left Marsh in 2002 and thought I knew everything, I was Managing Director at Marsh, and one of many who claimed to be the youngest ever. It turned out that I didn’t know everything. I joined a company with less than 100 employees and became their CEO. I had been head of divisions and business units before but when you are the CEO of a company, you realise that there is a long list of things you don’t know. I had to work out what trading and hedging Foreign Exchange meant, build a direct relationship with the regulator, understand, by example, employment law. There are a whole lot of things that you don’t need to learn at a big company because there are teams of experts working with you who take care of that. It was only at the point that I actually became a CEO that I realised that it really was what I wanted to be.

What advice for building a successful career would you give to young professionals?
Move around. That may seem a little controversial but that doesn’t always mean move outside of the company you are in. But when people knock on your door, or even better, when you knock on their door seeking opportunity, make the most of it. Even if you are the most successful in your particular area, you can only get so far up an organisation. I believe that the more rounded you become by getting exposure from lots of different disciplines, the better leader you become.

As an example, when I was asked to be the CEO of Willis Re, I had never been a reinsurance broker and I became CEO of the third largest reinsurance broker that had ever existed. I was asked to take the job not because I was a reinsurance specialist, but because I was a leader. It was an opportunity for me to learn about the reinsurance business. All of the pivotal moments in my career have been an opportunity to learn. Bank the experiences you gain,don’t hurry through and don't stop learning but when you get offered the next opportunity, it should be about how you develop.  

What do you believe to be the biggest challenge faced by young professionals in the market today?
The London insurance market is going through tremendous change; we may not acknowledge it and we may not always want it. But there is no denying there is a lot of change going on around us as the rest of world grows up and we are not embracing that. It is difficult to predict what the London market will look like in five let alone ten years hence, hopefully I’ll still be in the market. Again, it’s difficult to know exactly what the challenges will be, but my guess would be that it will include embracing diversity fully. I think really going out there and harnessing the skills that are relevant to the future such as languages and technology because they will be huge influencers. As I have said, the opportunity to get out in the world is second to none; if someone asks “would you like to take an overseas placement?” grab it with both hands! The old ways of expecting the customer to come to London isn’t the way now. In short I think the biggest challenge is trying to guess what the future is and that wasn’t the case when I joined the market. It was very settled and it hasn’t really changed in almost 30 years. There will be more change in the next five years than we have seen in the last 30 in the London insurance market.

How do you see the role of the broker changing as more insurers aim to become paperless operations and business moves toward e-trading platforms? 
So first of all, let’s hope that brokers are about more than just about creating paper. Recently, there was a conference where the Chairman of Lloyd’s, Bruce Carnegie-Brown, described a business model of the future. Technology capable of matching capacity to the customer instantly, mid-flow being able to handle a customer’s claim and all sorts of interesting stuff - and I agree with a lot of his comments. Much more focus on data analytics, humans only operating where they add value etc, but for me the difference is that I think he described the broker of the future, rather than the insurer or the Lloyd’s Corporation of the future. 

We often look at personal lines as a reference point, they seem to move much quicker with change, and talking about how the broker on the high street doesn’t exist anymore, he is generally right. But he went on to describe aggregators. Aggregators are brokers. Go Compare is a broker, not an insurer. If we look outside of the industry, at other big business models; Amazon is a broker, it’s an intermediary. Ali Baba is an intermediary. They don’t make stuff, they are exchanging what customers desire in a very technologically efficient way, bringing together supply and demand.  So I believe, and if we think about 60% of global Property and Casualty is handled by three brokers, that actually it is the underwriter who should be anxious about disintermediation, as capital gets closer to the customer. It’s the broker who has liquidity of independence with the customer. I see brokers very much as the business model of the future, I may be extremely biased but I really believe that to be true.

There has been a significant rise in the number of new MGAs and start-up syndicates being formed, what particular challenges do you think these companies will face that people should be aware of?
There is currently a bit of a flurry of Managing General Agent (MGA) activity but again, it’s down to supply and demand. There is a lot of capital out there looking for a home and MGAs offer good cash-flow and a non balance sheet risk. That’s going to be attractive for capital. We saw CFC, a great business, change hands at a 15 times valuation of forward profit, which is just breath-taking and illustrates the amount of demand out there for getting involved in MGAs. And I don’t see a lull in that in the short term. In the foreseeable future there is going to be more and more of it, certainly our business model at Ed involves being in the MGA business. Of course there are challenges that come with it. For instance intellectual property, the availability of underwriters out there in the market, macroeconomics, regulation - all the ‘normal challenges facing the insurance industry generally. Issues that particularly come with broker-owned MGAs is getting appropriate segmentation of duty between a broking activity and an underwriting activity. That can be tricky to do well but it’s definitely doable. 

What’s the end game? Where does it all go? If we look back at history, MGAs that stick with what they know and are good at, have a successful business model and there are lots of examples. I think that MGAs that over diversify, either geographically into parts of the world that they don’t understand or into product lines that they don’t understand, that’s when it can all go wrong. 

Rumour has it that you are a keen marathon runner, how do you find the time to stay fit and run one of the largest broking firms?
Most mornings, at 5am, my alarm goes off, I run six miles to the train station, get on the train to come into London and at the end of the day I run six miles home the other way. I probably do this three or four days a week, and when I don’t run I do the same journey with my Brompton. My life is busy. I’ve got a busy job, I’m a Dad, a husband and I make sure that these priorities are very firmly at the top of the list, but running is a passion so I find the time, even if it means getting up a bit earlier.

What practical steps will you take in the next 12 months to empower young professionals at Ed? 
There are three things we are focusing on here at Ed. First, keep the Executives’ doors open. There is a group in the business that has formed, we affectionately call them “climate changers” and they are cross-division, cross-product class, young professionals in the business, self-selected not appointed or even encouraged by the executives, who, together, are trying to drive a more positive environment for us. As it has formed, we are now encouraging them and involve them in things that we are working on at an Executive level to get their opinion as a community. 

Second thing is about skills. A lot of companies talk about the development of talent, and I wouldn’t say that we are perfect in any way, but we are investing in the talent in our business. Offering specific courses, opportunities for people to develop, I am encouraging a couple of people to do MBAs, we support the professional qualifications of our industry and are advocates of them, we participate in the LMA’s Leadership programme when invited to.  Relatively, we do OK but we could do more. Our next step is languages and we would like to set up opportunities during lunchtimes and evenings, for those that want to, to develop their skills in languages. 

The third thing I would say is that we have created a mentoring programme in the business. We are just beginning to roll it out.  Our Executives, including myself, will each have the responsibility of mentoring a couple of people in the business. Part of that is of course about getting to know them, understanding what their capabilities are and we will start moving people around the business. Back to the earlier point of knocking on the highly successful, up and coming, marine broker’s door and saying “we would now like you to go to our Aviation department, or political risk department or move to Dubai”. We want to encourage people to move around the organisation because my strong belief is that the person who ultimately will sit in the chair behind my desk will have done more that sit in one geography or one product line. Let’s start practising what we preach.



Who has influenced you the most in your career?
I’ll give you two answers; first one is my wife. Both times when I decided that it was time to move on, the person at home spotted it first. I spring out of bed in the morning and at times she struggles to get me home at night; I love our industry, I love our business but the person you sit at the breakfast table with at the weekend is very perceptive as to whether you are getting what you need, and giving what you need to the opportunity that you’ve got. I’ve resigned twice and both times it was my wife who said it was time to move on in my career. And both times she was right.

I’ve had some fantastic bosses and I have been very privileged. From my first boss in the city, Jacqueline Heron, through to some of the most senior leaders in our industry, I have had the privilege of working for Plumeri, Millwater, Dan Jones, David Margrett, lots of brilliant leaders. They have all been an influence. You take from them good things and perhaps you also spot some things that you try to do a little bit differently. To single out one would be difficult. I think so many people have an influence on what you do and I’ve only mentioned the bosses; you’ve also got peers, and many other people who have been an influence. There are many people where I have been their leader and have learnt things from them and I continue to learn every day.

If you weren’t the CEO of Ed, what would you be doing?
I’m passionate about our industry so whatever I did I would need to be passionate about it. There are a couple of things which are front of mind; I run, so if I could find something to do with that, that would be really cool. My wife and I, and some of our kids, are scuba divers so if money was no object, owning a scuba diving shop on a beautiful beach somewhere, keeping in touch with the industry through the internet rather than putting a suit on would perhaps be the way for me.

 

Our next Senior Leader Insight Interview will be out in March so keep an eye out for the announcement of who it will be with!

 

Steve Hearn 


Steve is Group CEO of Ed. Prior to joining Ed in November 2015, Steve served as Deputy CEO of Willis Group Holdings. He joined Willis in 2008 as a result of its acquisition of Hilb Rogal & Hobbs (HRH) and held a number of senior roles including Chairman and CEO of Willis Global, CEO of Willis Re and CEO of Willis Limited, the Group’s principal UK regulated entity. Prior to its acquisition by HRH, Steve was Chairman and CEO of privately owned London wholesale insurance broker, Glencairn Limited.

Earlier in his career, Steve was President and CEO of Marsh Affinity Europe, having previously held a number of positions at Marsh and Sedgwick Limited. He has served as Chairman of both the London Market Group (LMG) and the London & International Insurance Brokers’ Association (LIIBA) and as a Vice President of the Insurance Institute of London. Steve is executive director of global broking group Brokerslink.

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