There has been much speculation about who will be appointed CEO at Aviva and Direct Line Group. With Scott Egan being recently appointed CEO UK & International at RSA, there will have been some chat around the water-cooler about internal candidates being front runners elsewhere! But if an industry insider were appointed to either of these roles, would it reflect badly on the sector as a whole? Is the Insurance industry seen as unattractive by high-quality out-of-sector talent for these high profile leadership roles?
Whilst there may be an argument that the Insurance industry isn't the most attractive destination for today’s out-of-sector leaders, I don't believe this is necessarily such a bad thing.
For starters, there's no recent evidence to suggest appointing from outside the sector will result in better financial results and/or improved shareholder value. Were one to analyse the career paths of senior executives within the top 40-50 insurers, you’ll see they are either Insurance through and through, or they came into the sector via banking. Retail banking has proved to be a particularly fertile hunting ground for talent for a number of reasons: it is increasingly driven by digitisation and customer experience, and it sits within a similar regulatory environment to the Insurance industry.
So what is the biggest barrier to Insurers making 'sexy' appointments from the tech or retail sectors, for example?
In a word - Regulation.
Firstly, why would an out-of-sector candidate put themselves into a highly-regulated position? Secondly, running a modern-day insurer is so complex and the regulatory environment so onerous, is it likely an out-of-sector candidate would get regulatory approval anyway? There are exceptions, however. Historical lateral hiring successes include Paul Geddes, the outgoing CEO of Direct Line Group, and Steve Langan of Hiscox. Both came into the sector having succeeded in high profile marketing roles in FMCG. Yet in both cases they were initially appointed as marketers prior to stepping into the CEO role (I'd even argue that were such internal appointments to be made today, they might face difficulty gaining approval from the FCA and PRA). There are of course examples of non-FS industry CEOs running Insurance businesses in the Insurtech space. Lemonade and Trov were both found by tech sector entrepreneurs, but neither has posted profits yet.
There’s no doubt that the sector needs to recruit from a more diverse pool of talent, and should seek to hire creatively, from sectors that 'do it better' than Insurance. This happens regularly for senior roles across tech, data, digital, customer experience, and marketing. When discussing such hires with clients, we always recommend looking outside sector, and are increasingly finding that clients want to compare the best the sector has to offer with the 'best of the rest'.
As for the next Aviva and Direct Line Group CEO, I'm confident they will be a tried and tested sector leader.
If you would like to discuss this article further, learn more about The Norman Broadbent Group, or discuss specific people or organisational challenges, please do not hesitate to contact Clare Nash via clare.nash@normanbroadbent.com or on +44(0)7483 015591
*This article was written prior to the announcement of Aviva and Direct Line Group's next CEO