CIO Insurance Summit Presentation October 16-19, 2011
Steven Sheinheit
Chief Strategy & Technology Officer
QBE and QBE the Americas
• Top 20 insurer and reinsurer worldwide with operations in all key global
insurance markets
• Australian-listed company based in Sydney, with offices in 49
countries and more than 16,000 staff worldwide
• The Americas Division, headquartered in New York, conducts
business through property and casualty insurance subsidiaries in the
United States and Latin America
• Third largest manager and provider of capacity in the Lloyd’s market
• Celebrating 125th anniversary in 2011
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QBE the Americas at a glance - 2010
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Based on 2010 gross earned premium.
• Portfolio diversification by business
class, geography and production source
• 2010 GWP of $5.2 billion and 89.7
combined ratio
• 2009 GWP of $4 billion and 89.7
combined ratio
Recent performance
QBE focuses on Underwriting financial performance and continues to perform well in a difficult
market
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QBE the Americas Forecast 2011 GWP
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25.6% Financial Institutions
21.8% Crop
19.2% Program
16.7% Major Brokers & Regional
10.3% Latin America
6.4% Reinsurance
• Estimated 2011 GWP of $7.8B
for FY 2011
Right on Q: QBE the Americas’ 5-year Strategic Plan
Initial Observations
• Establish the Strategic Plan Working
Group to complete a transformation plan
and roadmap
• Create a sense of urgency to ensure
timely actions are taken with clear
accountability
• Commit to improved communication,
strong leadership and more employee
engagement
• Drive strategic plan development with
initial change processes and new
approaches to deliver near-term
improvement, long-term intent and
optimal outcomes
Management Actions
Right on Q was born out of a diagnostic that revealed improvement opportunities
People and
Performance
Product and
Distribution
Process and
Technology
Data
Governance
• Many talented people wanting to excel
• Varied culture and engagement across
locations with risk of increased staff
turnover as economy improves
• Lack of strategic intent and common view
of fundamental business aspirations
• Many loyal producers and agents
requesting easier policy processing
• Multiple iterations, duplicative functions
and activities with no common view on
distribution/product management and
other processes
• Redundant technology environment
requiring streamlining and rationalization
• Lack of data standards and consistency
that create inefficiencies
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Right on Q development approach
Define
Opportunities
Prioritize
Opportunities
and Define
Strategies
Define Future
State
Evaluate current
performance and
productivity, including
• Product profitability
• Distribution reach
• Process efficiency
• Technology
capability
• Data management
• Talent management
• Change readiness
• Economic factors
• Competitors and
best practices
• New products and
channels
• Key operational
benchmarks
• Key opportunities
and potential
initiatives to
achieve best
practice/ target
performance
• Fit with
strategy/capability
• Attractiveness
• Clarify timing and
approach
• Critical path
activities
• Risk mitigation
• High-performing
organization
• Key
products/markets
• Target operating
model
• Supporting tools,
platforms, and
capabilities
Conduct
External
Analysis
Assess Current
State
Business
Imperatives
Strategic Plan
Initiatives
Definition
Costs and
Benefits
October 2009 March 2010
High Level
Roadmap
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• People
• Customer
• Products
• Operational
Excellence
• Information &
Analytics
Right on Q development timeline
Milestones
Activities
Initiation Strategy
Offsite
Board
Meeting
Board
Meeting
July ‘09 Sept ‘09 Oct ‘09 Mar ‘10
Determine Inputs for the
strategic plan
Present strategic plan
approach and status
Present the strategic plan
Prepare for Offsite Develop Strategic Plan Approach Complete Strategic Plan
• The strategic plan was developed by the Strategic Plan Working Group, comprised of 25 full-time
senior resources from all major areas of QBETA, and 5 Strategy Team members
• The QBETA Executive Management Board actively participated in the development of the plan
Implementation
Planning Timeline
Coming up with Right on Q was a very intensive process involving 30 dedicated resources for
almost 9 months
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Right on Q Output
Right on Q selected 10 key initiatives, constructed plans, and identified costs/benefits, owners for
each
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Initiatives Considered
RETAINING AND DEVELOPING PEOPLE
PRODUCT MANAGEMENT
DISTRIBUTION
REGIONAL PORTFOLIO RATIONALIZATION
SPECIALTY MGA/PROGRAM BUSINESS
REINSURANCE PORTFOLIO
TRUE SPECIALTY/ MIDDLE MARKET EXPANSION
AFFINITY AND BANK DISTRIBUTION
WEB BASED DISTRIBUTION
BRANDING STRATEGY
SALES EFFICIENCY
POLICY ADMINISTRATION AND UNDERWRITING SYSTEMS
POLICY ADMINISTRATION CONSOLIDATION AND STP
CLAIMS
PRODUCT ARCHITECTURE
COMPLIANCE/PRODUCT FILING
FINANCE CYCLE TIME REDUCTION
VENDOR MANAGEMENT
MIS
TECHNICAL INFRASTRUCTURE ALIGNMENT
FOOTPRINT RATIONALIZATION
DATA GOVERNANCE
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2
3
4
5
6
7
8
9
10
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12
13
14
15
16
17
18
19
20
21
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Resulting Initiatives
PEOPLE AND PERFORMANCE
PRODUCT MANAGEMENT & DISTRIBUTION OPERATING MODEL
REGIONAL PORTFOLIO ENHANCEMENT
MGA OPTIMIZATION
TRUE SPECIALTY EXPANSION/ MIDDLE MARKET LAUNCH
CORPORATE PARTNERS LAUNCH
UNDERWRITING AUTOMATION & POLICY ADMINISTRATION TRANSFORMATION
CLAIMS
VENDOR MANAGEMENT (INCLUDING CLAIMS & REAL ESTATE)
DATA GOVERNANCE
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2
3
4
5
6
7
8
9
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Pro
du
ct
an
d D
istr
ibu
tio
n
Pro
cess a
nd
Tech
no
log
y
Pro
du
ct
an
d
Dis
trib
uti
on
Pro
ce
ss
an
d
Te
ch
no
log
y
Right on Q Impact
Incremental Benefits and Costs to Fund Right on Q Initiatives ($MM)
2015 2014 2013 2012 2011 2010
Non-Tech Costs
Tech Costs
Cost Take-Out
Underwriting Profit
As part of Right on Q, detailed projections of costs and benefits were made in cooperation with
business and IT. Initiatives target cost take outs and underwriting profit increases through
premium growth
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Need for new IT Solutions
Business Shifts IT Solutions
• Complex regulatory environment (US
states)
• Increasing M&A activity
• Increasing direct selling capabilities
• Climate change
• Business intelligence enabling greater
market segmentation
(e.g., affinities, corporate partners,
independent agents, brokers)
• Lifestyle and demographic changes
• Improved speed to filing products
• Lower cost – paperless applications
with electronic workflow
• Speed to market – business rules
updated by the business, modular
architecture
• Straight through processing, including
rules based underwriting
• Sophisticated predictive analytics
• Effective internal and external
interfaces
• Sophisticated business intelligence
tools
• Value added service – self-service
and mobility
Right on Q identified and addressed Business shifts that required new technology solutions
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IT as a Differentiator for business success
Time
Differentiation
Reliability
Cost
Value
Co
mp
lexit
y
Hie
rarc
hy o
f N
eed
s
High Service Level Stable environment with
low number of disruptions and ever-improving
security and protection capabilities
Lower Costs Continued cost efficiency
improvements as business volumes and
services increase
Higher returns New Governance processes
emphasizing project prioritization, project
implementation and benefits tracking
Growth New systems requested by our
Business Units to provide capabilities that will
differentiate QBE in the marketplace
With Right on Q, IT addressed simultaneously all areas of the Hierarchy of Needs
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Ten Critical Success Factors
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1 Bold End Goal • Provide clear and compelling vision
2 Best people • Secure best talent. Don’t settle for “whoever is available”
3 Active Engagement of
Key Stakeholders
• Secure engagement at right seniority level
• Free key stakeholders from their day-to-day jobs
4 Strong Program
Management
• Beware leadership void; make people accountable
• Engage/Hire Program/project manager support, as needed
5 Detailed Roadmap • Provide sufficient detail of milestones and decision calendar
• Factor enough time for project approvals, team mobilization etc
6 Effective Governance &
Empowerment
• Implement process to resolve competing & shifting priorities, maintain focus
and document benefits
7 Formalized Change
Management
• Inform/engage employees not involved in plan design
• Focus on communication and buy-in
8 Business IT Partnership • Jointly agree what IT can deliver given timeframes, legacy systems, funding
and resources
• Avoid scope creep
9 Quick wins along the
way
• Avoid “never-ending” project feeling
10 Evolving Change Plan • Update plan as new priorities emerge (acquisitions, market events, regulation
changes etc) but stay true to original cost and profit objectives