BearingPoint: The adaptive insurer is the flexible insurer

29 June 2015

To break through the traditional conservatism of the insurance industry, 84% of insurers that have greatly outperformed the competition did so through the adoption of adaptive business models, find a recent analysis from BearingPoint. Through understanding their customers, bringing relevant products and services to market quickly - in response to a measured understanding of current conditions - was correlated with setting these insurers on the path to success.

In a recent report from BearingPoint, titled ‘Adaptive insurance: finding the extra 10%’, the consulting firm explores the kinds of practices that set high performing insurance companies out from their less well performing competition. In a world full of volatility created by, among others, disruptive technologies, demographic changes and the growth of wealth in emerging markets, the traditional reserve of insurance companies is being called into question.

In the BearingPoint’s survey of 25 of the larger insurance companies between 2009 and 2013, the firm sought to identify what set the top performers, those whose share-price jumped almost 300%, from low performers, whose share-price remained flat over the period.

Survival of the fittest

Adaptive performance
As part of the research the consultancy considered the kinds of business practices that were correlated with high performance in the industry. Finding that a “compellingly 84% of the insurance companies categorised as ‘outperforming’,” had, what BearingPoint characterises as, an “adaptive operating model.”

The firm identifies three key leavers with very high mean scores in high performing players with respect to responsiveness and readiness; strong customer orientation (4.45), rapid product and service development (4.00) and early warning indicators (3.92). While capex/opex adjustability (2.42), advanced analytics (3.00) and cloud based sourcing (3.00), have significantly lower adaptability scores.

How can insurers reshape their business model?

Adaptive technique
The most powerful adaptability score, ‘strong customer orientation’, creates the conditions in which businesses are able to better understand the needs of their customers, which includes changing the perspective from products to services to customers, consolidating customer information across product lines and ensuring that customer needs are treated holistically. The second most powerful adaptability technique deployed by high performing insurers is the ability to recognise the customers’ desire and initiate ‘rapid product and service development’ to meet that desire with a relevant product offering.

The third powerful adaptability practice is to have an ‘early warning system’ in place which effectively and rapidly identifies trends that affect the market to produce, and was cited as important by almost 80% of respondents. The consultants note that such early warning system would provide information on things that starts to go wrong regarding individual customer and policy criteria or broader questions such as national and international events, as well as creating the opportunity to create or modify products and services, and/or to engage with customers and prospects.

Adaptive techniques

Supporting adaptation
With underperformance, insurance companies have been looking to streamline their operations through cost cutting exercises that aim at high levels of efficiency. While high levels of efficiency are not necessarily negative for a business, they can come at the expense of flexibility – and thereby adaptability. BearingPoint highlights that a level of ‘slack’ needs to remain which is able to provide room for adaptation, with for every €10 an organisation looks to save in short-term efficiency and performance improvements, roughly €1 should be put back as an investment into the capabilities required for mid- to long-term adaptiveness.

With the world starting to move faster and faster, and technological, demographic and emerging conditions changing rapidly – a move to an adaptive model sooner than later is posited by Matthias Roeser, Partner at BearingPoint Zurich: “Time is running out. If organisations already underperformed when their strategic reviews were running in two-year cycles, their challenges only increase as cycles move to six months or even shorter.”


RSM sells controversial UK wealth manager out of administration

26 March 2019

RSM has overseen the sale of UK financial advisory firm Mount Sterling Wealth out of administration. The company had fallen into insolvency earlier in March, but has been purchased by Quilter Private Client Advisers for an undisclosed fee.

Mount Sterling Wealth is a York-based financial advisory firm, offering financial planning and wealth management services to clients from offices in Mayfair and North Yorkshire. Founded in 2010, the firm has endured an acrimonious relationship with the UK’s businesses community, having been formed by Scott Robinson to move his clients from an old firm, after being sued for advising on investments which failed and were not covered by professional indemnity insurance.

Robinson was allowed to continue working as a financial adviser by the Financial Conduct Authority (FCA), despite being ruled against in court and avoiding further legal action after liquidating his company. The controversial decision of the regulator caused Conservative MP Kevin Hollinrake to state the FCA needed "to take a long, hard look at itself" for allowing Robinson to continue trading.

RSM sells controversial UK wealth manager out of administration

That comment was prompted by the case of Hollinkrake’s Thirsk and Malton constituent, Andy Mohun-Smith, who according to the Yorkshire Post, lost £2 million after trusting Robinson (one of Mount Sterling Wealth’s two Directors alongside David McLaughlin). Mohun-Smith also claimed the saga had a “devastating” impact on his life and health, with the stress involved “undoubtedly a major factor” in the break-up of his marriage.

As a result of the chequered history of one of its Directors, there was little sympathy expressed for Robinson’s firm when it fell into administration in March 2019. Mount Sterling Wealth was placed into administration following historic financing issues, appointing Jamie Miller and Gareth Harris of RSM as joint administrators to oversee the sale of its assets. The York-based firm had around £100 million in assets under administration.

Mount Sterling Wealth has since been sold out of administration, in a deal that preserves both jobs and the continuity of service for its clients. The financial planning and wealth management practice was sold to Quilter Private Client Advisers for an undisclosed fee.

Jamie Miller, RSM restructuring advisory partner and joint administrator, said: "I’m pleased to confirm that the deal preserves all jobs, ensures continuity of service for the company’s large portfolio of private clients and business owners and should result in significant returns for both secured and unsecured creditors which is an excellent result in the circumstances."

Commenting on the acquisition, Dominic Rose, Strategy and Acquisitions Director at Quilter PCA, said, “Mount Sterling Wealth was placed into administration following some historic financing issues. RSM was appointed joint administrators and the business was then sold to Quilter Private Client Advisers. Mount Sterling Wealth’s portfolio of clients will now be serviced by Quilter PCA’s by London, Chester and Shipley offices ensuring continuity of service. In addition, one adviser will join Quilter PCA.”