Gable Insurance's first decade: seven lessons for start-ups

The announcement came after the publication of the group's results for 2015 which revealed a £24.3m pre-tax loss for 2015. In May, Gable had insisted it would meet meet the solvency capital requirements under the full Solvency II regime.

The Liechtenstein-domiciled insurer's progress has been followed with much interest since its launch 10 years ago, not least because - as the Gable hierarchy has repeated over the past decade - the regulatory environment does not make it easy to launch insurers from scratch.

Which raises the question: What lessons could be learnt from Gable for anyone brave enough to set out on the same journey today? Here are some thoughts:

1) Be careful not to over-egg it at the start

Gable launched with a focus on all aspects of construction industry risks in January 2006.

Initially concentrating on the UK and Ireland, the subsidiary of AIM-listed Gable Holding said it had £30m of capacity for year one. However, in a bold show of strength the business outlined plans to increase this to £100m by year three through a combination of acquisitions and organic growth.

"We have created a new kind of insurance company, one that is designed to deliver commercial advantage and to meet the changing needs of today's construction industry," said William Dewsall, the chief executive of both the insurance and holding companies, pictured.

However, by summer of 2009, Gable was reporting static gross written premium of £5.9m (2007: £6.0m). A far cry from £30m, let alone £100.

2) Timing is everything

One of the key reasons that Gable struggled to achieve its objectives as quickly as it hoped was the state of the market when it came to the table.

In an 2007 interview with Post, Dewsall conceded that a slump in pricing, which he partly attributed to the "suicidal pricing" of rivals, meant that the timing of Gable's entry was less than perfect.

"Our targets have changed since we established. We thought there would be more premium around than there is. We hope to write between £15m and £20m in the year 2007 to 2008, but that will depend on the quality of the business out there," he added.

In 2013, he reflected: "Our timing was pretty good, although in some ways it was pretty horrific being at the start of the worst recession for 100 years."

3) Europe offers growth opportunities

In 2007, Dewsall said "you need to embrace the European Community".

Gable more than doubled its gross written premium to £8.63m (H1 2009: £4.0m) for the six months ended 30 June 2010, which it part attributed to continued growth in France and a Norwegian product launch. Opportunities it pursued to break its reliance on the "stagnant UK" market.

The split of business written by 2010 was approximately 45% in the UK and 55% in European markets.

Adding to France, Norway, Spain and the UK, Gable was licensed to write business in Belgium, Denmark, Germany, Ireland, Italy, Netherlands and Switzerland by 2011. Sweden followed in 2014.

 
4) Regulators, damn regulators

From the off, Gable ran into issues, not least in 2007 when it entered discussions with the Department for Work and Pensions in the UK over whether it needed to amend its employers' liability policies. It followed concerns that its EL wording may not comply with the requirements of the Employers' Liability Act 1969.

These were soon sorted, but were a storm in a tea cup compared to its efforts to get up to speed with Solvency II.

As early as May 2011, Gable announced a "complete review" of its business in preparation for its implementation, with Dewsall accusing the [then UK regulator] Financial Services Authority of failing to support small insurance companies.

In 2013, he noted Solvency II was designed 10 years ago for a completely different market and era, adding: "Europe has considerable issues to overcome that are far more important than some regulatory position on solvency that has been completely mismatched and badly handled. It has cost the industry a fortune to comply with something that it cannot yet understand."

5) Your credibility can be bolstered by blue chip partners

In December 2012 Gable entered a five-year partnership with Towergate, with Barrie Cornes, insurance analyst at Panmure Gordon, suggesting the deal would increase Gable's GWP by 30% in 2013/2014, based on an anticipated £14m in GWP per annum.

He branded the deal "hugely positive" for Gable's profitability noting it is "further evidence that it has established itself as an accepted provider of insurance products". Panmure listed Gable as its "top pick" for 2013 and a likely takeover target.

Further deals followed with Aon, Arthur J Gallagher and Iprism.

6) How much do you want to control your destiny?

Dewsall was involved with a number of brokers before launching an underwriting agency, Hogarth, which ran into its own problems.

Once things had calmed down and he'd put thoughts of retirement to bed, he did make one promise to himself - he was not going down the agency route again.

"The problem with underwriting agencies is you are controlled by the corporate carrier, so when it changes its global plan, it can pull the account - and that is what happened with [Hogarth's underwriter] Generali."

7) Choose your regulatory domicile wisely

Before Gable chose Liechtenstein as its home, it was more commonly known as a popular domicile for unit trusts and life companies. Once there, Dewsall admited there were advantages and disadvantages to being its [then] only registered general insurer.

"We are spotlighted a lot but we have a good relationship with the regulator, which is very keen to grow that area of the market," he commented.

"The tax advantage is considerable and we can easily passport into any area of Europe. We trade in a number of countries, and our expansion in 2013 is supported by a regulator that can enable things quickly."

He added that dealing with a relatively small regulator compared with the FSA also had distinct advantages.

"You can't have a personal relationship with the regulator, but it allows you to go to it and have an open dialogue rather than putting up barriers, which facilitates business."

So there you have it, a look back at the Post archive certainly paints an interesting roller-coaster ride of a story, which others could no doubt learn from if they are planning to launch a full-stack insurer.

Whether they do - and I suspect, this being insurance, they won't - is another matter altogether. And one that could leave them open to similar issues to those faced by Dewsall & co, and - to quote the band William used to drum for, Thin Lizzy - Waiting For an Alibi, when they run into their own problems.

If only they'd read this blog!