British Insurance Awards 2011: Momentous change

Switching nine million contracts to insurance policies is no mean feat, but it has paid huge dividends for British Gas Insurance, reports Martin Friel, and provided a platform for continued growth.

The business transformation award is all about, well, transformation and the winner of this award has made quite a change to its business model. In fact it has, from a standing start, become an insurance company of significant size in the UK.

British Gas is nearing the completion of a project that will see it convert nine million contracts held by over four million customers to insurance policies. British Gas Insurance is now a very significant UK insurance company, writing £1bn gross written premium per year.

This achievement is the result of careful research, development of propositions and processes to maximise the opportunities of the regulated world, the engagement and training of 3 500 staff members and 7 000 engineers, as well as building compliance, underwriting, capital management and Solvency II capabilities.

British Gas has reacted to an increasingly competitive market. More providers than ever before are offering a wide range of products at increasingly aggressive price points. On top of this, the economic climate has led consumers to become increasingly cautious when buying discretionary products.

Reacting to these pressures, British Gas set clear objectives for entering the insurance market - to offer customers greater product choice and value, and to become more competitive in order to drive continued profitable business growth.

To achieve this, the company gained a deeper insight into its customers' behaviour. British Gas analysed the reasons why customers left, complaint reasons and rejected claims information, and at the same time it commissioned customer research groups and spoke to its agents and engineers.

It became clear to the company that customers were looking for more flexible, lower-priced products and services, which could be tailored to their individual needs. Understanding that its existing business model did not allow it to develop a full product range, British Gas took a radical and innovative approach to develop and reinvigorate its service propositions - converting the whole business to insurance.

An entirely new entity was created within the Group - British Gas Insurance Limited - with the vision of "creating choice, value and fairness for its customers, people and shareholders though insurance innovation and excellence".

The BGI team also managed the transformation of British Gas Services Limited to become one of the UK's largest insurance intermediaries, to sell, administer and fulfil claims on BGI's behalf. The company introduced seven products and made improvements to eight existing ones.

This has been quite a journey - transforming a mature, existing business into the regulatory world has been a huge challenge - and the firm should be extremely proud of what it has achieved.

In order to make the plan a reality, British Gas equipped 3 500 staff members across seven sites to service and sell insurance products - a total of 16 000 hours of training - and transitioned 85% of existing customers to the insurance product set - at no additional cost to the customer. To maximise the number of customers benefiting from product enhancements, British Gas also migrated and enhanced the online channel to sell and service insurance products, and transitioned the direct mail sales channels to promote insurance.

And the results of this transformation impressed the judges. British Gas moved into a top 15 position in the UK's insurers table, provided a platform for continued financial growth and business returns, stimulated by improved acquisition and retention, and created a base of 3.5 million customers, holding over eight million products. In addition it sold 850 000 new contracts and reduced its 14-day loss rate by up to 70%.

Winning words
Helen Lovett, head of change at British Gas Insurance, said: "We wanted to expand our product range and this was the only way to do it while giving customers a better service and we're delighted to win.

"We can serve our customers in a broader sense, we can grow our business and we are very excited about the opportunities we have. T he award is fantastic and recognises everything we have achieved. It's great to be recognised for what we have done. We are all desperately proud anyway and this is the icing on the cake."