Q&A: Stephen Worrall, HSB

After taking over the CEO role six months ago, what challenges have arisen in adapting to a post Covid-19 pandemic world?

In terms of adapting into the CEO role, the biggest changes around my CEO responsibilities is that I have overall responsibility for overseeing and supporting the acquisition of MD Group that took place in April.

I am already familiar with some of my responsibilities, as I’ve been involved in those since I joined in 2007. In terms of adapting into the CEO role, I have added responsibility in overseeing the MD Group acquisition and supporting those employees who have taken on some new responsibilities. In some areas, I’ve handed over some responsibilities to give myself time to focus on strategy and the MD acquisition.

We’re all still adapting to the post Covid-19 pandemic world in many ways, and still getting into the rhythm. It is very helpful that, as an industry, as a nation and as a world, we’re all facing this together. “

We’re all still adapting to the post Covid-19 pandemic world in many ways, and still getting into the rhythm. It is very helpful that, as an industry, as a nation and as a world, we’re all facing this together.

Adapting has really been down to how our people stepped up, and the spirit in which they did that. Whether it was people who moved to working from home who had never had a laptop on the kitchen table before, for some people it was a big deal to be able to connect a laptop to the home wifi to log on. And we had to make sure we had enough stocks of the personal protective equipment we required to ensure our engineer surveyors were kept safe.

A lot of the equipment we inspect is often critical to national infrastructure, such as boilers or equipment in hospitals. However, with great support and input from our engineer surveyors in the field, during that first Covid-19 lockdown period, we delivered and inspected more than 90,000 sites – a lot of them key to keeping infrastructure moving, whether that was supply warehouses or hospitals. We have taken all the good practices we learnt during Covid-19 around communication, engagement and staying in touch, and have applied those into the post-pandemic world.

What are your ambitions for the business?

Our big ambition is really centred around a vision, which is to be our customers’ first choice for engineering, technology, insurance and services. When our customers or distribution partners think about an engineering or technology problem, or a need they have around insurance or inspection services, we want HSB to be the first organisation that comes to mind.

The 2025 ambition that we set out at the end of 2019 put that vision front and centre. In hindsight, it was probably not the best time to launch a five or six-year ambition just on the eve of a global pandemic that no one could see coming, but the aim was to double the size of our business by 2025.

We have set out activities and initiatives that will help us deliver on that. At its core, the ambition is still to be the customers’ first choice. You need to be able to demonstrate that there’s a relevance and the need for customers to have an engineering policy.

If you think about all businesses today, pretty much every business is reliant on a piece of equipment or exposed to a cyber risk. Our aim is really focused across having the right products that meet the needs of our customers, and the changing risk environment and appetites for risk. It’s about having an effective distribution strategy and being easy to do business with.”

If you think about all businesses today, pretty much every business is reliant on a piece of equipment or exposed to a cyber risk. Therefore, there’s very much more of a place for engineering surveyors in today’s environment than there was previously. For a specialist engineering technology insurer, such as ourselves, our aim is to support our distribution partners in providing easy access to those specialist risks.

Our aim is really focused across having the right products that meet the needs of our customers, and the changing risk environment and appetites for risk. It’s about having an effective distribution strategy and being easy to do business with. An example of this is our e-trade capabilities. All our specialist engineering products are set up on our e-trade platform. That enables all our distribution partners to quickly access a specialist insurance policy, whether it’s construction, plant or breakdown. Quote, bind and documentation issues are all very straightforward without needing to engage with,or call up an underwriter.

Are you seeing a growing demand for digital adoption?

We are certainly not finished in our digitisation initiatives, it’s a very important piece of our strategy that sits underneath the customer pillar.

We want to be easy to do business with, available via e-trade, by telephone, by email and in person. None of these different ways of interacting with customers are going away, so we just want to make sure that each of those channels is appropriately structured and available for all our segments, depending on what they’re looking to do.

We want the less complicated activities available for self-service because then things can be done quickly, and brokers know things are progressing, which then means they don’t have to spend time following up as to where things are. There is more to do within the claims area, but we’ve done well in terms of digitising inspection services. It is now more to do with expanding that capability to make sure it’s fully penetrated and available to all our customers as required – that’s where our focus will be over the next 12 months.

HSB is supporting Ace: a specialist police unit to target agriculture and construction equipment theft. Is the theft of equipment from construction sites and farms still significantly impacting the businesses targeted from the loss and replacement of the equipment taken?

Plant theft is always a trend that’s seen in times of economic uncertainty and recession. During the Covid-19 pandemic, we didn’t see any spike in plant theft itself. A lot of the equipment ended up back at the depot because customers retrieved them from sites.

Plant theft is a trend that’s seen in times of economic uncertainty and recession. Plant theft claims are down around 14% since 2019, while the average claims values for plant theft have increased by around 8%.”

The Ace unit does have a positive benefit, and we continue to contribute our support to that.

We have a good claims proposition that can help get plant equipment replaced quickly to ensure downtime is minimised because to replace a piece of equipment that goes missing from the site can mean a delay to the construction, which is probably already under a tight schedule.

Plant theft claims are down around 14% since 2019, while the average claims values for plant theft have increased by around 8%.

What other challenges is the industry currently facing?

With spare parts, there’s a long lead time in seeing those being delivered. The market for second-hand equipment has seen prices increase, and factories haven’t been producing as much new equipment.

We have seen a number of claims affected by this, but generally, we’ve been able to source the parts, and the more commonly used equipment, which is less of an issue. The more specialist and bespoke the equipment, the more challenging that that can be to source.

We work with loss adjusters, who have a good knowledge of different equipment and the manufacturers, and we use that knowledge to help minimise the time spent delivering the spare parts to repair as much as possible, and use their expertise to help assess the best repair plan where equipment is damaged.

After acquiring the MD Group, what are the plans for the integration and how will it complement HSB?

The MD Group is a managing general agent that writes residential building defect warranties. Alongside that, it provides the inspection, audit and technical services to ensure that throughout the build of a residential unit, such as social housing, it conducts assessments, and then only if the requirements are met, will the warranty be issued. This has given us routes to market that we didn’t previously have access to, as well as good distribution.

It’s very similar to HSB, an engineering-led underwriting organisation. We saw a very strong alignment between the organisations, with underwriters with strong expertise and knowledge around the risks that were being insured. It’s a very good synergy in terms of the business model from that space. 

The MD Group had been a distribution partner for several years. We started off by providing our machinery inherent defect product into its new-build warranty. So, alongside structural defects, MD Group would also cover defects arising from the installation of boilers or electrical wiring. Now, that will also cover renewable energy sources if those are included within the build. From providing that specialist part to its specialist product, we got to know the organisation and understand its underwriting philosophy and expertise.

We’re very optimistic around how this can feed into our 2025 ambition because it’s difficult for a business to double in size through just organic growth, new products and new distribution. An acquisition was always part of the initial plan.”

The opportunity came for us to provide capacity for one of the MD Group’s binders in the residential book and that strengthened the relationship, as we got to know the management better.

The business has been around for 25 years. It was set up from scratch by its previous owner and is now an organisation that is at number two in the warranty market next to the National House Building Council, with a 30% market share, so that is a phenomenal achievement.

This has given us routes to market that we didn’t previously have access to, as well as and good distribution. MD Group is based in Birkenhead, Merseyside, and I am from North Wales. So, its just a stone’s throw from where I live, and it’s nice to have been able to find an acquisition close to where I come from.

We’re very optimistic around how this can feed into our 2025 ambition because it’s difficult for a business to double in size through just organic growth, new products and new distribution. An acquisition was always part of the initial plan.