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David Reeves, CEO Barbican Insurance Group
6 September 2017Insurance

Barbican: Bucking the trend for 10 years

“Barbican launches in brutal market conditions”—David Reeves, chief executive and one of the founding directors of Barbican Insurance Group, ponders a newspaper headline from the time of its launch in 2007 and laughs.

“In retrospect, conditions were pretty good back then compared with now,” he says. “I wouldn’t describe them as salad days exactly but it is much harder now. Brokers and underwriters are really guarding business and it must be much harder to break in than it was then.”

In November, Barbican will celebrate its 10-year anniversary. Considering Reeves admits that market conditions have deteriorated during that time, the company has done well, growing steadily and posting solid profits for most of that period. Much has changed in the past decade, he admits.

“We were lucky to start when we did. We were a handful of people with ambition, a business plan and not much money. It is much harder for ordinary people to get that sort of chance in Lloyd’s now—regulations are tougher and the costs are higher. I think Lloyd’s deserves recognition for the opportunities it has given to people like us.”

But Reeves, formerly the director of RSA’s commercial division with responsibility for reinsurance, aviation, nuclear, international construction, financial solutions and ART, is no stranger to adversity and unafraid to go against the grain. He is one of the few high-profile CEOs in the London Market to openly admit he welcomes the UK’s vote to leave the EU.

He admits that his stance on this particular issue is enough to silence a room in the right circumstances, so pro-Europe is the majority of the market. But he believes some of the reaction to the vote to leave has been bordering on hysterical and that the consequences will be a lot less severe than people believe.

“Yes, I voted for Brexit. I was quite keen to come out of the EU,” he says. “I feel that it has become a super-state that lacks democracy and our laws are now made in a faraway place with no accountability. I voted to leave and I encouraged others to do the same.

“I am not typical of others in the Lloyd’s Market but I am OK with that and I believe there will be little disruption to the market.”

Reeves believes that at a business level, little will change. “We will still have a very strong capital regime, very similar to Solvency II, and most of the laws around that will be copied over. Business will find a way to operate from London. There is too much business structured in that way and that won’t be thrown away by people.”

Barbican writes only a small percentage of its book in Continental Europe. He says the business will retain access by operating through Lloyd’s subsidiary in Brussels.

“I am aware I could live or die by these words but I said when the Brexit vote happened that nothing would have changed in a year and it has not. I may live to regret saying this but I believe little will change once the UK formally leaves.

“Very high levels of regulation will ensure the UK remains attractive. That is why business comes here: we have a strong set of rules and regulations with strong regulators, trusted processes and robust systems. As long as we preserve those, we will be fine.”

Fighting for the pie

Given his optimism on the outcome of Brexit, it is perhaps less surprising that he is also positive about the status and future of the London Market more generally, although a combination of anecdotal evidence and some studies have suggested the market is losing market share to other hubs such as Singapore, Zurich and Bermuda.

Reeves believes London is fighting for business—and succeeding. “London certainly cannot presume to retain market share, I understand that. But we are seeing a lot of opportunity come to London and it is a question of converting that and ensuring we are properly competitive and proactive instead of just sitting in the box waiting for it to come. Those days have gone,” he says.

“We also need to ensure products are innovative, relevant and meet the needs of clients; from what I see London is doing that and is very competitive at all levels.”

He believes London is a fast-moving market, especially on specialty lines, one of Barbican’s core areas of business. But he does admit that it can be an expensive place to operate in.

“The costs do need looking at. Everyone needs to look at their expense base and strip out any dead wood. That is true across the market.”

One way to do this is by embracing aspects of insurtech, Reeves says. He is circumspect about the hype around this buzzword at the moment but also clear that some of the technologies available do indeed have the potential to transform the industry.

The one with the biggest potential, he believes, is blockchain. “If this is adopted properly by all parties in the chain, it has the potential to slash the expense base,” he says.

“There is so much duplication at the moment throughout the process; the idea that data sits in the cloud and is as up to date as the last person who touched it is a revolutionary concept.

“It will also potentially take out a lot of uncertainty, end failed transactions and help settlement occur earlier. But all parts of the chain have to embrace it. We are in discussions with several other syndicates to trial it and we need the brokers on board as well.”

Insurtech is also changing his business in other ways. Barbican’s box in Lloyd’s has embraced electronic processing, for example, which he says has made the business more efficient. He admits that he is approached on a regular basis by other insurtech companies but he prefers to remain focused on a smaller number of projects he thinks can make a real difference. He also believes that the use of technology can only achieve so much in what remains an industry dependent on interactions between people.

“Whether it’s big data or artificial intelligence, technology can be useful but, especially in speciality lines, you ultimately need a human being using those tools to make an informed decision,” Reeves says.

Attracting a new generation

This heady mixture of challenges and opportunities plays into the other great trial the industry must prepare for: how to attract, keep and motivate the best talent going forward. Reeves is passionate that the industry must do better on this front but also believes that the more entwined technology becomes with the industry, the easier it will be to attract the right people.

“It is important to remember that we are now the leading industry in the city, with more employees than any other,” he says. “We are gaining more attention from graduates and school leavers and that position is strengthening compared with other sectors, which are in decline.”

To help its own aims, Barbican is talking with Manchester University about a partnership to smooth a flow of quality graduates into the company. It also has an in-house academy, which structures training and qualifications to trainee underwriters.

“We have 24 people going through the Barbican Insurance Academy at the moment. It will help them understand quickly how the market operates and the key skills needed, and they will sit exams and gain qualifications. It is about recruiting the next generation.”

Barbican excels in terms of developing talent at the next level, Reeves claims. Through its managing general agency business Castel, it provides a “nursery” for entrepreneurs by supporting new businesses with everything from working capital to capacity to IT services, regulatory compliance and wider office support.

This is a potential growth area for the company, Reeves says. “We take a stake in these businesses but we are also earning fees as a service provider. It is a question of backing the right talent and finding the right balance in terms of our support and that investment.”

It has also been reported that the business is pondering starting a special purpose syndicate in partnership with Toa Re that would be managed by Barbican’s managing agency. We understand from market sources that an application has been made to Lloyd’s and the company is waiting for the green light on the project.

Growth elsewhere is a measured process in what remain soft market conditions in most lines of business. He acknowledges that cyber certainly has the potential for growth especially given the underinsurance in this segment, but he is mindful of managing the limits in this and all sectors of the business.

While he believes rates in most speciality lines have been adequate for the past three or four years, some lines are showing signs of stress now. “There is simply too much capacity in some areas and we are looking at reviewing the mix of the portfolio for 2018 with that in mind,” Reeves says.

“But Lloyd’s can change quickly and capacity can reduce very rapidly too. It is a question of being nimble and adjusting to market conditions.”

For the CEO of a company that launched in such adverse market conditions Reeves seems more than capable of navigating such challenges. And just as he stands apart on the issue of Brexit, Barbican will look to continue to buck the market trends.

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7 September 2017   Barbican’s David Reeves is one of the few high-profile CEOs in the London Market to openly admit he welcomes the UK’s vote to leave the EU.