Hereditary player

For Dane Douetil, whose father was a Lloyd's broker and whose grandfather refused to insure the HMS Titanic, resisting the world of insurance was always going to be difficult - despite his best efforts.

It was a Willis Faber Dumas graduate scheme that eventually tempted him off the fence after university, which he attended mainly to delay the inevitable. But, having subsequently built and run his own brokerage and taking the helm of Brit Insurance earlier this year, Douetil has firmly made the family tradition his own. And his time as a broker is certainly evident in some of his decisions as the chief of an insurer, such as putting underwriting support in the provinces at a time when much of this traditional resource has been centralised.

"Every office has to have a full range of property - motor fleet, employers' liability, public liability, professional indemnity, directors' & officers', package and scheme - to be meaningful," he states, adding: "There is an intensive peer-review system to ensure consistency across the regions but I believe it is empowering for brokers if those who make the decisions are where their clients are. Our philosophy is simple: to put the best technical underwriting expertise as close to the coalface as possible and to back it up with slick technology."

Brit, which evolved from Benfield Reinsurance, (from which it derives its name, not the country in which it is based), was turned into a holding company and reauthorised by the Financial Services Authority to operate in general insurance and has only served brokers in the regions for three years. Under Douetil's auspices, however, it has very ambitious plans.

Interesting development

After a period of laying the groundwork, the insurer is therefore at an interesting stage of its development and is attracting high-profile staff from banking and large national brokers. Barclays director for change, Kathy Lisson, joined as chief operating officer in September, while Marsh senior vice-president, Mike Smith, joined Brit in June.

Douetil is also passionate about new recruits coming into insurance. He says: "I want to help people into the market because I was helped. We are affiliated with Birmingham Business School and we sponsor a senior lecturer there because most Master of Business Administration courses do not cover insurance in depth."

In terms of Brit's preparation for the future, much research has also been conducted, offices are being refurbished - stamping the forward-looking and aspirational corporate culture onto its branches - while other regional branches are being opened. Its Birmingham office was officially operational from 16 November, with a Reading office due to open in January 2006. Brit currently has sites in Bristol, Darlington, Glasgow, Manchester, Ilford and Leeds. A further ninth office may open in due course and Brit intends to maintain relationships with between 50 and 200 brokers per regional office.

Douetil himself, as the author of this change, still bears the hallmarks of a reluctant entrant into insurance. As such, he has always gravitated to what he saw as the exciting or unusual aspects of it; a trend he set by initially getting involved in kidnap and ransom and political risks when it was emerging years ago. Douetil's creativity seems to stem partly from the perception he had of his father's and grandfather's careers and the conclusion he drew that it was not for him.

Nevertheless he eventually went on to create interest for himself within it from the great wealth of knowledge he had absorbed from his forebears. This has taken various forms such as pioneering financial risks and securitisation. He also set up his own brokerage, Special Risk Services, which developed the provision of insurance for financial institutions. After taking some time out to spend time with his family, while doing consultancy work Douetil was brought in to consult on the formation of Brit, which he ended up running.

It is this reactionary dynamic to his heritage that underlies his creative fervour and is evident in his approach to his current role and his hopes for Brit. Commenting on some of the preparation that has been undertaken to fine-tune his battle plans, Douetil says: "We have spent 12 months segmenting the market," adding: "And this has clearly shown that brokers prefer a 'how do we help clients?' approach to a 'let's sell them insurance' approach."

Independent research

Brit's research, carried out by an independent firm, also bears out Douetil's belief about what brokers require from their insurers. He continues: "What upsets brokers is administrative hassle and the worst thing is when the response they were told would be with them 'tomorrow' never materialises. Brokers need consistency and the answer from the underwriter quickly and, if the answer is no, they need to be told why."

His philosophy that extends from this is simple: "If we can make the broker look good in front of the client, then everybody wins." He adds: "There are multiple channels to market and multiple ways of dealing with brokers, but it is ludicrous and insulting to try to apply a one-size-fits-all approach to brokers."

As part of the process of gearing up for the future, Brit has managed to whittle down its underwriting systems from 12 to three. All of these systems link into one portal providing at-a-glance snapshots of the business.

Lacking the legacy IT systems of larger players, Douetil is adamant that Brit's offering to brokers will be underpinned by slick processing. "Our Brit UK System will be developed over the next 12 to 18 months with all the whistles and bells - contract certainty and documentation. For me, the management information and the capture of information are crucial."

No sooner has he said this and he is out of his chair and at his computer to illustrate the point, a sure indication of his confidence. Seconds later and charts appear, showing how individual brokers are performing against target, a prompt pops up to offer a full report and a plethora of other high-quality real-time management information available demonstrates how the power to 'slice and dice' information in myriad ways is at Douetil's fingertips.

Despite the tangible forward momentum at Brit, the insurer was knocked by claims arising from Hurricanes Katrina, Rita and the New Orleans flood, with preliminary exposure estimates of £145m threatening to wipe out its first-half profits. Douetil himself also took some criticism for being an early projector of estimated damage arising from Hurricane Katrina. The event, he said, was potentially the biggest-ever hit on the insurance market, and suggested it would cost $50bn (£29bn).

So, has Brit weathered the hurricane season as well as he had hoped, and was he concerned it may not maintain its A and A+ ratings from AM Best and Fitch, respectively? "Well, we are slightly windswept," he quips, adding: "But we have not been put on credit watch. Were we concerned? No, not overly. We said we would trade on with capital intact and that is what we have done."

That said, Brit is looking to diversify its portfolio, although this process was under way before the wind rush.

Hurricane knock-on

Concerning the potential knock-on effects on the cycle - in particular that carriers may redirect capital away from the Gulf of Mexico and energy markets to profitable UK and European markets - possibly causing a softening effect, Douetil is sceptical. He explains: "It seems to be the case that the people that have raised capital have raised it to go back into the cat market. The capital that has been raised would have difficulty entering the UK market because barriers to entry are high.

"We want to diversify our portfolio and cat business. If you are a mono-line cat player, insurance is like being a punter at a casino. You may do well for a while but it is not sustainable. I would rather be the casino operator."

Usually, the gambling analogy will be made by anyone but those in insurance, as it is frowned upon by all in the industry. Douetil, however, is unapologetic in his admiration: "Bookmakers are very clever in the way they calculate and lay off risk," he enthuses, adding: "But I think of myself as a portfolio manager rather than an underwriting manager - like a fund manager we might decide to be overweight or underweight in certain areas at certain times."

Referring to Brit's dynamic capital allocation process, he says: "Underwriting capital is traded weekly to give us the flexibility to make regular adjustments, which means we can put capital where it can make a return." However Douetil says that, when it comes to its investment in the UK regional broker market, Brit has taken a long-term view.

Despite the uncertainty of some, Douetil is adamant that the hard market will hit the UK regions in 2006. He explains: "Fleet has balanced out and is tipping upward towards the year end and, because we write reinsurance, I know property treaty renewals are up by 15%. This will filter down to the market. Also, there is no doubt that the modelling techniques used for Katrina, for example, flood following wind or fire following earthquake, hugely underestimated its effects. These are the same models used globally, so what if it happened here - the Thames flood barrier is there for a reason, or what if Norfolk were to be hit? The answer to this - that rate adjustments are now needed - is why, from January, rates in the London Market will be hard. And this will filter through to the regions by the middle of next year."

Part of the research undertaken by Brit has analysed the next big threats to broker distribution, one being commercial insurance direct. Douetil estimates the typical sub-£1000 sole trader, SME-type risk being catered for directly at present will eventually grow to £20,000, but he puts no timescale on this prediction. However, Brit's investment in the regional broker market backs up Douetil's belief that the broker model for larger risks is assured.

"When people spend a certain amount of money they want a service - that is just human nature. And people running businesses in the future will still want to know whether to buy D&O cover and PI and other general advice such as this. In the London Market, at the larger end, execution will become automated and this could belong to the broker. But brokers want to get paid for the advice they give. If I were a broker now, that is what I would be looking to do. Brokers must decide where they want to be and strip out infrastructure.

"Lawyers and accountants charge for their advice. Brokers, however, often undercharge for advice but overcharge for processing, but the client does not care who does the processing. Clients could link directly in to us via a brokers' portal, for example."

Impending threats

And the next big threats? "The big brand owners for sure; Bank of Scotland bought NIG. But do people really trust accountants to buy insurance for them? I think, if you asked most businesses in whose hands they would rather be for advice about their business, most would say a broker. I think brokers should take some reassurance that they have a long-term future and they should adapt, get ahead of the curve and add value - because people do want their advice."

In terms of Douetil's vision for Brit's future and the value he wants it to deliver, he says: "Where insurance is compulsory it is a grudge purchase, for example, third-party motor, and it is all about price. But when people believe and understand they are getting value - if you are protecting their livelihood, their profits or their businesses that is about having a meaningful relationship and building your businesses together. If I pick the right clients today - because insurance is all about moral hazard - Brit will grow just because they are good clients and they will grow. Any losses will be fortuity losses and a large claim will be taken as an opportunity to tie a client to us for a very long time."

Nearing the end of his first year as chief executive officer, Douetil has clear intentions for the company. "I've just started as CEO but I am ambitious for Brit. We can become the premier insurance group and we will get there by doing things a bit better every day. We have the people and we have the culture - but it is tortoise not hare - I have seen a few dead hares along the way."

CV

2005: chief executive, Brit Insurance Holdings

2004: deputy chief executive, Brit Insurance Holdings

2002: chief executive, Brit Syndicates, later head of underwriting, Brit Group

1999: Brit Insurance Holdings board

1998: chief executive, Brit Insurance

1997: consultant to the Benfield Group

1994: consultant on the sale of mortgage operations and a risk consultant for financial institutions

1989: founder and director, Special Risk Services

1988: executive director, political & financial risk division, Willis Faber Group

1982: Willis Faber Group.