Robert Hiscox: a biography

Robert Hiscox joined the Hiscox Group in 1965 and has been chairman since 1970. His biography states his role is to is to “chair the Board of Hiscox plc and the major subsidiaries; to help guide the strategy of the firm; to ensure that we have the best people to run the company and to monitor their performance; to represent the company, and to guard and protect its values and standards.” Hiscox was heavily involved in the Reconstruction and Renewal programme in Lloyd’s as deputy chairman from 1993-95.

He led the work of Corporate Capital in 1993, on Value for Membership in 1994 and on Distribution in 1995. He is a non-executive director of Grainger Trust plc, is involved in charitable work, has a strong interest in the arts and is married with five sons.

There can be few people better qualified to comment on the state of the London Market and its future than Robert Hiscox, chairman of the insurance group which bears his name.

Former deputy chairman of Lloyd’s and a member of the Council of Lloyd’s which piloted the market through the Reconstruction and Renewal process, Hiscox believes the London Market remains in a pre-eminent global position.

However, he claims it will not be just the collective will of the market that will need to be leveraged if London is to remain the world’s insurance centre. Indeed, it was Hiscox which took the decision to form its own retail entity away from its traditional Lloyd’s home to process retail business - a move which has since been mirrored by the likes of Brit, Catlin and others.

The company is also part of the G6, a group of managing agents who have linked up with the big brokers to forge ahead with the foundation of an electronic communications system which differs form its predecessors in the fact that the brokers and the G6 say they will be using this system in the future for the placement of business and inviting the rest of the market to join up as an when they decide they want to.

Hiscox chief executive Bronek Masojada has publicly stated the time for market consensus before any progress is made has passed, and it is a point of view with which his chairman agrees.

“The market has always had the issue of moving at the pace of the slowest,” he said. “I think in the past it was one of the issues with the Lloyd’s market that we would see the major entities looking to drive something through, but there would be too much issue over the opinion of the smallest.”

“I have always been of the opinion that in a market you follow the money. If those who have the majority of the business believe it is the best way to progress you will find that the rest will almost certainly follow their lead.”

Hiscox adds that the issue of contract certainty is a case in point whereby the market was driven by the fear of what the Financial Services Authority (FSA) as regulator would do if the target it has set is not met.

“The same could be said of the work on the reconstruction and renewal programme,” he added. “The market was in a state of fear and there was a collective will to ensure its survival. We achieved so much in such a small space of time, but my view is that the market would have done anything because it was so determined to survive.”

“The G6 has set out its intentions and it is good to see the participants in the market looking to create a solution to the problems they face and I believe that when the standards are set and it is seen they are working we will see others follow,” he says. “It is not about saying you will do it this way or do it that way. The G6 wants to create a basic set of standards which can then be adopted by others. They are not saying you have to use this piece of software or that piece of software - they are simply looking to build the standards and set of rules which can be accessed and followed by all.”

Hiscox said the aim is to enable the London Market’s underwriters to speak with brokers across the world and access business which at present is not being shown to London.

“The Market is built on the underwriting of major risks,” explains Hiscox. “The decision we took when we formed our UK insurance entity was that we could underwrite the smaller business more cost effectively outside of the market because of the way it was structured.”

“We will underwrite out business wherever we believe it is the most effective to do so. I think one of the things Lloyd’s needs to decide is whether the Market is there to underwrite the major international and specialist risks or whether it wants to underwrite the motor and smaller retail business.”

“If it does want to underwrite the retail business then it needs to put into place a system which makes it cheaper and more cost effective to transact that high volume low premium business.”

Hiscox, like a number of its London Market peers, has set up a Bermudan operation – and it has also branched out into the US.

“There is a lot of business which is shown to the Bermudan market that we do not see so it makes sense to be in the market,” he adds, “Our underwriter Rob Childs now works out of Bermuda. He is receiving requests from brokers, including those from London, for quotes and is able to reply and follow up with questions just like he would here.”

Hiscox continued: “We have also moved our Kidnap and Ransom operation to the Channel Island and our underwriters deal with the broker via, e-mail telephone and fax.

There is also a lot of French business for instance that is placed in Bermuda and we believe that we need to be in these markets.”

But what of London and its future?

“I think Lloyd’s has done a tremendous job,” he replies. “It is perfect for a business like us and enables us to underwrite business across the world. It has a new chief executive, who I have yet to meet, but I have been told some extremely positive things about him.”

“I hope he continues to progress the market and builds on what has been achieved in the recent past.

“The Lloyd’s brand and the market’s security rating remain huge plus points for Lloyd’s and those of us who underwrite within the market,” said Hiscox.

Hiscox adds that where the market has been let down is by the UK government itself.

“It was pleasing to see that Chancellor Gordon Brown has said he will set up a task force to examine the issues that face the City,” he says. “However, one of the biggest problems we face in the London Market is the government itself.”

“I would like to see those who run bigger companies than ours stand up against the regulators.”

Hiscox says the UK has a habit of taking European regulation and then adding additional regulatory burden to make its worse for those companies in the UK.

“In some ways the regulatory system we have here is a self inflicted wound,” he adds. “At least the Financial Services Authority has said it will look to authorise new insurance entities in the space of four weeks, which on some occasions has been the length of time it has taken for them to answer a letter.”

The Treasury has a real role to play in ensuring the competitive future for the London Market, according to Hiscox.

“The government does not seem to want to give us any help,” he explains. “Gordon Brown for instance, could give London a more favourable tax regime –it is not beyond the bounds of possibility. If Dublin can do it then why can’t we do the same?”

“We in the market can and have made London an easy place to do business in, but we can do nothing about the level of taxation.”

After his time in the market and having built Hiscox into the company it is now, Hiscox shows no signs of losing his drive or enthusiasm for the role or the company.

“I am fortunate enough to be a father and in some ways you still look at the company as my children,” he adds with a smile. “I still think the company as a whole is a teenager and our operations in Bermuda and the US are at best babies.”

“They are different stages of their development and with each stage they bring with them pleasures and concerns.”

He concluded, “London remains a wonderful place to work in and I believe the Market can work together to continue to provide an attractive and competitive place in which to do business.”

This Special item appeared in issue 106 of JTW News - June 2006

Author: Jon Guy - JTW News