An Interview with Richard Harding, Chief Executive Officer, Tower Insurance


FST Media: What are your business and digital priorities for the next six months?

Harding: This question is very timely for us.. As a general insurer in New Zealand and the Pacific, we are focusing on our core business; and our business strategic priorities are about creating a high performance customer service culture.

FST Media: What are your business and digital priorities for the next six months?

Harding: This question is very timely for us.. As a general insurer in New Zealand and the Pacific, we are focusing on our core business; and our business strategic priorities are about creating a high performance customer service culture; delivering operational excellence; and accurate pricing of risks. We know that a flexible, modern IT infrastructure is critical to deliver each of them. Therefore, we completed a thorough IT review to determine whether the existing platforms would enable Tower to become a high performing general insurer and deliver growth. We are exploring options around how we can develop a fit-for-purpose IT infrastructure.


FST Media: What technology or innovation is providing to be the single biggest game changer across the insurance sector?

Harding: I think it will relate to either the evolution of the underwriting process through use of external data, or via social platforms. Social platforms that allow customers to shape coverage and pool insurance risk together could reinvent insurance by taking it back to its orgins at the tea house. We are watching the Lemonade launch to see its impact in the New York market. Tower Insurance was the first insurer to release a telematics App (SmartDriver) in New Zealand, enabling people to control the assessment of their driving behaviour and gain a better premium outcome for good driving. Through access to data on people’ useage behaviour, we can tailor a product to suit customers’ needs.


FST Media: What are the most significant challenges the insurance industry faces in terms of growth in New Zealand?

Harding: We can say that, collectively, the insurance industry faces various challenges in terms of growth in New Zealand:

  • Claim costs have grown significantly over the past two years
  • Interest rates have continued to fall, impacting investment income
  • The overall premium environment remains flat as a result of increasing competition
  • Insurers continue to settle Canterbury earthquake related claims.

In addition, Tower Insurance has a strong presence in the Pacific. As such, the El Nino weather system has led to an active cyclone season in the Pacific. While the region continues to deliver growth for Tower Insurance, natural catastrophes (such as Cyclone Winston) impact financial performance and therefore, profitability and growth.


FST Media: What are the key differences you have found between the Australian, New Zealand and Asian finance industries?

Harding: Asian economies are clearly developing and experience faster growth and rapidly changing business environments. Many Asian markets tend to continue to be dominated by large tied agent sales forces – although more and more the digital mobile platforms are taking over. Many continue to be transitioning from a tariff-based underwriting approach with governments still having a major influence on pricing and policy construct. Australia and New Zealand are much more mature markets – growth is slower and the insurers are prudentially regulated. The Australian industry focus has recently been on the basis of accurately pricing natural disasters such as floods and bush fires. Key has been the engagement of communities in understanding these risks and seeking out better mitigation actions. In New Zealand, the industry continues to have a focus on the recovery of Canterbury Earthquake and seeking to finalise the claims after five long years. At a community level, New Zealand is still adjusting to a sum insured environment for natural disasters, with a significant discussion and concern around under- insurance. Both Australia and New Zealand continue to experience high competition from new digital entrants bringing new approaches to the market at lower cost.


FST Media: What role can the insurance industry play in helping drive New Zealand’s competitiveness of innovation in the fintech sector?

Harding: The insurance industry plays a key role in the economy in ensuring and pricing the effective cost of risk. Insurance enables businesses to expand and start new enterprise, enables people to buy and own homes and cars and to do so with the surety of knowing any financial loss arising from these activities can be protected. Fintech investment will be a critical driver in finding new ways that the insurance sector can better and more effectively enable the transfer of risk.


FST Media: What specific insights can Tower bring to the wider New Zealand insurance industry in relation to growth and diversity?

Harding: Our business strategy is focused on Tower becoming a high performing general insurer. To achieve that ambition, we will need a team of high performing people: diversity of thought, leadership, and culture will be critical to that success. Insurance is about understanding and managing risk – having different points of view and understanding how different cultures perceive things can lead to a better more informed view of risk. Tower’s business across eight Pacific Islands is a great example of where the diversity of our experience and our people help us better understand the risk in the region. Ultimately, insurance is a community-based product and as such, we need to reflect the needs, ideas and values of the communities we serve.


FST Media: What is next big thing for Tower and how will you measure its success?

Harding: The next big thing at Tower is about refocusing our core business to compete in the digital age. We need to make changes across the business to better use external data, improve customer engagement, and collaborate. To do this though, we will be looking at how we can deploy digital technology to make that happen. We will know we have achieved our goal when we have taken the complexity out of the organisation and simplified a lot of the things we do. This will mean that we are more efficient and effective in what we do and that our customers get a better overall experience.


FST Media: How do you encourage a culture of innovation in your team?

Harding: To me this about setting big hairy audacious goals – the BHAG. If you know that the scale of change you need to achieve to get where you are going is pretty big, then you should know you can’t solve it by just doing things better. You have to find a better way – innovate and seek out different and completely new ways of doing things.


FST Media: Where do you look for emerging technology trends?

Harding: The short answer is everywhere. The Leadership team and I look for emerging technology trends when engaging with key insurance industry influencers, professional services firms, by attending industry conferences with a focus on the future, and by reading a lot. We regularly take the pulse of our customers with focus groups to understand their expectations for all age groups. We don’t limit our curiosity to the insurance industry for ideas though, but we widen to adjacent industry player and further afield to seek out new ways that retail businesses are serving their customers.


FST Media: What career would you be in if you worked outside the finance industry?

Harding: Not many people actually choose to go into the insurance industry – most people I know have just fallen into it. You discover insurance and then you get involved. Learn about its unique contribution to the community and understand how it can really help people at times when they need it the most. So I originally didn’t set out to be an insurer, but rather started in Town Planning, Architecture and design. Luckily for me, that didn’t stick and 30 years after starting at GIO as an officer cadet, here I am still in insurance.