In profile: Jodie Blackledge, Staying ahead in the risk business

Jodie Blackledge took over as Chief Financial Officer of Austbrokers in July this year following an extensive career in corporate finance both in Australia and in London, including senior roles with AMP and Bank of America Merrill Lynch. Mostly recently she was CFO of The Trust Company.

Growing its market cap to almost $600m since listing in 2005, Austbrokers has become one of the largest equity-based insurance broking networks in Australia and New Zealand also providing risk services to brokers, insurers and other clients.

While the insurance industry is currently undergoing one of its softest market cycles in many years with premiums declining over the past year, Blackledge says Austbrokers has performed strongly in this environment and it is well placed for when the market recovers.

In recent years Austbrokers has diversified into specialist underwriting agencies and risk services to mitigate the effects of the insurance cycle.

With increasing market expectations for CFOs to take a greater role in corporate strategy, and acquisitions being a key component of Austbrokers’ growth strategy, Blackledge relishes the opportunity to help generate further growth in the business in the next 10 years.

Blackledge says, “What I value in this role is the opportunity to leverage my experience in business strategy and in M&A to focus strategically on how we can grow and help our broking firms and other partners grow”.

Interestingly, Austbrokers’ corporate strategy is underpinned by the ageing population, using succession planning as an opportunity to partner with insurance brokers and grow through acquisitions under a 50/50 owner-driver model, making up to five acquisitions each year.

“As the baby boomers move into retirement, this provides a big opportunity for us. We are bringing in new owners in their 30s and the average age of principals is now below 50 compared with around the mid-60s a few years ago.

“It is exciting to work with young, talented insurance brokers with innovative ideas (alongside the wise heads of our long-term partners) and, because they have to buy equity in the business, they have quite a bit of skin in the game.”

Blackledge speaks to INFINANCE about the impact of increasing digitisation on the insurance industry, the evolving cyber risk space, and the role of insurance brokers as key risk advisers to small- and medium-sized businesses.

A longstanding member of the Women in Finsia Committee until recently, she also highlights the critical role of workplace flexibility in helping women transition through different stages of their careers.

What are the key strategic opportunities and threats for insurance brokers, underwriters and risk services within Australasia?

The recent decline in insurance premiums has been more significant than in previous cycles, driven by competition in an environment in which there have been few catastrophes or claims.

It is obviously a challenging market in cyclical terms but, leaving that aside, the key opportunities are continuing to build client numbers and ancillary risk services, and manage the business so that when the premiums recover we are thriving again.

Just like every other business, the key opportunity and threat is digital disruption.

We provide mostly commercial insurance based on the property and physical assets of businesses, although this is increasingly extending to people and financial risk. Insurance brokers exist because SME business owners need specialist risk advice to help them assess their liability if something goes wrong, for example, business interruption or if a shop sign falls and hurts somebody.

Because our insurance brokers operate in the SME sector and their advice is not easily commoditised in the same way as it can be in the personal insurance sector, this protects us from disruption to some extent. But we need to continue to invest in our digital delivery and the service proposition from the broker to the client, to ensure it is efficient and working for all parties in the value chain and can’t be disrupted.

Risk services, which are ancillary services to a broker or insurer, such as claims preparation, loss assessing, return to work services or valuations for insurance purposes, are not affected by the insurance cycle. This is a highly fragmented and relatively undeveloped market and, having only entered this market in the past couple of years, we see strong growth prospects there.

We currently offer these services to insurers on behalf of the WorkCover Authority and other similar organisations but there are many opportunities to offer similar services either directly to clients or through brokers. Life insurers may also value some of the return to work services.

For underwriting agencies the key opportunity is to continue to seed new businesses where they have a niche position that is valuable in the marketplace and where it is large enough for us to play a role. We have been very successful at this to date with net profit before tax from this part of our business increasing by 35% in the past year. This is also a fast-growing area.

How is digital disruption affecting the industry? What new innovations are emerging?

From our perspective there are two important elements to developing strategies to deal with digital disruption.

Where risk services and insurance broking come together, the more value the insurance broker (or risk services expert) can add for the client, the more it becomes about the quality of the advice rather than being just a transactional or a commoditised relationship.

We provide a common processing system (and significant buying power) to all of our brokers and we are investing significantly in our innovation within that system to make sure the process is seamless and efficient from the client through to the insurer.

Sometimes the client is looking for a broader approach to advice and we want to ensure that the broker can continue to provide value in these circumstances. For example, if one of our clients wants to obtain a motor vehicle insurance policy at ‘direct rates’, we have an online facility with Allianz whereby our insurance brokers can ensure clients get a competitive rate in the market.

Within the SME market, there are two key relationships where businesses seek advice ─ the insurance broker and the accountant.

We have a unique position and for us it is all about ensuring insurance brokers remain the key advisers on risk. That requires a broadening of the thinking away from just property risk or risks associated with operating a bus fleet or manufacturing business, to thinking about their people, their own private wealth protection should something happen to them (i.e. key man insurance) and anything we can do to support their employees’ (post incident) return to work through rehabilitation.

There is a lot that the insurance broker can do to cement their relationship as the key adviser on risk. We are not in direct competition with the financial planner or the accountant ─ they have different roles. But, in the SME market, the risk adviser relationship works very well.

What are the key regulatory/compliance and related issues currently facing Austbroker and its clients?

Compliance standards go up every year in every industry, particularly in financial services. But we are probably less impacted by some of the regulatory change than some other parts of the industry at the moment.

We are very focused, however, on helping insurance broking businesses continue to upgrade their compliance. Client privacy and cyber security issues are key parts of these businesses and they are SMEs themselves so they often rely on our infrastructure to help them manage those risks.

Cyber risk is an evolving space. I don’t think the industry has reached the stage of maturity in understanding the full implications of cyber risk and the extent to which businesses need to be protected from this risk. But it is now very much on the radar of businesses ─ not just within our broking businesses but also for our clients themselves, because it is important for them to manage this risk well. It also provides another opportunity for us to assist clients.

Macroeconomic risk is another key risk for the insurance broking industry and our clients.

Insurance premiums are affected by two key things: the price that a customer pays to the insurer (i.e. the premium) and also the value of the assets, which is impacted by the economy.

For example, in Western Australia we have been through a long period of investment which led to increases in the premiums paid, including in relation to insuring some of the big projects undertaken as part of the infrastructure development there.

Following the ending of the mining boom, we are facing lower growth in the SME market, particularly in ancillary services to mining, and all of that affects premiums. So driving economic growth in the SME part of the economy is a really important determinant of the success of our business, along with the insurers’ pricing.

How has your previous work experience shaped your approach to the CFO role at Austbrokers? What have been the main challenges and joys to date?

My background was in accounting and I specialised in corporate finance early in my career – both in Australia and London. Then I moved in-house with GIO into mergers and acquisitions before they were acquired by AMP.

I had a very interesting 12 years with AMP, also moving into business strategy at the group level and later leading strategic change within AMP Financial Planning. That was an amazing career opportunity and it has definitely influenced me in my current role.

The market is looking for more strategic CFOs and, particularly in a smaller organisation, it is important for anyone in a senior role to bring breadth in this area to make the business better and stronger.

One of the challenges has been understanding the Austbrokers business because it is very different from the more corporate experience that I have had in the past.

Even the Trust Company, where I was most recently, was run like a corporate, whereas this business operates as a hybrid between a private equity company and a corporate.

It has been important to understand the really strong DNA of the business and not bring a corporate perspective with me. While that has been a challenge it is quite a refreshing one. The business is much more nimble and more oriented towards making things happen.

What are some of the factors that have helped advance your career? What are your main interests?

At certain times in my career I have had sponsors and mentors that have helped push me ahead and that has made a difference.

With a son who is 7 years old now it has been a challenge at times navigating through part-time and full-time work when I have needed to prioritise other things.

I wouldn’t have had this current opportunity if I hadn’t stepped out of the workforce for an extended period of time.

Flexibility is very important for women pursuing their career through different life stages and I was very fortunate that as CFO at the Trust Company they gave me the flexibility that I needed. Senior people didn’t see face time as really important in the CFO role and they left it up to me as to how I delivered on key tasks.

I am very passionate about empowering women and I was on the Women in Finsia Committee for around five years, recently stepping down to focus on my new role. I am also on the board of the Women’s Housing Company which provides affordable and social housing to single women.

Obviously, having a young child, that is a key focus for me outside of work, but I also try to keep fit by swimming and running. That clears the head and gives me some ‘me time’.

I also enjoy spending hours in the garden and grow everything from potatoes to pumpkins, rhubarb and strawberries. It has been quite amazing to discover how much better home-grown vegetables taste than the ones you get in the shops.

Originally published in INFINANCE news: