Profile of a chief executive: John Balmforth of AMI (New Zealand)
This article by Andrew Bibby, in a slightly different form, was first published by ICMIF (International Cooperative & Mutual Insurance Federation) in Voice magazine, 2007
The new logo and image for New Zealand 's general insurer AMI may have raised some eyebrows in more traditional insurance circles when it was launched last year. It is, AMI's chief executive John Balmforth agrees, a change from the typical conservative images more usual in the insurance industry. But the new logo, which turns the insurer's three letters into a smile, aims to reinforce what John believes is AMI's key strength: its focus on customer care.
An emphasis on looking after customers has been central to AMI's strategy as a business since 1997, and the company's mission statement reinforces this with its call for “total commitment to what our customers need, want and value”. Get John Balmforth talking and perhaps not surprisingly every other sentence seems to be peppered with talk of customer care.
“This is how we can differentiate ourselves in the market. We've done a lot of work in empowering our staff in ways to look after our customers,” he says. “Customer care is something different from customer service: customer service is a technical issue, such as answering the telephone promptly or having enough staff available. Customer care is a strategy.”
It's a strategy which seems to be bringing good results, for AMI has seen satisfying growth in its premium business, operating surpluses and asset base in the past few years. The company specialises in general insurance, focusing on house, contents and motor insurance, and is among the top four general insurers in New Zealand with about 20% market share. 2006 saw written premium income increase to NZ$251m, up from $200m three years earlier, with a claims ration of 62%-63%. Helped by strong investment returns, AMI posted a surplus after tax of $37m. The company's solvency margin is also looking strong, up from 84% in 2003 to 108% today. “Our solvency margin is high by New Zealand standards, where the insurance average is 57%,” John Balmforth says.
A key part of AMI's customer care approach is its continuing strong emphasis on a physical branch network, at a time when most competitors have tended to centralise their operations and to rely increasingly on technology-led interfaces with customers. Although the company operates two 24-hour call centres and an emergency helpline service, most policy-holders relate to AMI through the branches. “Our distribution strategy is unique. AMI doesn't deal with brokers,” John Balmforth says. But this approach does require effective ways of ensuring that all the 751 staff, spread throughout New Zealand 's two islands, are fully in tune with the company's customer-centred approach.
Staff communication is obviously one of John Balmforth's major concerns. There's an in-house newspaper and a regular team briefing newsletter and, a recent innovation, a staff intranet called mysite, part of a more general myAMI initiative which encourages staff participation. Each AMI employee also regularly receives in their mailbox an email from their chief executive. “‘John's Jottings' is a weekly email I send out, which is also posted on the intranet. It's reporting what I've been doing. It's also an opportunity to cover HR matters, for example to welcome new members of staff,” John says. There can be quite a personal feel to these emails. John, who describes himself as a keen DIYer, says he sometimes reports on the progress he's making in doing up his house.
Behind this communication strategy lies an attitude which aims to bring the customer care approach to AMI's internal employee relations as well. “Our staff are our internal customers, and they need to be treated with the same philosophy as external customers. Some businesses focus on their external customers and leave out staff care,” he says. Encouragingly for senior management, AMI has been shortlisted in each of the last six years in the Best Places to Work competition run by New Zealand 's Unlimited magazine, the only company to have achieved this.
So it's hardly surprising to learn from John that staff were involved during AMI's recent rebranding exercise, through a number of focus group meetings. The launch of the new logo was, in fact, the culmination of a lengthy two year process which began with a Board level discussion about whether rebranding was appropriate or necessary, and then focused on the key messages which the company wanted to communicate through its image. “We sought staff buy-in at the same time. Obviously rebranding doesn't come cheaply, so my tip from our experience would be that you've got to look on it as a part of a multi-faceted exercise,” John says.
In AMI's case, the rebranding was conducted as part of a major strategic review which aimed to scrutinise all aspects of the business. AMI's produce range was considered, as was the branch network policy. The board also reviewed, as John says it does on a regular basis, AMI's position as a mutual. The outcome has been a decision to maintain the company's present course and strategy through the next five to seven year period, looking to grow incrementally.
AMI's mutuality, unusual in the New Zealand general market where its chief competitors are all corporates, is also seen as a positive strength. John Balmforth talks of developing a number of strategic initiatives focused on what he calls “celebrating our mutuality by returning value to our customers”. AMI doesn't pay a rebate or dividend to members, ploughing surpluses made back into growing the company, but as John explains this means there is scope for policy-holders to be offered value-added products at competitive prices. One initiative, offering maximum no claim bonus protection for life, has already been launched and according to John Balmforth there will be others – wait until ICMIF's conference in Brussels to find out more, he says intriguingly. The aim will be to find high visibility ways of rewarding members' loyalty.
John Balmforth came to the insurance sector after more than twenty-five years in banking, having been head-hunted to the top job at AMI in 1995. He made the move to AMI's head office in Christchurch from his native Australia , having grown up in Tasmania . In fact, he says, his sport as a young man was Australian rules football, a version of the game which its exponents would claim combines all the best elements of American football, Gaelic football and rugby. But New Zealand was already familiar territory for him, for before moving to AMI he had previously spent a number of years in Auckland , when working for the Commonwealth Bank of Australia .
New Zealand 's insurance industry is unusual in being very lightly regulated by the state. The insurance market is open to all, with firms simply required to deposit a $500,000 bond and to make available to customers their company rating, as determined by an independent rating company (AMI is rated as an ‘A'). The New Zealand government is now reviewing the regulatory regime, and is expected to announce moves to a more interventionist approach later in the year. John Balmforth clearly believes that the current approach has worked well since it was introduced more than a decade ago, and he points out that there has not been a failure in the insurance sector in that time. Nevertheless, AMI is clearly well placed to deal with a new regulatory framework if and when it is brought in. John is proud of a company which – uniquely among major general insurers – is wholly New Zealand owned and which has been serving the New Zealand market for eighty years. Now it's onwards towards the centenary. And the slogan for the period ahead?: “Take customer care to new heights”.
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