Andrew Bibby


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Andrew Bibby is a professional writer and journalist, working as an independent consultant for a number of international and national organisations, and as a regular contributor to British national newspapers and magazines. He is also the author of a number of books.

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Profile of a chief executive:

Mogens N Skov (Købstædernes Forsikring)

This article by Andrew Bibby, in a slightly different form, was first published by ICMIF (International Cooperative & Mutual Insurance Federation) in Voice magazine, 2011

Mutual and cooperative insurers tend to be long-lived: Voice regularly carries news of 100 year anniversary celebrations of member organisations. But surely no other ICMIF member can rival the astonishing longevity of the Danish insurer Købstædernes Forsikring, which this year is commemorating its 250 th anniversary.

Ask Købstædernes Forsikring's current President and CEO Mogens N Skov about this early history, and he immediately comes out with the details: it was on January 13 th 1761, he says, that his organisation was established. What's more, the original royal warrant signed by King Frederik V is still safely in existence.

The story is this: Frederik V had been travelling around his kingdom, and had been concerned to see the devastating effect of fire in one of the country's market towns. The people of Copenhagen – itself the victim of a terrible fire in 1728 – already had an insurance facility to protect them against fire loss. Denmark 's 67 market towns needed something similar, Frederik decreed. And so was brought into being a new state agency, originally known as Brandforsikringsanordningen for alle købstæder i Danmark – the Fire insurance facility for all Danish towns.

It was needed. Eighteenth century Danish towns, where many houses were of wood, showed a unwelcome propensity to catch fire and the state was equipped to help. But after more than 110 years the government relinquished direct control of the insurer, converting it in 1875 to a self-governing mutual with the name Købstædernes almindelige Brandforsikring (KAB) – roughly, Market Towns General Fire Insurance.

When Mogens N Skov took over the top job at KAB in 1997, therefore, he was joining an institution with a venerable history and a unique place in Danish insurance history. Astonishingly, he was only the sixth chief executive since 1875. “My predecessor has been there for thirty-eight years, and he had inherited the job from his father!,” Mogens says with a smile. This was an institution, one might have thought, where things changed only very slowly.

Except that, shortly after Mogens N Skov's appointment, KAB was about to go through a dramatic change, one which potentially could have threatened its entire existence. One result of Denmark joining the European Community in 1973 had been structural change in insurance, and – for KAB – the loss of what had been an effective monopoly in fire insurance. KAB, after trying a series of abortive partnerships, had settled into a productive relationship with the large insurer now known as Tryg Baltica. KAB had kept its niche products and Tryg Baltica had provided the distribution channel. Each firm had agreed not to poach the other's clients. It seemed to be a good solution, but it turned out to be one which, according to the Danish authorities, did not comply with competition law. In 2000 the competition regulator ruled that the relationship had to be terminated. Suddenly, what was now renamed as Købstædernes Forsikring had to fend for itself, creating its own sales force and distribution channels from scratch.

Whilst in one sense, therefore, Mogens oversees a 250-year old business, in another respect the mutual he leads is an eleven-year old fledgling. The 2000 change was, Mogens admits, a real challenge. The only alternative would to have been to merge with another insurer, but he says that no suitable mutual partner was there, waiting. In this situation it helps to have reserves built up over a long period of trading: “Fortunately we had the capital to go through this period,” Mogens explains.

Now, a decade later, the benefits of the enforced change are becoming much more evident. “Back in 2000, we only had direct client contact with 40% of our turnover – the rest was co-insurance with Tryg Baltica as well as various kinds of reinsurance and wholesale insurances. Today we have direct client contact with 98% of our turnover,” Mogens says. The company insures private individuals and small and medium-sized businesses, including independent shopkeepers, and it looks for clients who want a traditional personal relationship with their insurer.

“When it comes to distribution, we are doing things in a very traditional way. You cannot buy insurance from us over the internet, for instance. What we have are old-fashioned salesmen who come out, knock on the door, sit down and have a cup of coffee whilst they write the insurances,” Mogens explains. “If we just wanted to be the lowest-cost insurance company in Denmark we wouldn't have a chance. We have to offer something different, and what we offer is this relationship.”

Fortunately, it's what many Danish people want. Mogens quotes a recent independent market survey of the Danish population, which found that about 39% of the country wanted to feel that they had a direct personal relationship with someone they could trust when buying insurance. “We have a market share of about 1% - 2% of total Danish insurance, so we've still got about 37% of the market to aim for,” Mogens explains. “We have a huge potential”.

If Købstædernes Forsikring has deliberately adopted a cautious approach to its distribution channels, it has been very creative in its products. “We did something which in other countries would seem obvious, but which wasn't obvious in Denmark . Generally here you have one insurance policy for your household contents, another for your house, another for travel insurance, for personal accident, and so forth. We put them all together, so you could just tick off the kind of cover you were looking for,” Mogens says. This innovation, introduced about eight years ago for private policyholders, has also been extended for Købstædernes Forsikring's commercial clients, and the approach has been well received. “We're not the biggest company, but I think we've been doing our part in product innovation,” Mogens adds.

Mogens N Skov has been able to bring to his post at Købstædernes Forsikring a breadth of experience in the insurance industry. He was born in May 1955 in the coastal town of H ø rsholm about twenty-five kilometres north of Copenhagen , and came to work in insurance almost by chance, initially wielding an old-fashioned calculating machine in a life insurance office for the Danish subsidiary of Royal & Sun Alliance. Following a degree in the Copenhagen Business School he worked for a number of Danish and multinational insurers, including Skandia and Baltica (now Tryg Baltica). For one hectic two year period in the mid 1990s he was CEO of the subsidiary Baltica-Scandinavia Re of America, a post which involved regular commuting between his home in Denmark and the company's head office in New Jersey . He became, he says, pretty well known to the staff at Copenhagen airport by the end of this period!

When the call came to take over the top job at Købstædernes Forsikring in 1997, therefore, he was well placed to steer his new company through the turbulent time of change. He clearly relishes the challenges. “I find insurance fascinating,” he says. “A lot of people seem to think it's a very boring business. I don't!”

Under his leadership, Købstædernes Forsikring has built up a direct sales force of 22 people, augmented by a further twelve sales staff who run their own agencies but are effectively tied to the company. Together, they are responsible for about half of the turnover, with the other half coming to Købstædernes Forsikring through brokers, primarily small local brokers. The direct sales force is now set for expansion: “We have decided to expand and take on six more people in 2011. Our approach may seem old-fashioned but we have shown over the past ten years that it actually works,” Mogens says.

He is sanguine about Købstædernes Forsikring's ability to cope with Solvency II, although sceptical that the new requirements on compliance will actually benefit policy-holders. “As regards Pillar I, the capital requirements, we are relatively speaking the richest insurance company in Denmark . We have had 250 years to make reserves. That's not a problem. But when it comes to compliance, that's a lot of work. We have hired two extra people just for this purpose,” he explains. What he worries about is the ability of smaller Danish mutuals to carry this extra administrative burden. As Chairman of the forty-strong Association of Mutuals in Denmark , he is well aware of the pressures facing the small insurers, some of whom focus on particular professions such as teachers and nurses, and some who serve particular local areas, often tracing their roots back over a century. “Where my mutual colleagues might have a staff of 50 people, the idea of adding two new people to cope with Solvency II means a 4% increase in staff. Solvency II is definitely going to be a huge administrative burden for some Danish mutuals,” he says. “They are all right capital-wise, but when it comes to the extra administration some of them might throw in the towel in the end.”

If so, Købstædernes Forsikring will try to do its best to ensure that the solution is a mutual one. Mogens N Skov has already begun to float the idea of a range of ways in which smaller mutuals could look to Købstædernes Forsikring for help. One possibility, he says, could be for the mutuals to maintain their brand and board structures, but for Købstædernes Forsikring to take over back office functions and other administration. “It would better for them to find a mutual home, instead of just giving in and handing over their clients to a plc. We've got the capital and I would claim that we've got the management resources as well,” Mogens says.

Mogens N Skov has a particular interest in reinsurance dating back to earlier stages in his career when he was focusing particularly on the reinsurance market. It's one of the reasons why he has a particular commitment to ICMIF. “Of course you learn something every time you're together with other people, and being a small country as we are we have to reinsure internationally, and that's why reinsurance is close to my heart,” he says. He is a regular at ICMIF's two-yearly Meeting of Reinsurance Officials (MORO) events. “I talk to a lot of the ceding companies and might learn a thing or two, I might hear a rumour, and that's all to the benefit of my company. Besides, it's a great inspiration to meet people from other cultures, it's necessary and it's stimulating. ICMIF adds a lot of value to me as a person and it adds value to my company too,” he says.

Mogens has now stepped forward to take over the role of Chair of ICMIF's Reinsurance committee, and is therefore heavily involved in preparations for the 2012 MORO, which will take place in Paris .

Life is not just insurance or reinsurance, however. “I'm very fond of cooking, that's one of my main interests. I cook on a daily basis… something of course which my wife enjoys a lot!” he says.

He adds that he has always been a keen sportsperson, having notched up an impressive 2 hours 46 for the marathon when he was a little younger. Football has been another enthusiasm, as has cycling. “I have two racing bikes, one in the south of France and one back home in Denmark , so I can cycle in both places,” he says. “These days I'm trying to learn to play golf, and then I play tennis once a week during the winter,” he says.

He's obviously driven to win as many points as he can: “My approach to tennis is that the ball's not lost until it hits the ground the second time,” he adds. It's probably the same spirit of determination which he has brought to Købstædernes Forsikring, transforming an historic institution into a successful mutual fit for the twenty-first century.

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