Conserving the culture

Conserving the culture

PSC Insurance Group continues to grow at a rapid rate, but not at the expense of core company values

By John Deex

PSC’s journey began in 2006 with the acquisition of a Melbourne brokerage with five employees and $800,000 of revenue.

Some 15 years later the diverse insurance group is heading for $220 million in annual revenue, with operations not just in Australia but also New Zealand, the UK and Hong Kong.

It’s broking roots remain strong, with traditional branch offices and a thriving authorised representative (AR) network, but PSC has also branched out into workers’ compensation, claims solutions and life – and boasts a range of specialist underwriting agencies.

The appetite for growth has not diminished, with the group aiming to double in size and capability over the next four years.

Group Chief Executive Rohan Stewart, who joined the business in 2009, tells Insurance News that while continual growth is the target, it has to be done in the right way – controlled, considered, and with a healthy culture at its heart.

New focus: PSC’s Rohan Stewart is driving positive culture across the diversified business

Putting the client first is part of PSC’s DNA he says, as is looking after front-line staff and not micro-managing.

“I think we’ve always set healthy stretch targets for our business,” he tells Insurance News. “We always want our business to grow year-on-year, we want to grow revenue, grow profit – we have always had that as a minimum expectation.

“We have this continuing desire to keep acquiring and organically growing by building a broking proposition that’s geared around the client first and then building all the infrastructure around it to support it from there.”

PSC isn’t a “serial acquirer”, he says, and many potential targets have been knocked back because the culture didn’t fit.

“Importantly for us the culture’s got to be right and the people have got to be aligned similar to us – client first, acknowledging that the people that look after our clients are our most important group of people.”

Mr Stewart says looking after all employees is “the PSC way”, and that management egos are kept well in check

“Treating people poorly in our business, or someone feeling they’re better than anyone else, is almost the cardinal sin,” he says. “We jump on that very quickly. It doesn’t matter what your role is, everyone supports each other and no one can really get their job done without contributions from others.”

Mr Stewart believes the company’s commitment to culture has helped it outperform the market and its competitors.

And a recent adjustment to his role means he is now able to give the issue more of his personal attention.

Former Allianz executive David Hosking has joined the group as Chief Executive Australia and New Zealand, allowing Mr Stewart to step back from some of the day-to-day concerns.

“We want to make sure we don’t lose the things that we think differentiate us – people running their own businesses, being treated fairly,” he says. “We want to make sure the cultural aspects get out to all parts of the business, whether it be Hong Kong, or the UK.

“Bringing David in here means I will spend more time driving the culture through the organisation.

“I’ll spread across both international and local, but it’ll be more around getting involved in acquisitions, how do we work more closely with Steadfast, how do we drive the culture.

“As your company gets bigger you don’t want to lose the things that have stood you in good stead from the start.”

Mr Stewart says the targeted growth over the next four years will come from “wherever the opportunity presents itself”.

Insurers contracting in the hard market creates agency opportunities, but equally there are plenty of openings on the broker side.

PSC caters for may broking models, including traditional brokerage branches, joint ventures (JVs), and ARs.

“We’ve got 16 branches that are full of brokers, salaried employees,” he says. “We’ve then across Australia and New Zealand got nearly 200 ARs, and then we have our JV partners.

“What we’ve got is a range of brokers who, depending on where they’re at, can either run their own business and lease out our facilities and our licence, be 50/50 JV partners where we are providing capital and helping them grow their business, or they can be salaried employees.”

A fruitful partnership with Steadfast (PSC is the network’s largest member) is an attraction to potential partners, as is the ability to obtain shares in the business which listed in 2015.

“There are plenty of broking opportunities out there because it’s an aging population, there’s regulatory reform coming over the hill and there’s a point where brokers will say ‘I don’t want to worry about that any more’,” Mr Stewart says.

“We are looking at quite a few opportunities at the moment. Some of it is because [the brokers] are at an age where the owner wants to step back.”

But as PSC grows it is careful not to become too centralised.

“We don’t create big buildings full of people,” Mr Stewart says. “That was one of the learnings [founding partners] Brian Austin, Paul Dywer and John Dwyer got from their OAMPS days.

“You don’t buy businesses and just put them all together and hope it works. Bringing different cultures, different egos together can work, but it can be problematic.

“So we don’t let any business get bigger than 30 or 40 people. We don’t want people managing people managing people.

“We want the people running that business to be close to their staff and close to their clients.”

The AR network is also targeting growth, but Mr Stewart says the AR selection process is rigorous.

“We like to see our ARs as part of our acquisition trail down the track. We’d like to eventually be able to acquire all of our ARs if we could.

“We have a view that unless you’d be prepared to employ them in your business you shouldn’t put them on as an AR.

“We’ve got about 55 ‘member brokers’ in New Zealand. Over time we’d like to be acquisition partners for those as well.”

“The key thing we tell people is we take the business seriously, but we don’t take ourselves too seriously.” – Rohan Stewart

Growth is also likely in the rapidly expanding UK operation and fledgling Hong Kong presence.

“We recently bought three businesses in Hong Kong that provide broking and risk management services, so that’s a bit of a toe in the water to see what we can do in that region. The UK business probably does as much premium throughput as the Australia and New Zealand operation,” Mr Stewart says.

“We’ve got wholesaling businesses in London which are effectively Lloyd’s brokers. If retail brokers want to get into Lloyd’s they come in through us. “We’ve also recently started to buy some retail brokers in the UK. Outside of London they look after SMEs and slightly larger commercial clients – very similar to what we do here.”

He says a network of regional brokers in the UK is a good opportunity for PSC. “We’re now fairly heavily weighted to the UK, we’ve got quite a dependent revenue stream coming out of the US, we’re dabbling in Hong Kong, and we’re continuing to grow business in New Zealand and Australia, so the geographic spread is quite significant.

“That gives advantages because you are not beholden to one geographic area and it also gives a more diversified revenue stream.”

Wherever growth comes from, the group has already come a long way from five staff and $800,000 in revenue.

The bigger you get, the harder it is to continue to grow, but Mr Stewart is confident PSC’s targets can be achieved – and that the culture it has grown up with won’t be lost along the way.

“We are going to try and bring in capability to help us continue to grow, so it might be individuals, it could be teams, it could be niche specialist areas.

“The key thing we tell people is we take the business seriously, but we don’t take ourselves too seriously.

“We’re always having a bit of a joke and a banter, but equally we know exactly where our numbers are, how we’re performing.

“I think they’re important elements of being able to run a business holistically.”

Coping with COVID

While the pandemic has had an impact on some areas of PSC’s business, Mr Stewart says overall it “hasn’t missed a beat”.

Flipping to remote working came easy, and results have continued to impress.

Lockdowns have also opened the company’s eyes to the benefits of flexible working.

“We always preferred people to be in the office working so they could be interactive and sharing ideas.

“But I think you can find a bit more of a balance with some people in some roles where they could do three and two, or four and one in terms of the split. We didn’t see any productivity drop-off which I initially thought there could be.”

The real challenge with COVID has been in dealing with insurers, Mr Stewart says. That’s the result of a hard market and an inability to hold face-to-face meetings with underwriters.

“Getting risk placed at the moment is probably 30-50% more difficult than it was 18 months ago.

“Insurers’ risk appetite has contracted and it just gets harder because it’s more difficult to walk down the road to see an insurer and get a deal done.

“Pre-COVID there was a spate of bushfires, floods and storms, so the hard market was already kicking in at that point. COVID has added to it.”

This makes a broker’s job harder, Mr Stewart says, but also potentially more valuable.

“There is a lot more work to get the same risk placed. In some of those harder-to-place complex risk areas it’s not so much about the price it’s about getting capacity, getting someone to put the risk down.

“My point to our people is that good brokers shine in hard markets. We can demonstrate our worth.”