News | 5 min read
Chairman of Elephant Insurance’s parent company pleased with progress
September 30, 2014
News | 5 min read
September 30, 2014
Alastair Lyons, the chairman of Henrico County-based Elephant Insurance Service’s parent company, Admiral Group Plc., is pleased with how its U.S. auto insurance business has progressed in the past five years.
Admiral Group, based in Cardiff, Wales, is one of the United Kingdom’s leading insurance companies. It opened Elephant Insurance as a U.S. division in 2009.
Elephant now sells auto insurance in four states — Virginia, Maryland, Illinois and Texas — using an online and telephone sales model.
The company has about 360 employees in the Richmond area now and announced in August that it will move its headquarters from its current location on Eastshore Drive to a larger space in the Deep Run I office building at 9950 Mayland Drive.
During his visit Monday to the Elephant’s offices, Lyons sat down with the Richmond Times-Dispatch and answered questions about Elephant’s progress so far. Here are some highlights from that conversation:
QUESTION: You were involved with Admiral Group’s decision to start a subsidiary insurance business here in the U.S. Why was that seen as a good business move?
ANSWER: “We had a decision to make almost 10 years ago now as to how we ought to develop our (business) group. There seemed to be two options. One was to take the group into other types of insurance — travel and household insurance, things like that — or we could take motor (automobile) insurance into other countries.
“We made the decision that what we really knew how to do well was motor insurance through the Internet and the telephone, and we believed that you would see all countries developing as the U.K. has done, with increasing penetration of direct motor insurance. The Internet itself is an irresistible force across the world.”
QUESTION: Elephant Insurance is part of Admiral Group’s international business unit, which includes other auto insurance businesses in Spain, Italy and France. Admiral’s half-year report for 2014 shows that the international business is growing, but it is not profitable yet. How long will it take for that to develop into a profitable business, especially the U.S.?
ANSWER: “If you look at motor insurance businesses, which have been set up from scratch, organically, they typically take eight to 10 years before they are profitable. That is because it takes a certain scale before you reach the level where you can defray the fixed costs of the business. Admiral has always built its businesses organically. We believe in an approach of test and learn.
“We are happy with the way the business has developed. We expected it to be making losses over this period. We will continue to invest in the business as it continues growth. Moving into new, much larger offices in the Richmond area is part of that investment and a commitment for the future.”
QUESTION: The company also started another business in 2013 called Comparenow, a price comparison website for auto insurance. Are you satisfied with how that business has developed?
ANSWER: “It is new concept here in the U.S. and very much in its infancy. We are pleased with the results we are getting. In our (parent company) report this year, we said that we would be investing materially in the Comparenow business over the course of this year and the next.
“The investments will be primarily to support its marketing campaign. Clearly, it needs to publicize its proposition and build awareness of its name.”
QUESTION: Do you expect to see more employment growth with Elephant and Comparenow?
ANSWER: Yes, particularly with Elephant, because as we grow, our policy count grows, so we need more people in sales and service and claims as well as in support departments.
“Comparenow doesn’t employ that many people, because it is by definition primarily an automated process. So it will not grow with the same scale of employment as Elephant, but we believe that it will develop into a significant and sizable company in its own right.”
QUESTION: Elephant is known for having a fun workplace culture, and its advertising also is light-hearted. Why do you cultivate that kind of culture and image?
ANSWER: “We believe strongly that a large part of our success comes down to the way we run our businesses and the relationships we build with our employees.
“Everybody in Admiral are shareholders. We give everybody 3,000 pounds (about $4,870) worth of free shares each year when they have worked with us for six months. We want people to see the business as their business, and therefore to seek out improvements. We have a simple philosophy: If people enjoy what they do, they do a better job.”
Copyright Richmond Times-Dispatch. Used by permission.