Introduction: Jacki Johnson talked about her role when taking over the CEO of IAG NZ at a critical time, when Christchurch Earthquake happened and also her path to lead the largest general insurance company in New Zealand.
Source: CoverNote Magazine, June 2015
Jacki Johnson took a New Zealand job expecting a more benign insurance environment. Instead, she got a once-in-1000-years earthquake.
When it comes to being thrown in the deep end of insurance, you can’t get more of a trial by fire than arriving in New Zealand in September 2010.
IAG chief executive Jacki Johnson was due to migrate from Australia to take up her new role in New Zealand in November that year. But at 5am on Saturday, September 4, she received a call from her new deputy in New Zealand that signalled the start of a major change of plans.
“He was telling me not to worry, everything was under control. I was still asleep and I wasn’t sure quite what he had under control. I had to get on a plane the next day,” Johnson remembers.
Christchurch had been struck by the first of two major earthquakes that were to completely change the face of the city. There were no fatalities as a direct result of the September quake but buildings were badly damaged, water lines broke and power to the city was disrupted. The second quake, on February 22, was much more destructive and killed 185 people.
If Johnson wanted to come to New Zealand to make a difference to Kiwi lives, her opportunity arrived early.
“To this day, I am very grateful to my team and the community,” Johnson says. “I was accepted very quickly, spending most of my time on the ground in Christchurch during those early weeks. We had 1000 people there before the earthquakes so we were not only looking at how we respond to the community but how we keep our people safe. It was a bit different to what I thought my induction would be.”
Johnson said she had been prepared for having to learn about leaky buildings, or the cultural differences between doing business in Australia and in New Zealand. But the earthquakes put everything on a fast track. Soon, she was not worrying about things like how to pronounce place names any more.
Johnson has been part of the insurance industry for the past 25 years. But she started her career in Australia as an occupational therapist, working in a teaching hospital, treating people with significant injuries including burns and amputations.
“I was working on how do you help people recover and get their lives back,” Johnson remembers.
From there, she was asked to work for a consulting firm, IRS Total Injury Management, that was owned by an insurer. It worked on injury prevention at companies such as Ford, BHP, Foster’s and the mines. “We were working on how do you prevent accidents as well as helping people recover.”
The company grew and before long she was deputy managing director, a non-executive director on the board of Workcover Authority in New South Wales and became more involved with things such as actuarial reserving. “All the things that make a prudent insurer in terms of collecting enough premiums to pay the claims when the worst happens.”
It might seem a big leap to move from occupational therapy to the helm of a major insurer but Johnson says the two roles are not really so different. “For me it was a sort of transition into insurance, a similar thread of being able to help recovery and making sure people are protected. People often say it’s been an unusual career segue but for me it’s quite congruent with what I believed in a as a young graduate at 20. I apply it in a different was as CEO of an insurer.”
Stints at HIH Insurance and Allianz followed before she started with IAG in 2001 in its strategy team, just after the firm was listed on the stock exchange. She quickly worked up the ranks, becoming chief executive of business partnerships, e-ventures, and digital start-up The Buzz Insurance. “Then I came to New Zealand in 2010 to lead what I thought was an insurance company in a much more benign environment than my experience in Australia, given I navigated through cyclones, bush fires, hail storms and everything else in between.”
A downside of being in insurance is that she has an encyclopaedic memory of disastrous weather events. “Usually if you can pull out a weather event I can tell you what year it was.”
Johnson says she has been impressed with the way the New Zealand insurance industry pulled together to deal with the Christchurch earthquakes. She still chairs a regular meeting between Government officials and the insurance industry. “Never in my whole insurance career, more than 25 years, have I ever seen teams across industries in a competitive environment work so well together.”
She says the Christchurch event was unique because of the huge number of aftershocks that rattled the city, and New Zealand’s system where claims have been dealt with by the Earthquake Commission as well as insurers.
New Zealand insurers also had to work hard to make sure they could hold on to reinsurance backing through 2011 and 2012 and ensure that investors could see New Zealand was not a bad market for insurers to be operating in. Johnson says she frequently lost sleep in 2011 over the possibility of capital disappearing and insurers not being able to offer protection to those who needed it.
“The way I’ve seen colleagues come together to solve the issues… I don’t think the community understands how many weekends and how many late nights, how much time has been invested to solve very complex problems to make sure we could respond and not just taking a short-term view but a long-term view as well. Even now, we still have these meetings.”
Now, premiums have dropped substantially and competition is ramping up. “Maybe we’ve done too good a job telling the international world what a great market it is and how well people are working together.”
The challenge now is to make sure Christchurch and other parts of New Zealand remain well insured at a time when the economy is growing and migration patterns are changing. “If new people are coming in to New Zealand who are not used to buying insurance, how do we make sure they see the value in being insured in a country they might not understand?”
The opportunities for insurers will come in making insurance available, accessible and sustainable, she says. “I see a real role for brokers and advisers for those people who really want a risk conversation and have complex needs. That is absolutely paramount. We partner very closely with brokers,” Johnson says.
Insurers need brokers to help them fully understand their clients as risks change. “You only have to look at the trucking industry, with road usage up this year and more trucks on the road, carrying different sorts of cargo from different ports, the broker understand of clients is really instrumental for us so we can make sure they’re getting the right product. Our priority is to make sure people stay insured and adequately insured and understand the risk they’re taking.”
Johnson is also working through the acquisition of Lumley. “It’s gone particularly well and I have great respect for all the people working together and becoming part of IAG. We’re constantly investing in systems and our premises to make sure people are safe and in safe buildings. We’re also making sure we continue to be viable in terms of the long term in being efficient and focusing on attracting capital to support out business.”
There are no plans to return across the Ditch any time soon. Johnson says she considers herself an adopted Kiwi now. But New Zealanders still often do not seem to appreciate what this country can offer. “There’s something about the New Zealand psyche, isn’t there? I constantly got asked in 2010 why did you come? I didn’t take it as an insult but people ask why you’re here. We love New Zealand.”
And insurance is where she will stay, too. At a recent reunion, a doctor acquaintance told her he could not believe she had stayed in insurance when she was once such a good occupational therapist. “I said I still make a big difference, if not bigger, in terms of the things I do in my career in insurance. He was probably sorry he asked. People do not understand how dynamic insurance s and what rich careers you can have, what a difference you can make in communities. I probably became a bit of a zealot.”