October 7, 2011 by Stefan Dubowski
What does it take to succeed as a broker serving large-scale clients on an international level? Good communication skills, resourcefulness, and an analytical mind, judging from an interview with Gilles Gervais, president of Arthur J. Gallagher Group Quebec ULC, where international customers generate 50 per cent of the office’s business.
An insurance professional for 32 years, Gervais describes a career built on understanding customers’ businesses inside, out, and upside down. Success also calls for an excellent grasp of international insurance regulations, and the ability to connect with people from different backgrounds and cultures. Plenty of travel and unusual hours are par for the course as well.
It doesn’t happen overnight. For Gervais, the journey began on the carrier side at Prevoyant du Canada, where he started as a file clerk and made his way up to underwriter. From there he moved to American International Group Inc. (AIG) and then to Munich Re. But he found the reinsurance game “too quiet,” he says – plenty of phone calls, not enough direct customer interaction. So given the chance, Gervais switched to brokering, starting at Johnson & Higgins, where he worked with his first international customer: C-MAC Industries, a microelectronics company headquartered in Sherbrooke, Que., that was looking to expand.
“They acquired 33 companies in 36 months, working all over the place – Europe, U.S.A, Canada,” he recalls. “Basically I got my experience in the international business with them.”
When Johnson & Higgins was acquired by Marsh Canada Ltd. (1997), Gervais continued working with international clients such as the Montreal Museum of Fine Arts, which needed insurance for various travelling exhibitions around the world, including one travelling between Canada and France with impressionist paintings worth $1.1 billion.
Given the opportunity to become a shareholder, Gervais joined Lowndes Lambert Group Canada, where he worked with international water-treatment technology company GLV Inc., operating in 30 countries with 2,300 employees. In 2007 Lowndes Lambert was acquired by Arthur J. Gallagher & Co., a publicly traded brokerage currently with sales of more than $2 billion annually, operating in 125 countries, with 13,000 employees.
The acquisition landed Gervais in the president, Quebec position, where he oversees premiums of $25 million annually in Montreal and Halifax.
He still has a hand in serving clients, including GLV. “A small portion of my time is the management of the company, maybe 20%,” he says. “The main portion goes to service my own book of business. I am an insurance broker, not just the branch manager or president.”
To meet the needs of the international market, Gervais had to hone his communication skills and learn to delve deep into customers’ operations. An extensive insurance and brokerage network goes hand-in-hand with hard work in the quest for success on a global scale.
The Language of Insurance
Communication is a constant challenge. Language barriers and cultural differences make business all the more difficult on the international level.
Gervais, who speaks French and English, notes that for the most part, business is conducted in English in many places. But sometimes he needs a translator to communicate with customers’ employees in some countries, and that can make workdays somewhat longer, since conversations take at least twice as much time with an intermediary conjoining the correspondents.
And even if the correspondent speaks English or French, Gervais can’t take communication for granted. It’s less of a concern among English-speaking countries like Australia, the U.K. and the U.S., where insurance isn’t all that different than it is at home. But in some countries, the industry has numerous terms that differ from those used in Quebec, making clarity difficult. France is a good example.
“One of the first things that I learned 20 years ago is not to assume that the instructions and questions you have provided were well understood,” Gervais says. “I like to double check very often.”
What’s more, business culture differs around the world. In some countries, requests are addressed in a matter of hours. In other places, answers come days later. It’s important to understand which countries operate in which ways, or the broker risks offending the client or business partner involved, Gervais says.
Communication is the key to understanding the customer’s business, which can be complicated in international accounts. For instance, GLV may be in the wastewater treatment industry in one country, and in the pulp and paper industry in another. What are each country’s regulations from an insurance point of view? The liabilities are bound to differ. What are the local rules regarding insurance needs?
Gervais is used to travelling. Operating as GLV’s risk management arm, AJG provides close client services, which means Gervais has to visit the client’s operations to truly understand the risks involved, and the customer’s local insurance needs.
Nothing beats being there, he says. In one situation Gervais travelled to numerous locations and viewed techniques used by specialized building contractors in the construction business. In some locations, he found that concrete buildings were supported by steel jacks as the concrete cured. Elsewhere, bamboo was used to stabilize the structure.
“If you are the underwriter and I tell you my client is building concrete buildings four, six, eight stories high all around the world, you may think that it is what you know,” Gervais points out. “But in reality, in some countries it might be very different.”
Laws and Logistics
One aspect that is bound to be different is the client’s time zone – another challenge in international business.
“The insurance business being what it is, we often get last-minute requests,” Gervais says. “Doing business all around the world means that your working week may start Sunday night. Asia and Australia, for example, are at work when you finish your dinner. Being committed to international business means that you are committed to sometimes working seven days a week.”
But that may be just another reality for brokers looking to succeed in the global marketplace. It certainly jibes with the amount of time Gervais puts into his work.
“I don’t work 35, 40 hours a week,” he says. “I work a lot more.”
International laws can be another challenge. Some countries permit non-admitted paper, so the insurer doesn’t need to underwrite policies locally. Other places forbid non-admitted paper, making local representation all the more important.
What’s taxable? That’s a question many international brokers are considering after Adidas’ New Delhi situation (see India country report by clicking here). According to an article in the Wall Street Journal, the shoe manufacturer received US$30 million from insurance after a 2009 fire at its warehouse. Adidas reportedly argued that the payment wasn’t taxable because the insurance policy was taken out by Adidas AG, the global controlling company. But India’s tax investigators found that money was transferred from the global corporation to its local arm, leading the investigators to the conclusion that the insurance money actually belonged to the local unit, and should be taxed.
International laws can be tricky. According to Gervais, an extensive global network of corporate offices and trusted partners stationed around the world can provide the on-the-ground information the brokerage needs in order to properly advise clients and inform insurers.
“I’m going to be in touch with my local office and say, ‘Here is what I know about the laws and regulations in your country. Can you confirm that I am right and I’m not missing something?’ My network is a first source of reference.”
But those networks can be tricky as well, consisting of corporate offices and partners. To ensure quality, the brokerage qualifies partners based on servicing capabilities, probity and positive reputation in the market before agreeing to share international responsibilities with them.
How does the company decide whether it should open a corporate office itself, or partner up? Gervais says that depending on the area, sometimes it makes more sense for AJG to work with the local top-rated broker.
“It goes with the customer’s needs,” he says. “If the need is only to issue an invoice and a local policy, it does not make much difference. If the need is to be involved in various projects – construction and manufacturing sites – and to be present on a day-to-day basis, we may prefer to partner with the number-one or two in that country, which may be closer to clients and provide a wider scope of services.”
Having worked with global networks at three brokerages (Johnson & Higgins, Marsh and AJG), Gervais says every network is different. And “none is perfect,” he says. But in his experience, customers prefer to work with brokerages that start from the client’s point of view: which organizational framework makes the most sense for the customer? “The corporate office does not always provide the best service. It depends on the need.”
One challenge: negotiating pay structures for partner brokerages. “All international firms like us have a predetermined set-up for remuneration shared between offices involved on an international account,” Gervais says. “Large business is often done on a fee basis, and not on a commission basis. In some countries, partners aren’t used to the fee basis.” That can result in some interesting discussions with partners.
AJG also expects the carriers to operate internationally if they want the customers’ business. While many insurers will say they’re global, in fact they may only have a couple of offices in the usual places – financial centres such as New York, London, and Zurich, Gervais says. He says that no more than five to seven insurers have genuinely global networks with a presence in 50 to 75 countries consisting of corporate offices and partners.
AJG works with all global carriers. “I have never been in a country yet where the insurance company we used could not issue a local policy.”
Advice for Young Brokers
Listen more, talk less. Stay honest. “Never be shy to say, ‘I don’t have this experience personally. Let me go back and ask my colleagues about this.’” And if it’s experience in the international market you’re after, aim for a position with a company that operates in the global market, he says.
Copyright 2011 Rogers Publishing Ltd. This article first appeared in the July/August 2011 edition of Canadian Insurance Top Broker magazine.
This story was originally published by Canadian Insurance Top Broker.