April 25, 2016 by Jason Contant, Online Editor
Don’t underestimate the effort required to have a major change such an acquisition go through successfully, attendees to the 2016 CIP Society Symposium heard last week.
Speaking during an Up Close and Personal session, Surender Sekhon, director of operational underwriting with Desjardins General Insurance Company, discussed Desjardins’ acquisition of State Farm Canada, which officially closed in January 2015.
“The end goal is you want to see the benefit of what you are implementing and if you’re not going through that change management process appropriately and not bringing your stakeholders along, you’re not going to see the value of it,” she said. “For us at Desjardins, it was obvious. We knew we wanted to grow, we wanted to be part of the Top 3, we had these ambitions, so none of us were surprised when it was announced.”
But for State Farm Canada, “it was a shock, there were no rumours, they weren’t expecting it and they were thinking, ‘Why are we being sold off and why are we being sold off to this Quebec company?’” Sekhon said. “They’re a direct model, so they are going to turn us into these direct robots somebody said to me.”
For Sekhon, “it was obvious – that’s exactly why we wanted to acquire State Farm.” Even though they had their auto product, “obviously we were going to introduce our product, meaning our pricing, segmentation, underwriting approach, our systems,” she said.
Sekhon noted during her presentation that the impact of the change was measured by different factors: tools and technologies; knowledge and competencies; processes and work organization; environment and culture. For example, people needed to learn a new system, products, rules, philosophies and guidelines. “What was bigger was not the product per se,” she said, “but what was the philosophy behind why we do things. So why is our pricing different, why is our underwriting result different?”
Processes and work organization was another “huge” impact for workers, Sekhon said, noting that for the Desjardins underwriting employees, for example, everything was front-end and more of a direct model. For State Farm Canada, it was back-end, meaning that “you fill out an application, an underwriter might get it at some point. In our world… if you need an underwriter, it’s going to tell you right then. So for that person doing that job, you can think how much that job changes.”
Although the difference in culture is something “we’re still working on,” Sekhon said, there are similarities. She related the first time she visited State Farm in Bloomington, Ind., – “it’s like a family-owned company that is massive” – and compared it to Lévis, Que. – “Desjardins town.”
“The two cultures are strangely similar in a way,” she said.