It might be the accountant within her, but FBD chief executive Fiona Muldoon isn't the type of person who gets carried away easily.
On Monday, FBD posted better than expected results, including a pre-tax profit of €11.4 million. Goodbody stockbrokers had pencilled in a €4.1 million loss. It was the group’s first profit in three years.
The return to the black was due to benign winter weather, fewer large loss claims than anticipated, and a €7 million pension gain. Better pricing and underwriting selection helped, too.
It was good news for the company, its staff and shareholders but Muldoon wasn’t breaking out the bunting.
“It’s been a lot of hard work but, yes, broadly speaking I’m happy. Better born lucky than smart.
“We got a little bit lucky so it’s probably best not to lose sight of that. We controlled the bits we could control and the weather broke our way as well. We were expecting a modest loss [but] we knew during the year that . . . we were hanging on to more customers than we otherwise thought we would when we were pushing through price increases.”
Muldoon isn’t making any grandiose growth claims for this year, either. She’ll be happy with “modest low single digit” growth in its premium income, reflecting “what we will see in the economy generally”.
With an investigation under way on possible anti-competitive practices on motor insurance, Muldoon is also wary of commenting on the likely increase in premiums this year.
FBD motor policyholders have been hit with rises of about 50 per cent in the past three years, because of claims inflation. Price increases for its farmer and SME customers have ranged from 30 to 60 per cent, depending on the specific risks attaching to their operations.
Muldoon prefers not to get drawn into a 'blame game' about the mistakes by the industry
Muldoon acknowledges that it has been “very difficult” for its 508,000 policyholders to absorb these increases.
“It’s not an easy environment to sell into; to explain the premium increases. No insurance company likes to have to do that. Premiums are as high as they are because we have an inflationary claims environment. We can see that very clearly in our own data. And premiums will remain high for as long as the level of court awards are as high as they are and the system we have with personal injuries.”
Don’t industry players carry some blame by lowballing premium prices to win market share?
“In hindsight . . . mispricing did happen. It’s a very competitive marketplace so there was aggressive pricing of policies and maybe too much focus on market share. But the reason that insurance is regulated is because it is only in hindsight that the cost of goods sold is known. On the day you write the policy, you don’t know what it’s going to cost in claim terms.”
Muldoon prefers not to get drawn into a “blame game” about the mistakes by the industry, noting that all she can control is what happens at FBD, which she insists is working hard at “better risk selection, better underwriting, and better pricing”.
An interdepartmental group headed by Eoghan Murphy, the Minister of State for Financial Services, recently recommended 71 actions to tackle the cost of motor insurance.
Personal injuries awards
Muldoon acknowledges that the Minister’s group produced a comprehensive report but would prefer if the Government focused on three to five big-ticket proposals that could make a difference.
“We can’t do 71 things together and what I’d like to see is a degree of prioritisation and focus,” she says.
How many? “Well, I’m a simple gal and I would say three to five [action points are needed]. It would be to strengthen the Personal Injuries Board, and within that they need to tackle non co-operation, implement the pre-action protocols, give them an appeals power for rejected cases, and a more efficient process en route to litigation.”
She would like to see the proposed personal injuries commission benchmark awards here against international experience. “I believe that would show that awards here are much higher than in other countries. The industry would like to see graded compensation coming out of that.”
She is also a fan of care not cash, which would involve people getting medical assistance rather than a lump sum for the likes of whiplash injuries.
In addition, Muldoon wants action on fraud, with insurers and the State being able to share data to improve the detection of dodgy claims. “The other thing is automatic number-plate recognition for An Garda Síochána. It requires us to be able to share and pool all the motorists that we have on our books and those of other insurers so the Guards have enough computer power and centralised data.
“If we got traction on some of those things the industry would then have to show that it would translate into decreases.”
The FBD boss is “hopeful” that the Government’s report “doesn’t end up in someone’s drawer”.
Muldoon took over as chief executive of FBD in October 2015 when the business was at a low ebb. It reported a hefty underwriting loss for that year of €125 million.
She found a business with a strong brand, staff loyalty and customer loyalty, many of whom are farmers or connected with the agri sector.
What were its problems? “If I was to say something critical . . . its own strategy for growth was to grow in urban areas and through intermediated channels [brokers]. To do that, you have to have very sophisticated pricing, actuarial and data analytics backing you up. In that area, we had growing pains.”
Her plan was to “simplify [the strategy], focus [on the core business], de-risk [by getting out of non-core] and strengthen [the balance sheet and management team]”.
Driverless cars
The Nononsense.ie brand was axed, with the company recently launching a €2.5 million advertising campaign behind the core FBD Insurance name.
There were about 150 voluntary redundancies and the management structure was changed to make the business leaner. The group also exited non-core business, such as its hotel and leisure joint venture and its 70 per cent stake in the Passage East ferry operator.
“We were too small to try and sell under two different names. That was a straightforward ‘let’s put our eggs all in one basket’ decision and the one brand that resonated with people was FBD. We wanted to reannounce ourselves as FBD.”
The process of change is unlikely to end there. The advent of driverless cars and other technological innovations are likely to bring significant change within the insurance sector.
“There’s an intersection there with regulation. How driverless cars will be regulated. How the transition – while you and I are still driving around but someone else has decided on a driverless car – will be managed. I’m not fully sure all of the advocates who tell us that driverless cars are going to be on our roads by 2020 know how that regulation will work.
“It’s fundamentally going to change the nature of road safety and of how the motor insurance product is sold. But that might be further out than some of the very early adopters in the technology space say. At least 15 years out for a full ‘ordinary-man’ purchase of a car that’s affordable and where we’re seeing them on our streets, fully regulated and fully insured.”
I had someone who hit me but they broke a stop sign so it wasn't on my insurance
Muldoon says there’s a burgeoning InsureTech industry thinking about these issues but she’s not clear how the sector will adjust.
Data analytics has been one of the “big investments” by FBD since Muldoon’s arrival, costing tens of millions of euro.
“Big spend for us. But that’s the way the industry is going. More actuaries, more technology, more ability to interrogate and know your own data. That’s why we’ve been so successful in the farming area for so many years, because it knows and understands all the data in relation to farmers. We know what their risk management practices are and what their loss ratios are.”
Childhood
Muldoon’s view of the insurance sector is that there’s no such thing as bad risk, just a mispriced one. “Understanding and pricing risk means you need enough data to do it properly.”
Needless to say, all of Muldoon’s own general insurance policies are now with FBD but who was her car insurance with before joining the company? “I have been with a number of insurers over the years but I’m damned if I’m giving them air time in my interview.”
Did she ever have a claim? “I had someone who hit me but they broke a stop sign so it wasn’t on my insurance.”
Muldoon is probably unique in holding a full driving licence in both Ireland and Bermuda, where she lived for seven years tax-free while working for global insurance group XL.
Muldoon spent 18 years with XL, returning from Bermuda to take up her role with the Central Bank in August 2011.
She has moved around for most of her life. Her mother was a Dub while her father was from Monaghan. He was an engineer with ESB and the family moved around the State with his job.
"I spent most of my childhood in Tuam, Co Galway, and when I was in second year in school, we moved to Bray, Co Wicklow, and I repeated second year in Loreto, Bray," she says.
Aged just 17, she did accountancy straight from school. “I very much wanted to be in business. I didn’t know anyone in business and didn’t come from that kind of a background myself . . . and accountancy seemed to be a way to go into business. I was good at maths and good at English and I liked the business subjects.”
Who would she cheer for in the unlikely event that Galway and Wicklow got to face off in Croke Park? “Most of my childhood memories are from Galway but I always find that question difficult. Moving in the middle of secondary school probably always conferred a bit of an outsider status on me.”
Did she feel like an outsider in the Central Bank? "Yes. Having spent my entire career in industry on the other side of regulation I was a brave hire by Matthew Elderfield [then head of financial regulation and deputy governor]. I saw an ad in The Irish Times and I applied. I was coming from a different background and I didn't have great regulatory expertise.
I'm way less intense than I used to be and I probably understand better the different points of view
“I had a commercial expertise that I felt strongly, and he shared that, could be combined with regulatory expertise to get a better answer when engaging with firms. I would have been very atypical. I had a different background to many of the people I was working with.”
Left the Central Bank
Muldoon threw her hat into the ring to replace Elderfield when his departure was announced in 2013 but the regulator instead chose French man Cyril Roux as his successor.
Ironically, Roux’s departure from the Central Bank was announced on the same day as this interview.
She describes missing out on the role as “disappointing” but she “wasn’t distraught” at being overlooked. “I ran a fair race but it wasn’t to be.”
Muldoon left Dame Street in May 2014, without having another role lined up. “I was happy to be there as long as I was seen to be helpful and I felt I was contributing. But I felt that had run its course. I did not want to stay and be either unheard or feel unheard or be unhelpful in any way.”
She thinks that “maybe she contributed to the dialogue around mortgage arrears”, which is something of an understatement given the way she rightly took the banks to task for their failure to face up to the issue. “I called it as I saw it and that’s what I understood the job of the regulator to be.”
Her leadership philosophy is based around teamwork and she claims to have “mellowed” in recent years. “I’m way less intense than I used to be and I probably understand better the different points of view and how important it is to hear those different points of view. I was very impatient in my youth. In any team, it’s about understanding your strengths and weaknesses and then having people fill your weaknesses and allow you to play to your strengths.”
Muldoon characterises FBD as a small insurance player in a small country. Given the increasing demands from regulators to hold ever more capital and the onerous regulatory obligation now placed on firms both locally and at EU level, does FBD have a future as an independent entity? Or does it need to become part of a larger financial services group?
“I get asked that question a lot but I can’t tell the future. I believe there is a viable path for us and we have given ourselves the best possible chance. I’m enough of an old-fashioned patriot to say, ‘Why shouldn’t there be a place for an Irish insurer in the Irish marketplace?’.
“Does the world have to be dominated by the same five or six brands in food terms or the same five or six shops in the high street or the same five or six banks or insurance companies? Or can an Irish company serve Irish farms, Irish consumers and carve out its own path? All I can do is the best with what I have in front of me.”
