2023 New Zealand Lifetime Achiever, Facultative Underwriter John Wiseman Stubbs feels fortunate to have been able to help keep the reinsurance voice alive in New Zealand.
Stubbs, who was Property Facultative Manager at General Reinsurance (Gen Re) New Zealand between 1987 and April 2023, is proud that he was able to provide the company’s global expertise to the local market.
“Reinsurance is a global industry and we've been returning value to clients here and helping them manage their volatility,” he says. “We have a sustainable well-priced business. Clients get local service and a quick answer when a risk is offered, or an issue is discussed.
“Because Gen Re has a local office the business can respond to topical government queries and contribute to discussions on re/insurance issues when they arise.
"Being local also assists clients who come to us with their risks; we have a direct underwriter-to-reinsurance relationship. Whatever the need, we’ve been able to offer the benefit of a reinsurer’s perspective.
“Without reinsurance foundations,” he adds, “insurance can't exist, so quite simply, my biggest legacy is that reinsurance in New Zealand didn't simply disappear into the back office.”
Computers, brokers and tariffs
Born in 1954, John Stubbs has lived in Auckland all his life. He joined South British Insurance in Takapuna straight out of school, as the company’s then manager Eric Granger was one of his father’s connections.
While his initial motivation for joining was to upgrade his Honda 50 Cub and purchase a Candy Apple red Honda CB 125, Stubbs quickly fell in love with the industry and has worked in the non-life sector ever since.
Starting as the office junior with the job of cleaning ants out of the coffee dispenser, Stubbs progressed to servicing direct commercial clients within two years, at the age of 19.
He witnessed rapid changes during his early years in insurance, including the introduction of market driven pricing, intermediation and computers.
“When I started at South British, general insurance pricing and coverage were controlled by a tariff,” he explains. “Undercutting the tariff or adding wider cover into the standard products was considered a "breach " and you could be held accountable by opposition companies.”
By the end of the 1970s, however, the tariff was gone, allowing for market competition, more innovative products and manuscript wordings, which incorporated exclusions. Intermediation by brokers became a preferred form of distribution and computers took over ledger functions.
Being young, Stubbs says he took it all in his stride.
In 1980, Stubbs took up the role of Broker Liaison Officer at Norwich Winterthur with Alan Cameron and Graeme Lynskey as his managers. Over his eight years at the company, savage pricing wars sowed the seeds for the market disruption of the 1990s.
Stubbs joined The Cologne Re in 1987, “just in time for the Bay of Plenty Earthquake, Cyclone Bola and the Global Financial Crisis (GFC)”. New Zealand was still home to seven reinsurers.
During the 1990s, the price cutting of the late 1980s and capital stresses resulting from the 1987 GFC led to massive restructuring in the insurance and reinsurance industries. Many old names disappeared through mergers.
Stubbs stayed on when Cologne Re was bought by Gen Re in 1995.
“I was fascinated by the cultural and strategic differences between the 150-year-old German reinsurer and the 100-year-old American reinsurer,” Stubbs recalls. “I had much to learn and one of my best decisions as manager in 1997 was to employ Sue Gilroy.
“Together Sue and I have served our clients and the insurance industry in New Zealand by smoothing the volatility of difficult or large risks, helping new businesses grow and being the eyes and ears of our company.”
Stubbs reflects on the early 2000s as a return to insurance pricing stability. “Computer systems were recording policy data and the rise of the analytical tools required by regulators and shareholders led to a more professional and sustainable industry,” he says.
When the Canterbury earthquakes hit, Stubbs says they were like nothing anyone had seen before.
“We’d had earthquakes previously, but this was really unusual, and it created so many questions around interpreting coverage and how a policy should respond,” he says.
As a member of many industry committees, notably the Insurance Council of New Zealand’s (ICNZ) Commercial Property Committee, Stubbs is recognised for making a significant contribution to the post Canterbury landscape.
In the initial phase, he was able to bring a reinsurer’s questions to the definition of an event or an insured property as well as supporting the EQC and insurers with interfacing their claims.
“Because we hadn't had an event like this, some of the existing wordings just weren't up to scratch, so a lot of work was done around trying to interpret them in order to do things better in the future,” he recalls.
“Over time, I think we managed to gain a better understanding of what will happen during the next large earthquake swarm, so any mistakes made originally, particularly with commercial insurance policies, won't be repeated.”
Developing the industry
With a mission to help develop underwriters and improve the industry, Stubbs is also well-known for his ability to bring people in with a coaching style that made insurance exciting.
“I'm an ANZIIF Associate, but I haven't had a formal education,” he says modestly. “But over lunch, I liked to talk about technical issues that people wanted to know about. I like clarity in insurance, and I want people to understand and know what they're doing. It’s all a process.”
Stubbs would often sit with insurance clients to discuss how to arrive at sums insured or how to categorise certain types of risk.
“When I saw underwriters, I enjoyed explaining how reinsurance works, how a risk fits into it and how they can protect their company’s treaties from shock loss and that type of thing,” he says.
He also often represented Gen Re or the New Zealand reinsurance industry at Treasury or an EQC Review in relation to regulatory changes or other technical issues.
“If you understand a risk, you can insure it and reinsure it,” he says. “I found that if the people insuring a risk need training, the brokers, for instance, it makes good sense to take that on. In the end, everyone will benefit from a better product.
“Insurance companies would often have bright young people, but they may only receive training for the small part of the business they belonged to,” he adds.
“Common sense is very important to the Insurance business in New Zealand. Risk assumed must be understood and rewarded. If it is not understood and the reward is inadequate the business is unsustainable.”
Taking a scientific approach to risk
Stubbs says New Zealand continues to learn more about its earthquake hazards and changing weather risks, including future bushfire risk and most recently, flood risk that was “fully on show”.
“Accumulations of risk are growing as technology changes and modern construction and manufacturing methods bring new and bigger exposures,” he says. “Change is constant. This volatility makes the industry so interesting.”
Stubbs hopes that the New Zealand insurance industry, just one sixth the size of its Australian counterpart, will adapt quickly.
“Most of our underwriters here have the same capacity they can put out on an individual risk as they would in Australia.
“I expect the insurance will adopt a more scientific approach to events such as floods, the normal action of the sea and sea level rise as they have with earthquakes, which are still the nastiest thing that can happen to us,” he says.
“Insurers need to understand the risks and reinsure them properly otherwise we're going to waste the capital which makes the industry unsustainable. To be sustainable the biggest challenge is a very engaging dynamic risk landscape.
The gift of an insurance career
Apart from the fascinating journey, Stubbs says insurance has given him his family. He met his wife Julie in 1975 when she started at South British Insurance.
“I had very little to do with reinsurance during my first 15 years in the industry, but I found the idea interesting and have never regretted my decision to join the reinsurance industry,” he says.
“I have made many friends both internally within Gen Re and externally with clients.”
An ANZIIF member since 1972 when he joined the industry, Stubbs is acknowledged as a man of great integrity and ethics, with insurance technical knowledge that’s second to none.
Picture: John Stubbs accepts his award at the 2023 ANZIIF New Zealand Insurance Industry Awards.