RICHARD Pietsch (pictured) became chairman of Queensland’s largest insurer as the floods flowed in Mackay, storms battered the Gap and the Gold Coast, all amid the deluge of the global credit crisis. 2008 was perhaps not the best time to become chairman of an insurance company, but that’s exactly what Pietsch did. He has since helped bring RACQ Insurance back into the black with 100 per cent ownership, following a demerger with Suncorp Metway.
The year was a baptism of fire for Pietsch, although ‘baptism of water’ might be more appropriate as Mackay experienced its worst flood in two decades and storms wreaked havoc in South East Queensland.
In insurance language these are known as ‘events’ but not of the sort you look forward to, setting back RACQ Insurance (RACQI) with an $11.8 million loss for 2008.
“That was my first year as chairman and president, it’s not a nice thing to happen and with the financial markets as well it was pretty tough,” he says.
“If anything could have gone wrong in 2008 in the insurance industry it did, there wasn’t much else that could have happened, but there’s always a brighter day around the corner and you just have to batten down when these things happen, and be there for tomorrow.”
In 2009 RACQI came back ‘bigger and brighter than ever’, recording a $63.3 million profit through cost-cutting measures, premium increases and fewer ‘events’.
“When we were in the centre of it I never imagined in my wildest dreams you could say that we would come out as quickly and as successfully as we did,” says Pietsch.
“That just goes to show our conservative culture and that we made good decisions, which come with good governance and good management. Nobody lost their job. We’ve got around 1500 staff across the organisations and no one was made redundant, it was all through natural attrition and re-arranging with our people so we’re proud of that.”
Pietsch says when RACQI raised insurance premiums it experienced flat growth, but competitors followed suit and the company is now gaining market share.
“What we did do though was increase insurance premiums, particularly in house because if you ask any insurance analyst they will say house premiums are too cheap – we recognised that, all the time looking after our members to explain it to them.
“Towards the end of 2009 the others went past us (premiums) and we’re gaining market share at the moment – I don’t want to be cocky about that but we are.
“We don’t aim to be the cheapest because there’s a saying ‘cheap and nasty’. We pride ourselves in the service we give and the expediency with which we resolve the claims and get people’s homes fixed.”
Until the recent demerger, RACQI was actually competing with its co-owner in Suncorp, along with Insurance Australia Group-owned (AIG) NRMA, which embarked on its ambitious ‘Unworry’ advertising campaign in Queensland.
“It’s fair to say they (NRMA) upset us, but we would not react in a similar way – I don’t think that going out there and belittling your opposition is the way to do it,” says Pietsch.
“In fact when NRMA gets on those campaigns, I’m not saying it boosts our sales, but it does increase ours because people think they’ll start comparing. It gave us the ability to be out there and talking to our clients and that’s what we want to do, so it helped us keep people I suppose.”
A corporate ‘event’
For 15 years RACQI has been involved in joint ventures – first with GIO, then AMP and finally Suncorp for the last eight years, but in January the banking and insurance company decided to withdraw its 50 per cent share from the arrangement.
“We had to acquire it. Our only other option was to put our 50 per cent on the market and sell the whole thing, and that was not an option, as we’re in insurance for our members – it’s a great way to give them a quality product at a reasonable price and with great service,” says Pietsch.
“We had strategically planned our insurance business two years before for all sorts of things, but honestly that was the last thing we thought would happen that they were going to knock on our door.
“The board was well-prepared but that’s not underselling the amount of work that we’ve had to do, and we’ve come out of it owning 100 per cent of that insurance company and we’ve paid for it with cash.”
The funding came from the sale of realised investments the club has made, but while there are no debts there is always a risk that comes with putting all your eggs in one basket.
“Owning the insurance company outright, the risk is that’s a huge amount of our assets in one pile,” he says.
“I think there’s a good future but we’re always open minded, so we’re not going to say 100 per cent that in five years time we’re still going to own 100 per cent, but at the moment we’re comfortable in doing that.”
Leadership is all about governance for Pietsch, inspired by the former director of Lutheran Education Queensland Ken Albinger.
“He was ahead of his time, teaching the difference between governance and management, and I think that’s an important thing to know and understand.
“We set the strategy, we engage management and carry it out, so we’ve got to have confidence and appoint the right people, we appoint the CEO and then he and his team deliver on what we as a team want.
“I as a chairman cannot influence and direct staff – I mean, I can by the way I act and they can say ‘the chairman wouldn’t be happy if I did this’, but not by direct interference, only by example.”
Pietsch has been involved with the board of Lutheran Education Australia and was on the board of Toowoomba’s Concordia Lutheran College for 12 years.
Born in South Australia, he moved to Inglewood on the Darling Downs 50 years ago and while he has to be in Brisbane for meetings every week, opts to live out west.
“Good fresh country air, there’s nothing like it if you’re all wound up - you jump on the motorbike and go ride around the cattle and the sheep and just relax,” he says.
“I have learned to know the inside of a hotel room but that’s the price you pay if you live in rural and regional Queensland to represent, and I’ve done that most of my life in various organisations, going back to Rural Youth in my late teens and early 20s.
“With my family we own a sheep stud, have done since the 70s, and at the moment the sheep industry is booming – my sheep enterprise is at its most profitable in my lifetime at the moment, it’s just fantastic.”
With close ties to his community, Pietsch knows how vital it is for rural towns to have access to the types of services afforded the cities, bringing a more personal approach to the RACQ’s policy to service the entire state.
“We need that rural and regional presence because while only a small percentage of our members live there, we need infrastructure and services out there because most of our members go there at some stage or another for travel holidays,” he says.
“We’re having a board meeting in Longreach in August, every year we do a regional visit, but it’s not without its problems and complexity so it’s been an exercise to work out people’s travels.
“Some of us are staying a bit longer and going up to Winton to see our service provider up there, to fly the flag with him and show him that we care because those people are extremely important to us.”
Pietsch remains focused on the RACQ team as a whole and is reluctant to talk too much about his own leadership abilities.
“Leadership to me, what I want to be remembered for is building and encouraging my team and getting the best for everyone out of the whole team effort, not so much focusing on myself – we’re a community organisation, it’s about service,” he says.
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