For someone who has been in the financial services industry for over 30 years, Mike Tyler exudes the enthusiasm and energy of a man starting a new business. And, in spite of his joining a long-established global broker, in some ways he is.
In fact, he says his decision – the news was broken exclusively by www.hi-mag.com earlier this year – to leave Buck Consultants to join Lockton to set up a new UK-based employee benefits consultancy (EBC) business there has all the hallmarks of a brand new business venture, albeit one underpinned by the existing clout of a well-established multinational organisation. His enthusiasm, he says, is driven – at least in part – by that.
“This has got all the right ingredients,” he tells me on a visit to Lockton’s offices in the City. “So it is a start-up, it’s like a new business venture just like you have with a private equity play.”
Lockton’s offices – of course – don’t feel like those of a start-up. And while many advisers in the world of health insurance and protection might not – yet – be coming across Lockton on a day-to-day basis, it is in fact the world’s largest privately owned, independent insurance brokerage firm, formed in 1966 and now with more than 4,450 associates in 60 offices in the US, Europe, Latin America, the Middle East and Asia.
While in the UK it is best known for its expertise in areas such as risk management, casualty, surety and professional indemnity, in the US, Lockton currently turns over around $250m of employee benefits business – and some $200m of that is health-related.
And with that bedrock in place, Tyler has been tasked to take on the big hitting EBCs and intermediaries currently operating in the UK employee benefits space, starting first with healthcare.
A CAREER IN EMPLOYEE HEALTH
The appointment certainly signals the broker’s intent. Tyler’s career in health insurance includes 20 years at Mercer, where he set up the organisation’s employee health & risk business before eventually being made chief operating officer. His most recent spell, meanwhile, has been managing director of the health & productivity practice at Buck, one of the UK’s other big-hitting health-focused EBCs.
And while the prospect of challenging the existing big UK EBCs at their own game is one which he appears to be relishing, he says it was the opportunity to return to his “first love” of employee health that remains his key motivation.
The concept of ‘employee health’ and of how it relates to business success and profitability has of course changed markedly throughout Tyler’s career and he has been at the forefront of much of that evolution. While the outdated model of simply looking at employee health as a cost – or something that simply needs to be insured against for when it goes wrong – still exists, many switched on businesses are today aware that a carefully constructed health and wellbeing strategy can result in actual increases in productivity and profitability, not just in reductions in absence and sickness levels.
“Today there’s a better awareness at the top of the organisation that good employee health is a good thing for the business but what they’re looking for is something a bit smarter, a bit better than just simply ‘can I get my insurance costs down’,” he says.
“They’re looking for something that means something to their business.”
Much of that has been driven by improvements in technology and the availability of data which has helped intermediaries and their clients to understand how they can better target interventions around good employee health, Tyler explains.
However, in his view, many employers still have a very reactive view of employee health – and the health and risk industry is in part to blame for that.
“Many of the insurers think that better healthcare equals more health insurance products and that’s not true,” Tyler says. “[…] Particularly with PMI, it’s downstream of what’s going on, it’s actually just fixing some defects. So the person’s tracking along, they’re healthy-healthy-healthy, then something goes wrong, you fix the defect and they go back to healthy-healthy-healthy-defect-fix-it.”
While Tyler believes that, of course, employers should have the safety net of insurance – or self-insurance for larger businesses – in place for when those “defects” do occur, he plans to continue to help businesses look “upstream” to develop meaningful health strategies that reduce the frequency of those defects taking place and to improve other business performance indicators – such as productivity – too. That, he acknowledges, can sometimes come at a cost – and meet with initial resistance – in the first instance.
“Rarely do you find an employer that says ‘it’s a great idea if we spend more money’,” he says. “That’s where it really comes back to making it meaningful to them, so that you can actually show the connection between why you were making this change from a health perspective into why this would be better business for them down the line. So if you had a situation where better employee health leads to better customer loyalty, for example, and then better customer loyalty results in better profits, then as long as you can show that link for the client appropriately then you’ve got a happy client.”
In Tyler’s eyes, there are an increasing number of employers – although still not enough – prepared to accept the validity of that link.
“There are a number of good chief executives, a number of good board members, who are now at the point where they’re saying we [they] need to treat our [their] people better, not just because it’s a nice thing to do but it’s actually a hard business reality, it actually gives us [them] a basis for moving forward. That underpins my passion for all of this.”
Also underpinning Tyler’s philosophy is an increasing amount of academic research in the field, much of it out of the US, where Lockton itself has been very active in employee health for a number of years. He points, for example, to the work of Michael Porter, the Harvard business professor, who “would argue quite strongly that the health of your employees is one of the few competitive advantages that you can have”.
“There are a number of very good studies now around the world, particularly from the US, which show that good health interventions result in good employee engagement, which then result in better productivity,” he says. “And so consequently this isn’t just some sort of ‘fun thing to do’ or notionally a good thing to do, actually you can get something serious for the business.”
Employers in the US have certainly been taking note. But while Tyler is convinced that the learnings of the US business can be applied in the UK, does that thinking – and do those studies – really apply on this side of the Atlantic? After all, because healthcare is not – ostensibly – such a major cost on the balance sheet, it remains pretty far down the agenda of most finance directors here. Tyler, in fact, argues that this is an advantage and should give intermediaries the opportunity to talk about healthcare consulting in a far more sophisticated way.
“In the US, you don’t have to spend more than a very short time talking to someone at a senior level in the US about the importance of healthcare because obviously they are aware that it’s a huge cost,” he says. “In the UK sometimes you have to open up the conversation and actually walk through some of the issues.”
Nonetheless, Lockton’s work in the US gives Tyler a solid bedrock on which to build his team and vision in the UK consulting space, he says.
“Lockton has grown from their roots as being an outstanding general insurance broker to developing some 12 years ago as an employee benefits business in the US. It has given us a great starting point,” he explains.
But is it really the most fertile time for an intermediary to be looking to build a new health-focused business here in the UK? Is the contracting PMI market, for example, not a cause for concern?
Tyler says that while figures from the likes of Datamonitor and Laing & Buisson show the UK corporate healthcare market is relatively flat in terms of total numbers of people covered, there are plenty of reasons for optimism.
“What has been evident is that there are a very substantial number of firms in the intermediary space, all of whom have grown pretty nicely over time,” he says. “But most of them have been focused on just simply the placing of insurances. […] Rather than start from what insurances can we place, you should start from the standpoint of ‘what does good employee health look like’ and then bring the blocks in to deliver that.”
In order to do that, all eyes will be on Tyler and the team he plans to build at Lockton.
“We’re going to build a team quickly, a robust substantial team quickly, with our initial focus on health and group insurances,” he says. “But then the intention is to build a much bigger employee benefits offering here so that we can deal with the complete array of employee benefits issues for our clients.”
And while Tyler is wryly aware that it may take some time to build an employee benefits business with some 4,000 people reporting to him – as they did during his time at Mercer – he is adamant that this is the genesis of a powerful new force in employee benefits consulting.
“Many of the established players are considered to be routine, there’s nothing new, there’s nothing innovative, there’s nothing exciting coming out of it,” he says. “I think it’s fair to say that we will be all of those adjectives.”
But can he really take on the big incumbent UK EBCs?
“It’s extraordinarily difficult,” he concedes. “They’ve got a long head start on us and so it’s extraordinarily difficult to catch those guys and they’re always going to be big players. But I can assure you that we’ll be the best. We’ll be the best advisers in this space.”
Whether or not that comes to pass remains, of course, to be seen. But it is clear that Tyler’s ambition and enthusiasm remains as keen as ever.
“I’m more impatient now than I was when I was 20,” he says.“I’ve got more enthusiasm for doing this stuff now than ever. For me there’s an urgency and need to do this because if you’re not doing it with enthusiasm and gusto then why would you do it?”