QBE CEO Australia and New Zealand Colin Fagen says changes taking place in the group’s Australian business must be seen in the context of a global program designed to enhance its effectiveness and reduce costs.

He says the rising cost of doing business in the Australian intermediated market and the need to become more efficient are issues that must be addressed by the company and its broker partners.

Mr Fagen told insuranceNEWS.com.au today that the local reaction to plans to move some process jobs to its Philippines office has overshadowed major benefits of Group CEO John Neal’s global “operational transformation program”.

Most controversy has been caused by information leaked to the Australian Financial Review suggesting QBE plans to offshore around 700 local jobs to operations in Asia – part of a global program to offshore some 3000 roles from Europe, the US and Australia by 2015 to Asia.

Mr Fagen says the issue of moving some jobs to the group’s Philippines office – which Mr Neal has said he “is nowhere near being able to be firm on” – is intended to speed up processes in key areas of the company while freeing up Australian staff from labour-intensive work.

He says changes taking place in the Australian operation are part of the global improvement program.

“People tend to forget that 75% of our business is not in our home territory,” he said, adding that QBE now plans to capitalise on its global footprint.

“There’s nothing new in moving process work to another centre,” he said. “I think 75% of large local companies have moved some operations overseas.”

The process jobs to be moved will help QBE cut costs in the local market. “We’re very cognisant of price-competitiveness here and the need to become more efficient.”

He says improvements in the way QBE handles claims, finance, IT and operations are vital, and while brokers will note little or no change in the company’s relationship with them in the short term, “in the medium term they will note an improvement in our consistency”.

“For example, we’re applying more rigour in looking at processes in Australia to achieve faster turnaround in quotes and claims.”

Mr Fagen told insuranceNEWS.com.au the local intermediated market needs to concentrate on cutting costs or lose market share to direct competitors, particularly in the SME space.

“We are trying to help protect the broker market,” he said. “We value the service levels we have in place, and we need to be able to work together to keep them.

“We need to delineate back-room functions from front-room issues to be more effective for our broker partners and our customers.”

He says the change process for the Australian business should be seen as part of the group‘s global program rather than a purely local issue, echoing Mr Neal’s comment on February 26 that the group must move from “a regionally focused multinational to a fully integrated global insurer”.

This has the potential to open up more opportunities for staff because it will result in more co-operation and skill-sharing across the group’s divisions. Mr Fagen says the group’s effectiveness in dealing with catastrophes in different regions will be enhanced by sharing expertise, and some claims work may also become more centralised.

He and other senior managers have been travelling around Australia to explain the program to staff. Other managers are speaking to brokers about the reasons for change and what the program will entail.