Tower to expand Fiji operation in bid to fill labour shortage

Tower plans to hire more workers in Suva to help with the labour shortage. Photo / 123RF

Tower plans to beef up its workforce in Fiji in a bid to counter New Zealand’s labour shortages which have dented its contact centre response times and customer satisfaction rating.

The insurer, which yesterday announced a net profit after tax of $18.9 million for the year to September 30, down from $19.3m in the prior financial year, said it would hire an extra 100 people in Fiji which would see the percentage of its workforce based in Suva rise from 11 per cent to 22 per cent.

Chief executive Blair Turnbull told shareholders and analysts on a briefing call that it was no secret that a key challenge for New Zealand businesses was the tight labour market.

“And for many businesses with active contact centres this struggle to fill seats has resulted in long wait times and frustrations for customers. Tower has not been immune to these challenges which have disappointingly seen our net promoter score (NPS) drop to 20 per cent from 43 per cent in September 2021.”

A net promoter score is what companies use to measure the customer experience of their brand and whether that customer is likely to recommend the company’s products or services to a friend or colleague.

Turnbull said it planned to tackle the challenge by leveraging its digital self-service platform and investing in its Fiji hub.

“This will see the mix of staff more evenly spread between our operational centres in Auckland, Rotorua and Suva, and our people permanently working from home.”

It plans to have 18 per cent of its staff working from home with around 48 per cent based in its Auckland office - down from 67 per cent in FY20.

“Our investments in digital technology are increasingly enabling us to move workflows across our Suva, Rotorua and Auckland operations centres. Having a physical presence in these locations also gives us access to talent in these markets,” Turnbull added.

Strong growth

The company has seen strong growth over the past year with gross written premiums up 13 per cent to $457 million and customer numbers rising 5 per cent to 319,000.

Turnbull said he expected that growth to continue despite the tougher economic climate.

“We have posted guidance for FY23 of 10 to 15 per cent [growth in gross written premiums] and this year we were 13 per cent. We have every expectation we will see that continue.

“This time last year we took decisive action to combat inflation, inflation is the robber in your back pocket. We have targeted our rating. We went out with ways to improve our supply chain to get more efficiency and in a year where we had record inflation to actually reduce our claims ratio to have a really competitive core is a real testament to the fact we are building this business on a really solid foundation of technology, with good people that are leading out on customer experience.”

He said unlike competitors it did not rely on intermediaries and large commissions to drive its business.

Tower’s efficiencies should continue to improve as well as it brought all its businesses together on one core platform, Turnbull said.

“What’s holding us back a little bit is that we haven’t been until now on one core platform for all our personal lines business, secondly we have struggled to find enough people to answer the telephone when we have had to answer the phone.”

Tower CEO Blair Turnbull. Photo / Brett Phibbs / www.photosport.nz

On top of the 100 extra roles in Suva he expected that to grow even further. “And that’s where we are going to catch some of that additional capacity we need to answer those phones, do more sales and service, quickly get the claims through.”

Turnbull said it was also continuing to invest heavily in its platform where it had already spent over $150m in the past three years around digitising and automation, especially for claims.

“That’s a big part of this coming year.”

The insurer has just made an agreement for its reinsurance which will see its catastrophe upper limit rising from $873m to $934m to reflect growth in the business. It has also budgeted $30m for large events cover, up from $20m. That was more than double the 10-year average of $13m and its five-year average of $16m.

Customer payout

But front of mind for the insurer right now is a customer remediation programme where it will begin paying back millions of dollars from next month due to an error in the calculation of its past multi-policy discounts.

The company has a $3.654m provision in its accounts for the payouts.

Turnbull said the issue dated back to 2017 and as soon as it found the error it disclosed it to the Financial Markets Authority.

“Then we started work immediately on remediating it with customers. It’s a wee bit of a legacy issue for us that we are addressing.”

“We are going to go through it as quickly as well can. We will start remediating and communicating with customers in the coming weeks.

Turnbull couldn’t say how many customers were affected immediately.

“Part of the challenge is the salutations on a policy - sometimes this has been the problem - it has differed - so we are having to go back through old records and sometimes we can’t always see if it is the same customer with the two policies.”

He said until they completed all the remediation and talked to a number of customers he could not give a definitive number for those affected.

It was expected to take a few months to pay out those customers.

“We will be updating the market again, probably at our ASM [annual shareholders meeting] in February.

“I hope at that point we will have completed if not be close to completing it.”

He said a key part of the reason for the issue was Tower having too many systems.

“When I first arrived we had roughly 10 legacy systems...now we are at two. The key part of solving this is not having complexity in your systems and having one core platform so you can get the controls in place to stop errors like this from occurring. We are confident where we are today with our go forward position, we have a lot of checks and balances in place but unfortunately, this is something that has come from years gone by.”

Asked how the rising cost of living could impact policyholders’ ability to pay Turnbull said it was very sensitive to affordability.

“Through myTower we are putting a lot of content on there to help people if they are struggling a little bit. Giving them options to manage that affordability whether it is increasing their excess, changing their cover. The nice thing is they can do it simply and easily, and we are helping customers who may be struggling a little bit.

“What we don’t want them to do is not have protection for their family home.”