There's more to Life yet, says Harney
Irish Life may dominate its market here, but its chief executive tells Michael Cogley he still has plans for even greater expansion
David Harney wants every household in the country to have a policy with his company, Irish Life. The Roscommon man has spent 33 years at the business, working his way up from the early days of its actuarial apprenticeship scheme. He knows it inside and out and says the opportunity to lead it was a "great privilege".
Harney's goal of selling the country wealth and health plans will prove challenging, however. There's plenty of room for growth but people need to be convinced they need his products.
"We have a very good State pension here that people are entitled to and that does a very good job," he says in a cafe in Ranelagh in Dublin.
"If you look at what people have outside of the State pension, only 35pc of the private sector are saving for retirement. The big worry, as we look forward, is that we'll see a huge number of people relying on the State pension. It doesn't mean they'll be in poverty or anything like that, but it does mean they won't maintain the same living standards as they had pre-retirement."
He describes his company's job as "getting more people to save for the future", which he concedes is a difficult argument to win.
"It is very hard to convince people. Everyone knows they should do it and everyone wants to do it, but it's a very easy thing to procrastinate on," he says.
That level of procrastination is likely to drop thanks to some Government-driven cavalry coming over the horizon. Almost 15 years after it was first mooted, Ireland is set to deploy an auto-enrolment scheme by 2022. Under the current proposals, which are due to go through a public consultation, employee savings will be supported by both employer and State contributions. As it stands, for every €3 saved, the Government and employers will add a further €1.
"We're so keen on auto-enrolment, which will default those who aren't saving for retirement into a plan, and we think it's the most effective way to get the savings up," Harney says.
"The feeling around it at the moment is quite positive," he says. "I don't see resistance in Ireland against that. Employers are worried about extra cost, but there's a recognition that something needs to be done. The unions are pro it, the politicians have broad political consensus on it, and that's a good space for us to be in. It's quite an exciting time."
Pensions are just part of Irish Life's wealth-improvement arm. The company is changing the way it invests too, having completed its first foray into the residential property market last year.
Its Irish Life Investment Managers (ILIM) team acquired the sought-after Fernbank development in Dundrum, south Dublin.
The €100m deal forced many to take note of the new-found trend of institutional landlords buying up residential blocks to be rented out long-term. The practice has been criticised by some for taking stock for would-be buyers off the market. Despite this, ILIM's residential property fund has attracted a €140m commitment from the State-Backed Ireland Strategic Investment Fund (ISIF).
"Residential will be a portion of our property portfolio," Harney says. "Of a typical portfolio that we might create for a customer around 15pc of it might be property and of that 15pc a fifth would be residential.
"We did the deal in Fernbank and we're in for another couple of deals of probably the same size. It's a competitive market so it depends if we get things or not."
The 50-year-old refused to be drawn on which particular developments had piqued the interest of Irish Life. However, the proposed deals are likely to be in the "hundreds of millions".
"I doubt we will be doing two deals like Fernbank every year but if we're doing one deal like it annually we would be pretty happy."
When asked about the criticism of taking properties out of the reach of homebuyers, Harney admits that people's concerns "are valid".
"It's a reasonable part of the market but it's not right if it's the main part of the market," he says.
"The primary thing we want as a country is that there is affordable housing for people that are working for young people coming through. Our country isn't working well if that isn't the case. This (institutional investors buying blocks) has a role to play in all of that, but it shouldn't be the primary housing supply."
Harney says the days of getting bargains for sites or under-valued developments are "long gone" and that the moves in the property market were straightforward yield plays.
He was speaking after the launch of MyLife, the company's new health improvement app which will be marketed heavily from tomorrow onwards.
The app gives users an overall health score, originally based on someone's height, weight, gender, and age. Over time it will continue to add various data sets such as heart rates. Users are incentivised to stick with it by generating points based on their health, which can be used to redeem rewards that range from €5 off an Irish Rail ticket to Monster headphones.
It's the result of a tie up with Zurich-based start-up Dacadoo and represents a multi-million euro investment.
"A lot of our business up to now has been on the insurance protection side of things but what we're trying to do with the app is to try and get more into the prevention space and encourage people to be healthier," Harney says.
"It's an emerging trend with insurance companies. With the emergence of technology all of the insurance companies are seeing what it can do. Practically everyone has a smartphone with the capability to track their activity.
"On advanced digital technology we're spending around €10m a year. This would be a fair chunk of that for the last couple of years, it won't cost that to run going forward. The full programme probably cost a couple of million a year to run. To run the application and the awards programme."
Naturally enough there are some suspicions around where that data goes and what access Irish Life has to it will raise some concerns, but Harney insists it will not be connected to users' premiums. Fitness trackers have become a sizeable trend in the global insurance industry, with US giant John Hancock putting an end to its traditional underwriting business last year in favour of "interactive policies".
"People put in personal data to the app that is used to calculate their health score and as they interact with the app they earn points for the rewards programme. That's the only use of personal data," Harney says.
"We as an insurance company don't have any access to people's data to link back to policies. That's not the motivation of it in any way at all, people will see that in the terms and conditions."
The Irish Life boss says that legally there is nothing stopping the company from doing that in the future, but they have no plans to link health trackers to health insurance premiums.
"For this we only need personal data to give people their health score and do the rewards programme, it's not to feed into the rest of the business," he says.
"We deal a lot with corporates as well as people individually. Individuals have concerns about data but corporates are very particular about their employee data and how it's used. This probably wouldn't work in the corporate landscape unless we were very up-front and able to give corporates assurance."
"We could reward people through reduced premiums but for the moment we prefer to keep it separate from the life insurance premium so we feed the incentives through the rewards programme and things like that," he says.
Given the length of time he has spent at the business, Harney has overseen quite a lot of change. Part of that change was a switch in ownership to Great-West Lifeco for €1.3bn in 2013. Since then the Canadian parent has enjoyed sizeable returns from its Irish business, which reported a €201m profit in 2017.
The might of Great-West has given Harney the backing to go on the acquisitions trail, particularly in the wealth management business.
"We bought Invesco, an employee benefit consultancy, last year. We would probably be interested in more acquisitions in that space. We had an interest in Investec, but we weren't successful," Harney says.
"The investments going forward would be in the wealth space that might help us in the pensions space," he says. "The other investments will be in technology. If anything is up in that space I would be surprised if we aren't having a look at it."
Elsewhere the business has set stringent targets, including a €70m hike in annual revenue to €250m. Harney wants to beat the economy by between 2pc and 3pc a year and a big part of that will be getting the ordinary worker more involved in investing.
"We do think that in Ireland too many people have too much on deposit rather than in broad- based investments," he says. "We've grown our multi-asset portfolios into a €5bn business over the last five years and we'd love to double that over the next five."
Harney has spent his life at Irish Life. He knows the business intimately and has seen it grow substantially since its "painful" separation from Permanent TSB six years ago.
With investments in artificial intelligence, health tracking, and other technologies on the horizon, Irish Life is perhaps changing at a greater rate than at any other period during Harney's time there.
Chief executive, Irish Life
Marist College Athlone, Institute of Actuaries, MSc DCU
Full career in Irish Life
Married to Bríd. Three sons: Brian, Shane and Cormac
Golf - when I'm not at the side of a pitch watching the kids play football
Bring up the Bodies by Hilary Mantel
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