And for Stuart Randall, a broker with 35 years in the industry, the other way was Brokerbility. Almost three years after he set up the group, it is rapidly approaching his target of £500m GWP. Danny Walkinshaw finds out more.
Stuart Randall has had an “unbelievably busy few weeks”. You might think the next few months will be even more frantic for the chief executive of Brokerbility, which aims to reach £500m in gross written premium by the end of the year. He isn’t daunted, though.
The target is “not difficult to achieve”, he says, “because of the size of Brokerbility brokers”. The core brokers in the group range in size between £15m GWP and £25m GWP, although its biggest brokers are approaching £35m GWP.
“We have probably got 20 of the top 100 brokers in the independent sector,” he says.
Brokerbility has 25 members in total, a presence in the North-West, North-East, East Midlands, East Anglia and the
South-East, and it recently brought in Ian Stutz, former Aon director, as managing director – not bad going for an organisation launched in January 2006.
Back then, Randall was busy at Brett & Randall, the Leicester broker he set up in 1982 with David Brett and still runs, but there were frustrations. “We felt squeezed in the middle of the hourglass and we thought, there has to be another way. Brokerbility was the other way,” he says.
“We knew Brokerbility could be exactly how it is today, but the translation of plans like that into practice often fail. However, the organisation grew faster than we thought it would and, within two years, we grew dramatically from nothing to £400m gross written premium.”
That would explain why he calls the past three years the most interesting of his near 35-year career (“Christ, that is a long time,” admits a surprised Randall after working out the length of his tenure in the industry). Now that Brokerbility is closing in on the magic £500m figure, however, he insists he is under no pressure to keep expanding the business.
“When we get to £500m, we will concentrate on maximising our current opportunities because we feel in the current market, despite the credit crunch and all the problems around it, there has never been a better time to be an independent broker.
“One by one the consolidators are having their own problems from whatever direction, and the fall-out from that will create opportunities all over the place.”
Although he accepts Brokerbility brokers will expand through organic growth and acquisition, he says the group will not emulate networks “that have gone beyond their optimum size”.
“Big is beautiful to a degree, but there is a tipping point where that size starts to act against the wider interests of the group.
“We are not looking to reach 1bn pound. If we go beyond a certain size we will start to lose the benefits of what we have achieved.
“We are not looking to reach £1bn because we feel if we go beyond a certain size we will start to lose the benefits of what we have achieved and what we are striving to achieve. This year we have slowed down the number of people we are talking to. We want to slow growth. We are cool about it.”
To that end, brokers who wish to join the group have to meet certain requirements. First, they have to be “nice people”.
“We do a huge amount of research, financial and due diligence in terms of finding out about the brokers,” says Randall. “The idea is to go into a region and slowly build, based on the local knowledge of the people in the region already.
“In the last two months there have been three brokers we have spoken to and later discovered things about them that we feel don’t really fit with our ideals, and they have been rejected. The minute you start to dilute what you are offering, you are on a slippery slope.”
Randall repeatedly insists that Brokerbility is neither a network nor an alliance, but grudgingly accepts that the business will be tagged as such. “Brokerbility filled a gap which no one else was in and it is difficult to put a handle on ourselves, but the best way we would describe ourselves is a federation.”
He won’t say that Brokerbility obtains higher commissions for its members, but its brokers do benefit from “true partnerships” with insurers. Unlike networks, there are no other perks such as compliance or human resources support for Brokerbility members. They are “all big boys and can look after themselves”, says Randall. Brokerbility is more of a negotiator on behalf of its brokers, which otherwise operate independently.
“From our point of view alliances were good sounding boards for people. Though not being an alliance ourselves, we understood alliances are good for a lot of people. But alliances are essentially committees and committees don’t design good cars.
“Networks offer something, especially to the smaller broker, which is important. But the brokers in Brokerbility are of such a size that a lot of the things offered to networks aren’t of interest to them.”
He adds: “I’m not aware of any other real networks that have the larger provincial brokers as members.”
Running Brokerbility and Brett & Randall keeps his hands full, but Randall, a rugby fan who also owns “a few motorbikes”, enjoys his work.
“I still deal with clients, but it is important that you are grounded and face the same problems that everyone else is facing. It is good to see clients, it is good to win new business, it is fun.
“There is a crossover sometimes in terms of pressure but, generally speaking, I have managed to focus my time on where it needs to go.”
Stutz, Brokerbility’s new managing director, will relieve him of any pressures and is the perfect person to improve the business, says Randall. He modestly adds: “To have a great organisation, you need to surround yourself with people that are better than you.”