As an abundance of M&A hits headlines, Insurance Times asks the industry how brokers can best plan for succession
Howard Lickens, executive chairman, The Clear Group
I’m excited about the possibilities provided by hybrid working. Getting back to our pre-Covid desks is great and comforting, but we also have a chance to create a new paradigm where some working from home - for those who can and who like it - is normal.
Homeworking is more efficient, saves time and resources and helps with that fabled work-life balance. What’s more, people love it. We must all work harder to create and maintain teamwork, but that’s an opportunity too.
I worry about the combination of an activist regulator and populist government keen to avert eyes from their own failures around the Grenfell Tower fire fallout, cladding generally and the appalling ongoing delays for innocent leaseholders.
On the insurer front, it’s time to stop hiding behind the remote working excuse and address service. In a tough market, we need more resources, more time and better relationships to support our clients. It is in tough markets that real professionals should thrive.
M&A has certainly been on some ride over the past 12 months. Given the high prices in the market now and the delays baked into the sales process, I’m expecting to see a real flurry of activity this spring and summer. But I’m hoping that brokers remember that not all acquirers are the same.
Mike Thomas, regional manager, south, Allianz
There has been a lot of M&A activity over the past months and years, due to the amount of private equity capital in the broking markets. With big players such as Arthur J Gallagher and Howden Group still very active, M&A does not look like slowing up anytime soon.
Good communication is key in this ever-changing market. The easiest way in which brokers and other insurance entities can be flexible and prepared for any potential changes coming up is honesty when setting standards.
Commercial insurance is still a relationship led business, so building strong relationships with insurers and other brokers is key to future success. Networks can be a great help to brokers in broadening their relationships.
M&A can also present opportunities. There are lots of talented individuals that prefer to work for smaller, more agile businesses, so building a broad network is key to identifying talent to bring into a business. Being proactive is also key.
Covid-19 has additionally taught us that location isn’t the number one priority for employees, so potential talent pools get bigger if we embrace flexible working.
Gareth Hemming, chief distribution officer, Aviva
It is important for anyone owning a business to be really clear on what they want to achieve in the long run, so they can start putting the foundations in place as soon as possible.
If the goal is to pass the business onto the next generation of leadership, then a succession plan is key.
Whatever the plan, once it is in place, business owners can involve key stakeholders in the future of the company to help deliver an outcome that is in the best interests of colleagues, partners and, most importantly, customers.
Regardless of what the goal is, joint agreement can only be achieved through open and honest conversations.
Once a shared goal is agreed, planning is essential. Not just to outline the route map, but also to plot milestones that demonstrate to all parties involved that the succession is continuing as agreed, or if things don’t go to plan – and we have all seen how this can happen over the last few years - how things can get back on course.
A further factor to consider is attracting and retaining talent so that succession can be planned with confidence.
There should be a focus on skill sets, not just headcount, at all levels when planning resources. This will highlight what skills will be required in the future and, crucially, where the current gaps are now, enabling effective planning. After all, the colleagues who will be handling the relationships and policies of customers should always be at the centre of any change to the business.
Lea Cheesbrough, managing director, Movo Partnership
You’ve created a business you are proud of - now the time has come to consider succession. The good news is you do have options.
Selling outright to a bigger broker amid a buoyant M&A market might seem attractive, but it has its disadvantages. What happens to the book of business and the client relationships you’ve worked hard for years to build? What happens to your staff? Will you be forced to work for the new owner with little or no control over future direction?
The crunch question becomes whose business it actually is.
Movo Partnership has successfully grown its network by allowing individuals to flourish in a trusting environment, with the knowledge they are building a business for themselves, not another consolidator.
Joining a network where members can become appointed representatives and have the flexibility to operate on their terms is a very attractive option. A network gives you bargaining power with insurers.
Movo has a broad panel of insurers and we give brokers direct access to them. The principal also takes the strain, giving as much or as little support as brokers want and need on IT, human resources, regulation and compliance. Members retain 100% of commissions and all profits are reinvested.
In the last 12 months, we have taken on board numerous brokers looking at succession, using a variety of models to suit individual needs.
Neal Lumb, group sales and marketing director, Verlingue UK
Recruiting, retaining and developing talent is a major challenge for just about every business in every sector - and insurance is no exception.
The truth is there is no silver bullet to solve this challenge - it is always a combination of approaches which are relevant to that particular individual at that particular time. These things are always fluid.
One key factor is always the strength of the relationship between the business and the employee. A business that fails to understand, or care, about what is personally important to its staff will never realise their maximum potential.
It stands to reason that the bigger the organisation, the more difficult this is to practically manage - meaning that smaller, entrepreneurial brokers with more flexibility can have a real advantage in connecting with their team.
A key element of any good organisational strategy is having a clear set of role objectives aligned with an appropriate rewards strategy. These should include an agreed development plan, which develops an individual both within and beyond their current role where appropriate, as well as a flexible employee benefits package that enables employees to address the things that are important to them at that time.
A one-size-fits-all approach is no longer the standard to achieve. Instead, long-term incentive deals aimed at top talent, which link their longer-term contribution and reward to the success of the business, are key.
Alistair Hardie, group chief executive, Jensten Group
There is no doubt that being acquired by another business can unsettle staff. That is why the Jensten Group considers the culture and values of potential acquisition targets at the very start of the process.
We are only interested in acquiring brokers that have a culture and sense of community that matches our own - this pays dividends in the long run through the retention of staff and motivation levels.
Getting integration right is essential to harness the enthusiasm and motivation of existing brokers and to ensure they feel empowered to get on with their jobs and not have to fit into a foreign and limiting corporate reporting structure.
Becoming part of a bigger group can also pay dividends for individual brokers because it opens up new opportunities for personal progression and provides access to wider employee benefit packages, training resources and different specialist skill sets.