In the first of four regional surveys of the independent broker scene, it seems customers are loyal and optimism high in the North and Scotland, despite the effects of the credit crunch
Let’s hear it for the independent broker! Despite the best efforts of the consolidators and the global players, this sector is still alive and thriving in communities right across the country. These firms offer committed service, a ‘do or die’ attitude, and that all-important personal touch towards individual clients, small and medium businesses, and in some cases the big corporates too.
As Insurance Times celebrates the Best of Brokers, we have crosses the length and breadth of the UK, speaking to some of the bastions of independent broking. First, we looked to the north of England and Scotland – and here is a taste of what we heard:
Aviva regional broker director Gareth Hemming enjoys trading with the independent sector. He says: “There is a lot of competition in the Leeds market, and that keeps the market quite vibrant. You do have some really significant players broking in to the Leeds market, and it is very, very competitive as a result. That is quite a mature market. I’m not seeing masses of start-ups around the Leeds area, but the good independent ones are continuing to thrive.
“In Newcastle, the businesses and the brokers like to deal with North East-based operators. It’s not a closed shop, but there is a definite preference to deal locally, and it is stronger than you’d see in the Leeds and Manchester markets.
Manchester-based CBG Insurance Brokers director David Cobb explains why being local counts in the North: “In my opinion, service is absolutely paramount, and it is difficult to give service to a certain size of customer if you are based 200 miles away. Like all brokers, we mirror the economy in terms of any downturn. Over the past 12 months, we have seen a U-turn and it is starting to climb back up”
David Fryer, head of office at Heath Lambert’s Leeds branch, says brokers have to fight for business in the North. He says: “It is very competitive, but I think insurance buyers are looking for value for money, rather than just the cheapest deal.
“I think it is fair to say that the independents have increased their market share over recent years and capitalised on the rationalisation within the national broker sector. I think that we shall see the independents continue to win market share, albeit at a slower rate, in part down to their tenacious stance and also as a result of the continued migration of good-quality staff into the independent sector.”
A spokesman for Caunce O'Hara, a member of the Brokerbility alliance of 34 independent brokers, says the recession and soft market continue to make life tough for brokers in the region. He believes that the future for many independent brokers lies in organisations such as Brokerbility, adding: “We can all remain independent, which is our directors’ wish, and yet have the benefits of a larger organisation and what we can do as a collective. I think perhaps more and more will pick the third option – to get into bed with a trusted partnership – as we and others have done. We think it’s a good model.”
Broker Network chairman Grant Ellis believes that Scottish brokers are breaking out of the regional market. He says: “I think a lot of Scottish brokers’ preference is to deal in Scotland, but I think that’s diminished over time. There used to be an Edinburgh market, a Glasgow market, and markets in Aberdeen and Inverness. It’s virtually all congregated in Glasgow now, and the Scottish brokers are increasingly doing business in England.”
Heath Lambert’s Aberdeen office head Mark Webster says in-fighting among brokers can be problematic: “The market is being driven by a high degree of competition on the majority of new business enquiries. It is not uncommon now for four to five brokers to be involved in quoting for a case.
“Also, because of the difficulties in growing the business through normal renewal and new business activities, a number of brokers seem to be looking to acquire teams from competitors and to buy in books of business. The recession has most definitely hit Scotland in 2010, unlike last year when we didn't see much initial impact.
“We are finding it extremely difficult to grow the revenue from our existing clients. It’s currently virtually impossible to carry increases in fees, and with the continuing competitive market and companies generally downsizing or amalgamating, commission income is also under pressure.” IT