Brit’s Peter Burrows and Simon Cooter are not afraid to have fun but they are deadly serious about the business, which they expect to see more than double in the coming years.
Peter Burrows and Simon Cooter should be sick of each other’s company by now. It’s Wednesday morning, and as well as the daily grind of the nine to five, they have spent the last two evenings entertaining together. “I see more of Simon than I do of my family at the moment,” jokes Burrows. But instead, they seem to be having the time of their lives. Brit’s chief executive and distribution director are on a shared mission – to take a traditional Lloyd’s insurer and build its profile, and consequently its business, in the regional market.
It helps that they were colleagues back in the 90s at what is now RSA – the alma mater of many of Brit’s senior team. As they chat with Insurance Times in Burrows’ small, glass walled office in the insurer’s Broadgate headquarters, they are relaxed, enthusiastic and obviously excited about the future of the business, which they expect to more than double in size in the coming years.
Brit has been making headlines for the past two weeks, first with its threats to redomicile if controversial changes to the business tax laws go through, and second with a landmark deal to underwrite JLT’s online offering for micro-businesses – of which more later. But this is just a fraction of the story they have to tell.
Given the ease with which they interact, it’s hardly surprising that Burrows tapped his former employee Cooter on the shoulder nearly two years ago, when he needed a right hand man to forge links with brokers across the country. Cooter, the younger man, refuses to wear a tie for the Insurance Times photographer, joking that the picture should show “the chief executive and his scruffy distribution director”.
In truth, both men are casual in manner, nothing like the grey suited, uptight insurer of tradition. They are running something of a roadshow at the moment, visiting brokers. The practice has made them an effective double act, with Burrows answering most questions first, and Cooter coming in at the end with the details. There are plenty of jokes, too.
The importance of relationships to the business Brit is trying to build is also apparent in its attitude to brokers. Burrows and Cooter differ from many of their larger rivals in their selective approach. While there are still some 4,000 broking outfits in the UK, Brit wants to build “deep and meaningful” relationships with just 400 of them. As Cooter puts it: “We’re selecting our dance partners.”
This is the key to Brit’s distribution strategy. Instead of offering the same products to all comers, they want to form partnerships with a chosen few. The benefit, says Burrows, is that “those people who have a relationship with us are not faced with the prospect of everyone they are competing with having access to the Brit market, so we can give them something differentiated an special in exchange for the kind of support we’re looking for.”
As this suggests, access to the Brit band is not a one way street. While they are realistic in their expectations of how much of a broker’s book they can expect in a soft market, they are not looking for fair-weather friends, says Burrows. “It would be very easy to support us in the next hard market and less easy to support us today,” he adds. “We are looking to commence those relationships today, but not to be unrealistic in terms of how far and how fast we can take those relationships in a soft market, because the last thing this organisation will do is chase revenue.”
In return, they say, Brit offers swift decision making, empowered underwriters out in the regions and a strong claims service. “We’re looking to grow the business significantly – to two and a half times the size it is, and the way to do that is by being much easier to trade with than the traditional market leaders,” says Cooter. “ If you overlay a strong claims service with regional underwriting centres where you can get access to the decision makers, that will reflect on the clients’ experience, and our retention rates will go up.”
Research conducted by Insurance Times’ parent company, Newsquest Specialist Media, at the end of last year broadly supports this view of Brit. Commercial brokers ranked it fourth out of the leading 14 insurers on general service and support, fifth on provision of timely and accurate data and eighth on claims handling.
Brit’s most recent results, released in March, were healthy. The company reported a pre-tax profit of £191m, up from £186m in 2006. Gross written premiums increased by £28.6m to £1.26bn, but the combined ratio deteriorated six points to 92.7%. The insurer also revealed the extent of its limited exposure to the subprime crisis. It received nine notifications of sub-prime claims to the end of February totalling £12.7m and a further 16 notifications that did not specify a sum.
By building relationships and a brand, Brit is positioning itself for the next hard market – which Burrows thinks will come in 2009. “We are currently saying we expect to see the easing back [of the decline in the market] continue through 2008 and the potential for better conditions in 2009,” he says. Burrows adds that across the market, the 2007 results were boosted by reserve releases, which cannot carry on forever.
Commenting on recent reports that Dane Douetil, Brit’s chief executive who sits above Burrows, is ready to take the business to a friendlier tax environment, Burrows acknowledges that Brit’s domicile is always under review – and never more so than now. But he emphasises that a move would not affect the vast majority of the organisation’s staff, and certainly none of its relationships in the UK.
One of those key relationships at the moment is with JLT, the broker that announced a new web-based offering for micro-businesses, underwritten by Brit, at the end of last month. Expect to see more developments along these lines.
Cooter is convinced that the future of micro-business lies in electronic distribution. “This market is going to be blown apart in the next two years,” he says, and Brit is determined to be at the centre of the explosion. The insurer is new to micro-business, so it is not cannibalising existing books. “Our regions are about looking after what we call middle market customers, so those are cases where brokers want face to face contact with an underwriter, typically £2m and above,” explains Cooter. “So we identified where we needed a solution for the smaller businesses and that is electronic trading. So there’s no legacy to protect, no big business to protect. This is a completely new approach, now and for the next ten years.”
There are more partnerships like that with JLT in the pipeline, he adds, and the best model of distribution is still open to debate. The next obvious step, arguably, would be for Brit to go direct, at least for micro-business. But Burrows and Cooter insist they have no plans to do so.
As the interview ends, the chief executive and his distribution director head outside for the photoshoot. Laughingly, they mutter that they are bound to see someone they know as they pose in an alleyway off Broadgate, and Burrows calls out to a passerby that there’s “nothing interesting happening here”. That’s not quite true. When Burrows persuaded Cooter to join him at Brit, he promised that “amidst the toil,” there would be a lot of enjoyment. That they would “have a laugh”. He was as good as his word.