CETA managing director David Quick tells Andrew Holt that small brokers must adapt or die

David Quick is in a unique position that gives him an inside view of the broking community. His group Central Electronic Trading Agency (CETA) is a broker network with a difference.

At the heart of CETA’s proposition is for brokers, particularly smaller ones, to exploit CETA’s technology and array of products which they can put forward to their clients. “We originally set up as a technology link between brokers and insurers,” Quick says.

He promotes it as a white label service which can be converted to the broker’s own website and brand, covering 78 products, with among other things household cover, shops and offices policies, commercial cover, travel and caravan cover.

The big attraction of CETA is that the service is offered free to brokers. CETA takes an override commission from the insurers.

It was established in 1993 and now has over 4,000 members. It is surprising that only 300 brokers currently use the white label system out of such a comprehensive membership, however. For the rest, the offering is used by smaller brokers as a range of quotes.

The disparity in figures is stark. And on this, Quick gives a warning. “Smaller brokers are behind on technology. It doesn’t cost much to have the hardware to be able to use our system.

“Any broker should have a good web presence and be using technology in their business. Too many are not.”

His group exists, he says, to help the smaller broker. But Quick’s view is that the smaller broker also has to help themselves. “Smaller brokers are being hit from all directions. In motor they are non-existent due to the rise of the internet, aggregators and direct players.

“Household is going the same way, commercial business is going to the bigger commercial brokers and the SME market is being squeezed – because of the attractiveness of the internet.”

This is all very true, so where does this leave the smaller broker? “Smaller brokers need to change quickly or there will not be any left in three years,” he argues.

The argument is leading to the fact that if brokers join CETA they will have a technology offering that gives them a fighting chance. “Brokers need to be proactive, and not sit back and wait for business to come to them - which is what has happened in the past. Technology is so important.”

CETA has among its members a fair chunk of Independent Financial Advisers (IFAs) which, Quick says, are more capable of adapting to change than brokers. “IFAs are moving more into general insurance and stealing the broker’s business.”

“Any broker should have a good web
presence and be using technology in
their business. Too many are not

The threat for smaller brokers has always been there – it has just intensified in recent years. And organisations like Biba for example, have on an on-going basis been trying to deal with the concerns of small brokers.

Quick is not convinced that Biba delivers for the smaller broker. “In the past they have been focused on the bigger brokers. And when you look at their conferences there are no brokers there.

“For smaller brokers it is too expensive to pay to attend and then fork out for a couple nights in a hotel. They should make it free so it would be more accessible.”

So how does he view an organisation such as Broker Network? “The Broker Network is a totally different animal to us. It is an all encompassing organisation for all brokers. We do not do 100% all in. Plus it has members that it is possibly looking to take over,” he says.

Quick is similarly bullish about insurers buying brokers and the constant charge of consolidators buying up all before them? “It will all blow up,” he says without hesitation.

“There are so many issues to deal with when buying companies, especially when you are purchasing so many regularly at a time like Towergate.

“Towergate is very clever, but you have to ask where will it go? Where will it end up?”

Brokers must also consider technological advances such as Imarket.

While it has hardly lit up the world of commercial broking world, it is surely a step forward.

But Quick sis not worried. “Years ago we launched a motor quote system and we ended up dumping it. The commercial market is not geared up for it. And when it comes to Imarket, you should have a set of rules and abide by them. They set out to achieve rules among all the insurers and that cannot be done.”

So how can brokers improve going forward? “Do what they have been doing, but do more – have more get up and go. Embrace technology, do more electronic business and make sure you have an excellent website.”

What other networks do

Broker Network
Broker Network promises to give independent brokers a national voice. It negotiates deals and service levels with key insurer partners, and offers a wide range of business support services – from compliance to marketing, HR, legal and IT.
It also promises to help brokers strengthen and differentiate their business and aims to increase broker’s visibility, even generating sales leads.
Grant Ellis, Broker Network chief executive, says: “We support those brokers who are ‘have nots’ to become ‘have’ brokers.”

Cobra Network
Established in June 2003, Cobra Network claims to be the fastest growing network of commercial insurance brokers in the UK.
With headquarters in Caterham, Cobra Network offers like-minded independent commercial brokers the benefits of working together in a partnership, enabling them to compete more effectively in a competitive marketplace.
Membership of Cobra Network is free and aimed at attracting commercial brokers. Business independence is guaranteed and existing agency agreements are unaffected.
Steve Burrows, chief executive of Cobra, says: “Cobra is at a stage where expansion is the key to its continued success. Market conditions are ideal for consolidation in both the London and provincial markets, as insurers are keen to work with fewer, larger broking houses.”

Brokerbility
Leicester-based Brokerbility is a broker convergence vehicle, which has brought together a select number of well managed, highly ethical, like minded brokers into an organisation whereby, it now has a significant distribution channel presence in its sector.
It holds shareholdings in all the brokers within the group, many on a reciprocal basis. Stuart Randall, managing director of the group, says: “We are very careful about who we talk to. The integrity of who we talk to is very important.”