Broker networks have had a pretty good year, but is that enough to protect them from a potential insurer backlash?

“2010 will be the year of the network”, it was confidently proclaimed last year – admittedly, by many of the networks themselves. And as the number of independent brokers signing up to them proves, there may be some truth in the claim.

There has certainly been plenty of investment in the space: Giles-owned MGA snapped up network Westinsure earlier this year, Willis launched a second network for smaller brokers, and Marsh got in on the act with Pro Broker, to name but a few.

But will these alliances continue to thrive? Purple Partnership managing director Les Brewin reckons so. He says: “Our membership is approaching 50 and we have a very active pipeline of discussions. We’ve also seen an upturn in new starts and restarts. For them, we believe the question is not whether to join a network, but which one.”

Broker Network managing director Nick Houghton says the Towergate-owned group plans to expand its membership from around 700 to 1,000 brokers over the next three years.

Willis Networks managing director Phil Scarrett is equally confident. “We have seen continuing interest from independent regional brokers throughout this year. The logic for an independent regional broker to get the best of both worlds still seems compelling to me – an independent local broker brand with the support of a network behind them.”

So what’s in it for the brokers? As ever, it comes down to hard numbers. Small brokers have little bargaining power with insurers, but put 100 small brokers together and suddenly the insurers need to sit up and listen. As Houghton says: “It gives us significant buying power with insurers and with suppliers to brokers as well. Size in the network world is really important.”

Brewin agrees, saying the Purple Partnership benefits from better access to markets, greater remuneration from insurers, a good premium finance facility and support services.

Clear Group chief executive Howard Lickens, also chair of the south-east region of Brokerbility, believes networks are a good option for start-up brokers. He says: “Where a lot of networks are really scoring is as the incubator, the place to set up a new business. If I decided to start again I think I’d almost have to go through a network in terms of access to markets and a standardised approach to compliance.”

Cobra Network managing director John Lincoln says brokers with a gross written premium of £1m or more have most to gain. Cobra’s members vary from start-ups to those with a GWP of £40m plus.

Scale solution

As acquisition activity among the consolidators slows, networks may provide an alternative for brokers looking for the advantage of scale.

However, the networks are keen to distance themselves from the consolidators – despite being owned by them in some cases. They claim they offer a different package, allowing brokers to retain their independence but also achieve economies of scale.

The increasing burden of regulation is another factor pushing brokers towards networks. Houghton says: “If you go back to 2005, when the FSA came into being and brokers were forced to adopt a regulatory regime, there was a huge surge of brokers joining networks for that very reason.

“We know things are going to change in 2012 [with the government regulatory shake-up], and that will be another opportunity for us as we help our members cope with that change. My members will not go through pain in that period. I’d encourage brokers to join a network now before it all kicks off.”

Networks offer new members several advantages, with one important caveat. In order to succeed they need the support of insurers. In 2008 some of the major composites questioned whether they were getting value for money from the deals that networks were giving out. Were the networks placing enough business with them to justify enhanced commissions and other benefits?

Brit Insurance UK distribution director Simon Cooter is clear on networks’ standing among insurers. “Some of the networks provide value; most of them don’t,” he says.

Lickens agrees. “I suspect some of the smaller networks that really add very little value will find it increasingly difficult to survive. The larger networks will become more focused on delivering value, both to their membership but also to their suppliers.” He says networks need to demonstrate they are adding value. “You’ve got to make sure there’s enough on the table for everybody to make a crust,” he adds.

Cooter identifies one way for networks to succeed: “The big opportunity is in embracing e-trading – it is certainly taking off in the marketplace.”

By following advice like this, the networks that can drive efficiencies and deliver value to both their members and insurer partners stand a good chance of surviving. Never mind 2010; could 2011 be the year of the network too? If it is, you heard it here first. IT

Broker networks in the UK:

Bluefin Broker Partnership Services

  • Bluefin has 63 partners across the UK, with an approximate average gross written premium (GWP) of £1.9m, and 22 franchisees.
  • Services provided include consultancy and acquisition funding.

Broker Network

  • Numbering around 700, members’ GWP ranges from £1m and £5m.
  • Recent initiatives include the launch of Broker Network’s insurer trading room.

Cobra Network

  • Cobra Network has 132 members across the country, which vary from start-up brokers to firms with a GWP of more than £40m.
  • The network has returned to profit following a £192,000 loss last year.

Labyrinth Club

  • Labyrinth Club is a network of around 160 small, independent community brokers, controlling more than £400m of GWP.
  • Labyrinth is part of Marsh’s intermediary markets division, and was acquired as part of the purchase of HSBC Insurance Brokers.

Pro broker

  • Marsh’s Pro Broker network is aimed at independent mid-sized UK brokers with £3m-plus GWP, with a particular focus on small and medium-sized businesses.

Purple Partnership

  • Around 50 members, most with £1m to £5m GWP.
  • Originating in Bristol, approximately two-thirds of Purple’s members are now from elsewhere in the UK.


  • Westinsure has around 180 broker members, 35 of which joined the network in 2009, with an average GWP of £1.5m.
  • Westinsure was bought by Giles-owned Ink Underwriting in August.

Willis Networks

  • The Willis Network consists of two divisions: Willis Commercial Network and Willis N2.
  • Willis Commercial Network has 88 regional broker members and places in excess of £350m in premium.
  • Willis N2 has 22 smaller community brokers, which place around £50m in premium.
  • Willis recently announced plans to roll out its network internationally.