‘Give me an underwriter and it will write more business in my world than in its world’
Nick Houghton has big boots to fill. Boss Grant Ellis has been synonymous with Broker Network since he launched the umbrella body for independent brokers in 1994. After selling his baby to Towergate in 2007, Ellis has now stepped back to enjoy his rewards as non-executive chairman, meaning that managing director Nick Houghton is increasingly the public face of the organisation.
The two men couldn’t be more different. Ellis is a plain-speaking Yorkshireman – quick to speak his mind and the devil take the hindmost. Houghton is also from Yorkshire, but that’s where the similarities end. He’s fresh-faced and smooth-talking, with a nifty line in sales patter. Today, he’s keen to tell Insurance Times about his plans to grow Broker Network – and knock out the competition.
Houghton acknowledges that he and his parent company have had to fight some perception battles. “At first, it would be fair to say that members were sceptical about the Towergate purchase,” he says. “Many brokers speak their mind and, having come from a broking background, I understand that.”
What those ‘independent’ brokers might have to say about effectively being part of a listed company if Towergate goes ahead with flotation in a year or two is a matter for discussion – but that’s not a discussion that Houghton is keen to have right now. “I really can’t comment – that’s something that may or may not happen down the line,” he says, a tad defensively.
And what about the £200m investment by private equity firm Advent that was announced earlier this year? Houghton is tight-lipped about how much Broker Network will see of the cash injection that the deal has released for his parent company.
He is less coy about the opportunities that the extra cash will deliver for Broker Network, saying that he is developing a new proposition to facilitate acquisitions by its members. However, he is clear about what he is not keen on. “I would not want to buy another network.”
Houghton is more comfortable telling the Broker Network story – and he talks a good game. He outlines plans to increase the number of existing members that upgrade to full membership and to attract new entrants. He claims there is no lack of appetite among brokers.
“There’s a huge demand from brokers to join networks off the back of two to three years of tough economic conditions,” he explains. “Insurers have been beating the brokers up, the economy has been beating them up – the network is a haven.”
Indeed, Broker Network claims that a record number of independents have signed up over the past year. Houghton is particularly excited by conversations he has been having with a £6m-£10m gross written premium broker, which he says “didn’t want to know” about network membership a couple of years ago.
But the reasons brokers are choosing to sign up to networks are changing. “If you went back to 2004, impending regulation was the number one driver for going into networks,” Houghton says. Five years’ experience of regulation means it is less of a factor these days.
“The big driver now is access to the market and the ability to trade with carriers,” he continues. Brokers are fed up with the capriciousness of insurers that ignore them one day and want to be best friends the next, he argues.
But Houghton believes there are too many networks around. “The market can’t sustain the number of networks we have.” He adds: “Networks are still in their infancy. We need to reinvent them and make them fit for purpose for the next 15 years.”
This will involve networks working harder to demonstrate added value to insurers, he admits.
One of Broker Network’s answers to this conundrum of demonstrating value is the trading room established at its Knaresborough head office just under a year ago. The network has created a physical base for underwriters from partner insurers, who are there exclusively to service brokers.
The experiment hasn’t worked for everybody. Aviva is quitting the trading room because it has enough branches across the UK to service the network’s members. However, MMA is taking its place. And Houghton points out that Zurich has written 120% more premium with Broker Network members, after becoming one of the first insurers to enter the trading room last year.
Houghton has faith in the project, and says he is rolling it out across the network’s membership after piloting the initiative with a select few.
In the internet age, it may seem strange to establish a new physical facility, but Houghton says being located inside the network’s space gives insurers a better understanding of his members’ needs.
For the insurers, the room will provide access to hundreds of independent brokers. “Give me an underwriter and it will write more business in my world than in its world,” he says. “It’s very important that it is sitting in our environment and our culture. The key is that it is part of our world.”
Meanwhile, independent brokers have a robust future, Houghton says, despite the challenges posed by the economy and technology. “SME broking is alive and kicking,” he says. “There are 3,000-3,500 brokers out there, and I don’t see that number going down. The recession has hurt, but they are pretty recession-proof. Anybody who dismisses the SME market is making a major mistake.”
So have we seen the last of Ellis? Houghton says not. “He invented the market and he is still involved,” insists the 39-year-old. “He’s on the board and still there for members when they want him. He is there quietly in the background.”
Whether or not the famously forthright Ellis can ever be ‘quietly in the background’, the message is clear: Houghton is firmly in the driving seat.