The Leeds gathering of the IT Pack covered a wide range of issues in an intensive round of discussions. One participant’s comment – ‘I learned so much in such little time’ – summed up the tone of another productive session
Insurance Times travelled to Leeds for the ninth IT Pack, where brokers were joined by Aviva’s George Berrie and Larry Harrington.
The brokers met on the top floor of the Living Room bar in the city centre to discuss the latest developments in the broker market. Among the topics on the table were insurer and broker relationships, client management and consolidation.
In a full-flowing discussion that lasted an hour and a half, brokers found they had a lot to discuss with each another.
Neil Bromley, a trainee business executive with the Oval Group, said: “I thoroughly enjoyed meeting like-minded people within the industry of a similar age. It was great to hear people’s thoughts on the ways our industry will be changing. Healthy debates were had by all and I left feeling that I learned so much in such little time.”
First up, the opening question on how participants became involved in the insurance industry drew some interesting responses.
Adam Verney, part-owner of Townends Insurance Brokers, took a less than traditional route into the insurance sector. He worked in a range of other business before deciding to buy a half share in a brokerage at the end of last year.
He said: “I’ve only worked in insurance for six months and bought the brokerage with no previous experience in insurance. My background is predominantly in business, IT project management and financial services, with a bit of telecom consultancy.
“Why did I go into the insurance world and buy something I have no experience in? That’s a good question and something I’m asking today.”
One of Verney’s main reasons was a family connection. Townends is part of a larger group that includes chartered accountancy and wealth management operations, and Verney’s father is one of the equity partners of that group.
He recalls that his father had been thinking how the group could turn around the insurance broker. “It had not had leadership or focus for about 12 years,” he said.
So how is Verney coping with being such a latecomer to the industry? “I now own 50% of the company and am playing catch-up with the staff because they are miles ahead of me. I did one exam the other week and went back to school for the first time in 13 years.
“I’m really trying to get my head round the business I’ve bought: what is the insurance world, who are our customers, how can we do more, how can we exploit the customer base we have in accountancy? And how to become the next year’s millionaire according to Del Boy.”
Gwyn Evans took a more straightforward route into insurance. Now a commercial account handler at Marshall Wooldridge, he said he originally came to Leeds in 2004 to embark on a business studies course at university.
During that time, he was offered a job at Broker Network, which sponsored his final year at university. He subsequently joined an arm of Broker Network, Oyster Risk Solutions, and worked there for a few months before landing his current job at Marshall Wooldridge. He has been with the broker for a year and is about to take his Chartered Institute of Insurance exams.
Changes in the sector
Looking at more general issues facing the broking community, Eastwood & Partners account executive Samantha James said: “The last few years have seen smaller regional brokers being swallowed up by consolidators – such as Oval, Bluefin and Towergate – with others joining broker networks such as Willis.
“This means that although there are fewer brokers, the consolidators have a large presence and have been able to negotiate significant deals and packages with insurers, including bespoke products with increased benefits and rollover SME schemes. This has a major impact for the remaining independent brokers in competing for business against these companies.”
Aon business development manager Jesper Paul said that, in this climate, service was less important in winning new business.
“The advantage brokers have is shrinking with competition,” he said. “Competition is very high. Everyone pretty much has access to the same markets and rates there or thereabouts. It comes down to price. Service is important, but I think service is more important for retaining clients.”
Paul said retention rates at Aon were in the 90s, to which Aviva commercial lines director Larry Harrington commented: “You have hooked up some clients that must have some connections to you other than price.”
Oval’s Bromley added: “Without the correct service, feedback and guidance from a broker, price won’t matter.
“Any of us brokers could go to the same company and probably get the same ballpark figure for a premium, but what is that covering – are the clients fully covered? It’s about drilling down and making sure the finer points and the cover is right for these clients.”
Park Home Insurance Services business development manager Charles Coade said: “We have people in our small markets who undercut everyone and the service is shocking.”
Aviva director of trading George Berrie said: “From the client’s point of view, what does the client see as good service from a broker? What do you have to do to differentiate yourself from the market compared to your competitors in the eyes of your client?”
Towergate Risk Solutions corporate account handler Sandra Thurlow provided a good example of differentiation. She said a large corporate client suffered a fire one Sunday night and her broking team came out to help.
‘He raves about the service. He’ll never move, touch wood. But he’s seen it happen and I think that’s the main thing,” she said.
Thurlow said independent brokers had to stay ahead of the game by embracing e-commerce.
“E-commerce will have a big impact in the next five years,” she said. “It has massively changed the personal insurance market, and SME and smaller commercial risks will follow.
“Brokers need to stay ahead of the game with e-trading and managing general agents to provide clients with the benefits of using a professional, experienced broker together with prompt service and competitive pricing gained by using direct writers.
“This in turn benefits underwriters of such binder arrangements with reduced administration costs of delivery and work transfer, together with comprehensive and accurate management information.”
Bromley said that more consolidation, higher rates and the end of the FSA were all looming.
He said: “The first change I predict is increased consolidation across the industry. Coming from a group that has grown through acquisition, I see the benefits of doing so. However, the question is: who will be doing the buying during the financial crisis? “The FSA may soon be no more. What effect this will have is yet to be seen, but I do feel that whatever authority is created next will still regulate us fiercely. This is not necessarily a bad thing. It is just another challenge we face as brokers.”
Bromley believed that the industry was about to enter a hard market.
“As a new business executive, these are promising times. People will look to change brokers as premiums rise, including our own clients. So now is the time to make sure our clients are fully protected and well informed ahead of the changing markets.
“If we do our job properly, loss ratios should be at a minimum, and new business levels should rocket – fingers crossed.” IT