I read with interest Grant Ellis' suggestions of ten questions to ask a network before you join (Insurance Times, 12 February 2004).
As the chairman of the Cobra network, I would agree with Ellis that any intermediary considering joining a network should take great care to not only ensure that the information given is clear and concise without ambiguity, but also, as with Cobra, insist on confidentiality agreements to protect the prospective member's business.
While I would accept I am biased, Cobra would be able to answer all ten questions positively. I wonder how many other networks can do the same.
While the article states that the questions listed are the top ten of Ellis's, may I suggest that the following should also be considered.
1. Is the network providing an increased benefit to its partner insurers? To merely allow all members to access an enhanced level of agency, without providing the insurer with a clear means of improving their profit, will surely result in only the medium term reduction of enhanced commissions/service to the detriment of the network as a whole.
2. In order to join, is the intermediary being asked to pay a percentage of its entire premium book? If so, is this payment sustainable, especially in the current market of volatile commissions? We repeatedly hear that by charging a percentage of premiums in this way, some networks are merely suggesting that the enhanced commissions they receive (by joining the network) will assist in compensating for this cost. Surely this only applies if the member is able to switch their account to the panel insurer. In the event that this is unachievable, which I suspect is often the norm, then the member's profits could be severely compromised.
3. Does the network allow the member to remain truly independent? We believe this is paramount. We could of course insist that each intermediary places his business through our own agencies, but what then happens should they decide to sell? To extricate their clients from this type of system is not only complicated, but could be hindered by the network itself.
4. Reference from other members is important. Does the network allow new companies to meet each other prior to signing?
5. When considering a network, will the intermediary be confident that it can achieve greater profits , achieve enhanced status with the insurer partners, access marketing and business development services and, importantly, receive adequate assistance towards FSA compliance and training, long term?
The most important is, can the network deliver its promises and maintain its position as a true partner of both the member and the insurer. It will only continue if this is achieved.
Chairman, Cobra (Commercial Broking Alliance)