Incoming Biba chairman George Nixon has raised a war cry for brokers. He wants them to use their collective muscle to demand better service and fairer rates from insurers. He also wants them to work harder at highlighting to the public the added value that brokers provide. But he wants them to prove their worth by getting even better.
As vice-chairman of giant broker Willis, Nixon has seen at first hand what he now wants extended to all brokers. Willis is able to shout “jump” and have insurers ask “how high?” and it has a marketing budget bigger than most firms' turnover, with the best management consultancy and advice that money can buy.
But this doesn't mean he is detached from the needs of the bulk of Biba members because Nixon is from ordinary stock. Born in the East End, in Bethnal Green, in January 1940, Nixon started his insurance career straight from school, joining the Alliance, now the A in RSA, at the firm's offices in Bartholomew Lane. He stayed four years: long enough to qualify with the Chartered Insurance Institute and meet the lady he later married (he has three children and four grandchildren). In 1960 he moved to brokers
RK Harrison, first servicing north American clients (mainly small US brokers), then switching to the UK retail department. Following this he joined Bray Gibb, the then medium-sized Lloyd's broker. A merger and takeover or two later and Nixon was working for Willis (Willis Faber at the time) where he kept his role running the UK operation of the group.
Subsequently, he ran the international operation before looking at cross-group issues as vice-chairman. His responsibilities include the Willis Institute, the firm's in-house university, and he is also a director of WISe, which develops and encourages e-commerce in the insurance industry.
The Biba activity is new. Nixon admits to having avoided the committee structure due to work commitments. But he has stepped back from that and can devote more time to the trade body. “The insurance broking industry is at an interesting stage and I'm more able to give a bit of time over the next couple of years. I hope I can bring over some of my experience.,” he says.
And his timing could be perfect. Many brokers feel under attack at the moment. Merger mania among insurers and brokers has changed the face of the industry. Competition from direct writers, the internet and high-street retailers is heating up. And even their traditional allies – the broker-friendly insurers – seem to have turned their backs on the brokers, serving up often abysmal service and then charging brokers often twice or three times as much as they offer to customers buying through their direct arms. There is a widespread view that some insurers are overcharging the broker market to subsidise their loss-making direct arms, which they then use to undercut the brokers. Many feel insurers are determined to put brokers out of business.
If that is the case, the insurers will have a fight on their hands, says Nixon. He reckons that the size of the market means Biba can act just like a major international broker, such as Willis, and give the insurers a bloody nose. “Insurance brokers have every right to feel confident about their role – they add value. I'm passionate about the role of the broker. We need more publicity about it and we need to use the leverage of the members to support that within the industry. Our membership should have some large leverage with these brokers,” he says. “Brokers need to exert more control over their businesses than they have in the past. To some extent the insurers have dominated. It's important that brokers should try to influence the insurers. And the insurers will be concerned because they get a lot of their business from brokers.”
But Nixon is not only talking about collective action. He reckons brokers can influence insurers by demonstrating their dominance of the market. If brokers can show that no matter how hard direct writers and retailers try, or how much they spend on advertising and direct marketing, customers still go to brokers because they know they are getting some added value from the broker's service, insurers will have to listen.
To that end, Nixon wants Biba to provide its members with subsidised management consultancy to help them strengthen their businesses, move into new markets or, if necessary, reposition themselves. “Change generally in business is a fundamental challenge but the change taking place in broking is evolving all the time. I think every firm is going to have to have its own strategy but, in my opinion, a broker's real value is in the knowledge and advice he can offer. There are many professions that earn commission on transactions but the value the professional adds is from their knowledge,” he says.
Nixon knows that many people believe that a high-street broker selling a few basic personal lines products from a computer screen based on the cheapest price and price alone, is likely to die out, but he won't say so in so many words. He repeats that each broker will have to have their own strategy but he does offer some thoughts. “They might think about the range of services they offer and perhaps that means a broader range,” he says. For those choosing to be niche players, it could mean reducing the services they offer but being better at the services they retain. “There is no reason why a good small broker shouldn't prosper, providing they are focused on what sort of customer they are trying to serve.”
That is where the management consultancy will come in to offer independent advice and help to brokers, many of which rely entirely on consultancy and advice provided by insurers. “Often the insurers' help is not really suitable,” he says. “Maybe Biba can do more to help its members.”
Biba is looking into establishing a consultancy role on a similar model to its current training set-up, with an in-house team using external consultants when needed. Whatever consultancy becomes available, brokers will have to learn to live in a newly regulated world. “I'm a strong supporter of GISC. I've seen how ineffective IBRC has been. The real problem was that insurers were prepared to deal with people even though they were not regulated. GISC does bring the insurers and brokers together. It means that if someone is not registered with the GISC then the insurers will not do business with them,” he says.
He accepts there are problems with the rules and that Biba will demand further changes but insists the principles behind the rules are right and GISC will be a success. “Whenever you produce a rulebook there are bound to be issues and Biba's role is to represent its members. I've no doubt that the rules will change, but it's a pretty damn good effort,” he says.
Nixon is delighted with the prospect of the CII issuing chartered insurance broker status and that it will only issue it to those who have passed the examinations, but he is less convinced of a need for broking firms to be identified within GISC's regime, such as with a chartered broker title for the firm. Willis prefers to concentrate on risks rather than broking when it markets itself. “My own view is that each firm has to decide how it presents itself. You have to determine how best to promote yourself and each firm has to do that for its own clients,” he says.
But demonstrating the added value a broker can provide will secure it a rosy future, Nixon insists: “If you look at countries where the business was traditionally sold direct, such as Sweden, when it introduced broking, brokers won more and more business. That has demonstrated the value that brokers bring.”