With aggregators muscling in and red tape on the increase, brokers are facing difficult times. The IT Pack met in Romford to discuss survival strategies and to share their personal ambitions
Insurance Times’ latest IT pack was attended by Aviva’s head of claims proposition and strategy James Russell and head of broker development Sam Hudson, along with another set of dynamic up and coming brokers. Held in Envy nightclub in Romford, Essex, the event saw a lively debate on the future challenges facing the broking market. Top of the agenda for many was the increasing threat posed by aggregators.
James Titmuss from Alan Blunden & Co said: “The direct arms of insurers are posing a threat to the customer bases of brokers. A broker can still find themselves undercut by the direct arm of the same insurance company they had quoted.”
Rebecca Golding from the Barbon Insurance Group believed that tough times lay ahead and more sacrifices would need to be made to ensure survival. “Decreases in premium and reductions in commission, with a lack of new business to offset these losses, will cause more and more brokers to make cutbacks and save on costs.”
Joe Penny from Anthony Jones pointed out that growing red tape would put more pressure on brokers. “There will be more EU regulations and if the Lisbon treaty is ratified, there will be a lot more regulations,” he said. But Nev Dephu from Lagrove Insurance Brokers said brokers would always occupy a valuable space in the marketplace. “There will still be the few who prefer to deal with someone face-to-face and still require that personal touch.”
Titmuss believed that specialisation would provide a key strategy for survival. “Brokers are leaning towards commercial business now that the personal lines business is so heavily competitive online. Commercial insurance online solutions will develop and will attack this area of a brokers’ business. For those who cannot compete directly, an answer is to specialise in a particular field and push to be a market leader in these.”
Some felt that greater monitoring of the online market was required in order to safeguard consumer choice and help them to choose the right cover. Titmuss noted the lack of regulation required for online markets compared to the large amount required by brokers. “There is a lack of clear information online regarding cover, excesses and so on for comparative websites,” he said.
Tracy Izzard-Johnson from HealthCare Partners said: “I think more web-based products will be offered, with more customers choosing to use the internet rather than an intermediary. This in itself, I believe, will pose its own problems due to comparison sites not being properly regulated.”
Titmuss said that Aviva had publicly removed its direct business to focus on its broker customers. “And I believe this was down to a tried, tested and failed approach to doing it directly,” he said.
Towergate’s Kali Allen was concerned about how the economic climate was preventing the market from hardening. “It is widely said that the insurance market was soft prior to the recession and has potentially been made worse or held back from developing since.”
Golding agreed that current trends were problematic. “I feel that brokers will continue to feel the pressures of a growing online insurance market that is driving the rates down, fuelling the price-driven attitude, which removes the chance for the market to harden.”
Titmuss was more posit. “The market will harden, rates are at an unsustainable level at the moment and it will turn. The signs are there,” he said. But Natalie Humphreys from Hamilton Leigh believed a hardening market would pose more challenges. “Some of the commission levels are unsustainable if the market hardens. Some insurers are already withdrawing long-term agreements,” she said.
Elaine Lennox from JLT was concerned about the lack of new entrants coming into the industry. She felt that more needed to be done on behalf of the industry to encourage graduates to enter insurance. Allen said that greater support should be given to all talented entrants, regardless of educational background. “There will be a greater focus on recruitment, development and continual assessment of new blood into the market. Changes have already begun to happen through graduate training schemes, but I feel this net needs to be cast wider to those who haven't had the benefits of a university education.”
Golding believed the prospects for recruitment would improve. “Insurance as an industry will start to come out of the shadows and begin to be more recognisable in terms of career opportunities.”
Despite the mounting challenges facing brokers, all were confident that the insurance industry offered many opportunities. Many had different aspirations for their career development. Tom Alexander from Motorcade City said: “I would like to be working within more areas of insurance to gain a vaster knowledge of how the broking industry works as a whole.”
Dephu saw her future in claims. “I aspire to do my CII and perhaps be a senior underwriter or a senior claims handler, as one of my roles at Lagrove is to deal with commercial fleet claims.”
Allen wanted to develop a specialist role within the industry, focusing on renewable resource insurance and the energy market. “My biggest whine is that, as a commercial wholesaler, I am a jack of all trades and the master of none and I would like to be given the opportunity to take a specialism and develop both my skills and the class of business,” she said.
Titmuss wanted to climb the professional ladder within his company. “I have never worked in a job and not looked to the very top of the company. I aim to become as integral to the business as the directors themselves and push through all levels within the company.”
Golding was determined to move into management. “I am currently working for a management degree,” she said. “Within the next five years, I plan to move into a management position … From there, I would then aim to move into a head of business position that allows me to focus on sales and underwriting.”
Up close and personal
Despite their contrasting ambitions, all felt the IT Pack was a valuable opportunity to debate relevant issues and network with like-minded people. Titmuss said: “It’s always valuable to be part of a group made up of people with similar experience levels in the insurance industry but from different walks of insurance life.”
Allen said the event offered an insight into other areas. “As a commercial wholesaler, it is rare for me to see the struggles a personal lines retailer faces and I think it's invaluable to know these pressures. It also allows you to interact with experienced market professionals and breaks down that higher-level management barrier.”
Golding felt she would be able to apply some of the information she learnt to her own work. “Some of the responses in discussions helped me to look at issues I have faced in another way and have given me ideas to take back to my own company on how we deal with our clients,” she said.
James Russell from Aviva said: “It was a good opportunity to meet a diverse range of individuals from across the insurance industry and share experience, thoughts, ideas and concerns.” IT
How I made it: Sam Hudson
Sam Hudson is Aviva’s head of broker development. After spending ten years in the army, he worked in finance before joining Aviva in December 2004. “I came into it via RAC when they were acquired by Aviva. The opportunity came up to work in the broker channel and I have never looked back,” he said.
He said he felt grateful to the person that gave him his first job in insurance.
“I went to a lot of interviews at other firms where there was a fair amount of prejudice from people towards my background,” he explained.
He added that determination helped him climb the career ladder. “I always wanted to stretch and challenge myself and see how far I could go. I worked hard, and always kept my eyes open for new ways to develop and grow.”
He also offered the delegates some advice for getting ahead in insurance. “Have integrity. You have to be trustworthy; if you lose it you’ll probably never get it back. Don’t be afraid to take a calculated risk, to try new things and to ask for new challenges.”
How I made it: James Russell
James Russell is Aviva’s head of claims proposition and strategy. He is responsible for developing claims propositions for brokers and helping to shape market strategies for Aviva’s supply chain. After working in manufacturing, he joined Aviva in February 2002 to manage the loss adjuster panel. “Financial services was quite a shock coming from manufacturing industries and I had a steep learning curve,” he says.
When he was younger he wanted to be a pilot. “I was awarded a bursary by the RAF when I was 18, but when I found it was more about rules rather than “Top Gun”, I resigned and re-paid the money.”
Before taking up his current role, he was managing director of Bluecycle, a standalone Aviva business which handles and sells total loss vehicles via e-Auction.
“I remember [corporate sales director] Janice Deakin saying to me ‘Bluecycle is a terrific little business – just don’t mess it up’. This has been the highlight of my career. I worked with a fantastic team for over three years and we successfully diversified and grew the business,” he says.
“Janice Deakin and Simon Machell [Asia Pacific chief executive] probably gave me my biggest break when I was given the opportunity to run Bluecycle. Rob Townend [commercial and supply chain director] recruited me to Aviva so I guess I have him to thank most for bringing me to a great company and living in glorious Norfolk.”
Explaining his success, he says: “I have always maintained the philosophy that if you do the right thing, the rewards will come. I love leading teams and bringing people together to deliver value for the business.”
He believes that integrity and leadership skills are vital for career progression. “Insurance and business in general is a small world. I have learnt the hard lesson that you can’t please everyone, but that doing your job to the best of your ability and for the right cause earns respect. Above all, I want to be respected for what I do and how I do it.”