Brokers have been flocking to Lloyd's to replace markets vacated by composites. But Lloyd's broker Andrew Holman tells Michael Faulkner that the multinationals are edging back in and it could cause a price war
Andrew Holman, chief executive of Holman Insurance Brokers (Holman's), is sitting in the small but elegant boardroom in the company's offices near Tower Bridge. On the walls hang half a dozen paintings, including the chief executive's ancestors and ships.
The company's origins lie in shipowning and shipbroking, but over the past 170 years the focus has shifted to insurance broking - placing business in Lloyd's and London Markets.
This is a critical time for Holman. The composites have started to show an interest in winning back the business that they have been shedding over the past 18 months.
Historically, the company has been seen as a market of last resort. If a regional broker couldn't place a risk he would go to Holman's. Holman fears that a drive by the composites to win back business will distract them from placing business in London. "The concern is that they will buy back business at a ludicrous rate and start a price war," he says.
Andrew Holman's mission is to make the company the first port of call for regional brokers.
Focus on development
Holman's has being going through a major reorganisation. It has moved offices in London, relocated its back-office systems to the capital and implemented a new IT system.
"Our focus has been on internal housekeeping, looking at the fundamentals," says Holman. "Now that phase is complete we can begin to look at development."
The company's new broking platform, Websure, is an important part in the company's development plans. Developed specifically for Holman's, is an extranet system that enables the company to extend its processing chain to anywhere in the world.
The key benefit for clients is that it has speeded up processing times. "We have always said that we would turn quotes around with 24 hours - but this was sometimes difficult. With our new system we can do that easily," says Holman.
"Brokers have got a lot on their plates at the moment with FSA regulation and mergers and acquisitions," he says. "We want to assist brokers get through these pretty turbulent times. We say: you focus on your clients and let us focus on the London Market."
Some brokers may consider the option of going to a service company or direct to a syndicate. But Holman says that while it might be financially attractive, the additional work-load that this generates can be too much, particularly for those brokers who are in the process of negotiating acquisitions.
Holman says: "The change has been driven from both ends of the distribution chain. At the bottom end, the lack of choice in the composite market has caused risks to migrate to Lloyd's. At the top end, capital providers are also fuelling the process. Lloyd's has record capacity and to use it up, syndicates will have to look at more mainstream business from regional brokers. They will have to take on the composites."
The Lloyd's and London Markets are evolving, he says, with new insurers springing up and a new dynamism being shown by existing markets. "The process of evolution has speeded up since 11 September. The market is much more dynamic.
"The conglomerates were enormous edifices which started to dissolve under their own weight. But just like shoots of grass, individuals started their own operations.
"I think this will occur in the London Market over the next couple of years. You can't keep talented individuals in large corporate entities - they will go and set up on their own. It is good news - the choice is getting a bit limited at the moment."