The road to LIoyd’s can be a tricky one to navigate. Brokers who are looking to work in the London market for the first time will need some extra schtick to make a real impact. But it can be done. Armed with these tips from Insurance Times and a little savvy, brokers should be able to enjoy a seamless journey to their final destination at 1 Lime Street
1. It's who you know
Insurance is all about who you know and for brokers looking for a step up in the London market, Lloyd’s is no exception. Ataraxia chief executive Stuart Randall says: “Lloyd’s is a very impersonal place if you are from outside the City. So how do you access it? The first point is usually someone you know. I’ve had a relationship with [Lloyd’s specialist broker] Thompson, Heath and Bond for nearly 20 years now. Even though there may be changes in personnel, they still have a strong emphasis on continuing to build relations.”
Momentum broking director Craig Burton agrees, saying that new recruits fail to see how vital it is to make the right connections. “Graduates think that a broker lining up in front of Lloyd’s boxes is not efficient. But at Lloyd’s, we build trust through relationships and that is how business is done. You can’t do that by flicking emails around.”
2. Building connections
Making the right connections is not enough to be a successful broker within the London market. Building a relationship with the connections takes time, understanding and professionalism. “The placement of business into Lloyd’s is all about relationships with Lloyd’s brokers and people who move around within Lloyd’s. You have to build up relationships with certain insurers and underwriters. That’s the way the business flows,” Randall says.
Relationships within Lloyd are also deeply multifaceted – reaping rewards for both brokers and underwriters.
Burton says: “For a broker like us, it’s important to understand not only the relationship we have with our wholesale broker, but also the wholesaler’s relationship with particular syndicates on the floor. With these relationships, someone will really go that extra mile to place the risk.”
Communication is key for brokers looking to build and maintain Lloyd’s connections. Randall says too many brokers are not communicating with insurers, finding it hard to place business effectively. “As with any insurance relationship, as a broker you must build a relationship with your underwriter. Good insurance companies will have underwriters who speak your language and, through communication, the business flows.” For smaller brokers looking for a way in through the wholesale market, Burton says it’s about personality and friendship.
“You find out what the wholesale brokers’ strengths and weaknesses are when you work with them, as well as where they focus, whether it be motor or liability.
“It’s quite an antiquated system but a lot of it has been down to the individuals who work for the wholesale broker.”
4. Go niche
Unlike other markets, in Lloyd’s a broker can thrive as a small fish in a big pond. Lloyd’s broker RFIB’s director, Hugh Champion, says developing a specialty will set non-Lloyd’s brokers apart in the market. “If you want a relationship with a Lloyd’s broker, then you can develop that in respect to being a niche business. A niche personal accident broker might only need access to one or two syndicates and they can build up the relationship solely on that basis.” Randall agrees, adding: “After building a speciality, people will tend to move around Lloyd’s with that underwriter or insurer.”
Champion also says it has never been easier for non-Lloyd’s brokers to work within Lloyd’s. “I think it is easier now to place business, especially for a niche broker. Lloyd’s has made it a lot easier for a niche broker to deal with just a Lloyd’s syndicate or two.”
5. Get an agent
If the paperwork required to become a Lloyd’s broker is too much, using a managing agent to access the market might be the answer, says Champion.
“Getting access to the companies at Lloyd’s isn’t as complicated as it used to be if you just want access to one or two syndicates. You can deal with one of their managing agents and therefore not actually have to be a broker at Lloyd’s to access those companies.
“Two examples are Catlin and Travellers, who have the ability to deal with non-Lloyd’s broker enquiries. You are accessing the market that is at Lloyd’s but in a different way.”
6. Use wholesalers
In the competitive broking market, the best tip may be to simply use what is already at your disposal. Take advantage of relationships with big broking firms where possible. “Nationals such as Aon and Marsh have their own teams with Lloyd’s passes and in they go to the market. That’s their play, really. It’s the strength of having such a big organisation,” says Burton. But even smaller brokers can use the wholesale market to their advantage. “With the guys, we rely predominantly on the London wholesale market such as Miles Smith. It is up to us to develop a strong relationship with them because of their strong relationship with the Lloyd’s market.”
Have business cards out and handshakes at the ready, because the London Market is all about broker networking.
Randall says: “There is a fundamental truism in our business: ‘Insurance is a people business’.” Burton agrees, “Networking is a help in so many areas. When you go to London, everyone has the image of the brokers and the underwriters in the pub, and that image is true to life.
“From social conversations you can pick up who’s done what and with whom. The more people you get to know, the more you pick up information about what lines of risk they might take on.”
8. Think twice
Perhaps the most obvious way for a broker to access the Lloyd’s market is by becoming a registered Lloyd’s broker. But this has its pitfalls, says Champion. “If you want to be a fully-fledged Lloyd’s broker, your balance sheets and the structure of your business have to pass muster.”
Since the Legislative Reform (Lloyd’s) Order 2008 relaxed the regulations governing broking within Lloyd’s, nine brokers have also been given access to Lloyd’s as non-Lloyd’s registered brokers. This means brokers are able to access the market via individual managing agents with whom they have been given authority to conduct business. Champion adds: “You either need access to the whole of the Lloyd’s market or you already know you just want to talk to Hiscox or Catlin. They are rather different games.”
Case study: Primary Group Intermediary Services
Primary Group Intermediary Services became an accredited Lloyd’s broker in February this year. Managing director Duncan Philpott says that before regulation was eased between 2005 and 2008, accreditation was a “hard, long-winded, time-consuming prescriptive process”.
But, according to Philpott, it is now easier to become a Lloyd’s broker. “The FSA undertakes the checks and balances both pre- and post-authorisation – Lloyd’s in part relies on these,” he says.
But Philpott has a word of warning for brokers thinking of becoming Lloyd’s brokers. “Before you start the process, you need to decide what you want out of it. We believe that being an accredited Lloyd’s broker is vital to the success of our business.”
Since the rules were relaxed in 2008 by Lloyd’s, allowing non-Lloyd’s registered brokers to apply to work directly with managing agents, only eight brokers have applied. What is holding brokers back?
How can Lloyd’s further improve regional brokers’ access to the market?
What are the most important elements of a relationship between a broker and a Lloyd’s underwriter?
What are some of the major disadvantages of working as a broker in the Lloyd’s market?