Budget Group chief executive Peter Winslow has delivered phenomenal growth over the past two years, and he promises an even better future. Katy Dowell reports

Under Peter Winslow's leadership Budget has transformed from a small time underwriter to a major intermediary with considerable market influence. With a growing aggregator website and a significant portion of the affinity sector, he has delivered added extras which have accelerated underlying profit growth.

But as Winslow points out: "The great thing about this business is that we are never going to live long enough to complete the list of opportunities before us."

In the past two years Budget has seen phenomenal growth. For the year ended 30 June 2006, the company reported an 85% rise in pre-tax profits to £22.2m, the second consecutive year its profit growth doubled.

At the time Winslow laid out his expectations for the following year: "We expect to have two million car, home, motorcycle and commercial vehicle policies under management, and a further 40% increase in GWP by the end of the financial year [June 2007]."

Today he says those expectations will almost be fulfilled: "Budget & Dial [Budget's leading personal lines brand] will have 800,000 policies on its books by the end of June. That is almost double in size. But we don't write unprofitable business, all of our businesses will make a profit this year."

Targeting growth
Winslow, however, is not a man to stand still. Once a target is achieved another is set. "Admiral makes £100 per policyholder – for Budget £100 per policy is an aspiration. Our aim is to increase profit per policy, work on claims efficiency, and drive through harder deals with insurers."

Being able to deliver 800,000 profitable policyholders to insurer partners can buy intermediaries considerable power. Last year, Norwich Union (NU) and Royal Bank of Scotland Insurance (RBSI) announced rate hikes for motor premiums. Winslow says he is yet to see evidence of rising motor premiums.

According to Winslow the days of the motor insurance cycle are over. He asks: "How successful will insurers be at putting up rates in a world of aggregators? I think they will find it hard. How are NU and RBSI, the past dominant parties, with enormous cost structures, going to be able to compete with smaller insurers? Our rates aren't rising."

Budget's own aggregator website, Compare the Market (CtM), is set to undergo a radical makeover this year as it aims to become the insurance sector leader. "We intend it to be the dominant player in the insurance market," says Winslow. "We are putting together a media strategy, but making it stand out and making it sustainable is a challenge."

But he says CtM has a secret weapon: "The unique selling point for CtM is that it is the only aggregator where the price you see on screen is the price you get."

The rise of the aggregator websites, says Winslow, has led to the commoditisation of motor prices. "The band of prices has narrowed enormously and the motor market is very fragmented at the moment," he adds.

With the squeeze on motor rates tightening insurers are looking elsewhere to grab their share of the distribution chain. One example is Insurance Australia Group's (IAG) recent purchase of Hastings Direct, a deal which automatically extended IAG's share of the UK motor market.

Is Winslow worried that Budget's insurer partners could soon become its competitors? "We are used to insurers nuzzling in," he answers. "We have a schizophrenic existence, 70% of our capacity will come from competitors in one way or another, and we expect that to go up." Yet Winslow says this is not a threat to Budget: "Insurers are much less at ease than we are."

With insurers supposedly becoming more broker distribution chain it would be natural to assume that insurer service standards are improving. Not so, says Winslow: "There are still some real shockers out there."

Although he will not be drawn into pointing fingers, Winslow says that the larger insurers tend to be less satisfactory. "What you get is the senior management view which is sometimes quite different to what is happening on the ground," he says.

The gulf between senior management and frontline staff often comes in for criticism from brokers. As intermediaries begin to make acquisitions they too will face structural issues.

But Winslow, being a philosophical man, has a series of strategies designed to mitigate that risk. "Sure, I look at the overall strategy, but if I don't know what is happening on lower levels how can I ask my management questions?" he says. "Management need to know about their business on all levels." It is a sense of autonomy which allows staff to "get on with the challenge," says Winslow.

Staff handbook
Later he explains that there is one unforgivable sin: "Don't take credit for other people's work. It is an insidious thing. If staff get ahead using other people's work they will always be found out."

The handbook on how to work for Budget says: "Treat people as you wish to be treated. For example, if you are forced to sack a person then do it with a bit of respect – how you would wish to be treated."

Winslow adds: "I am a polite person and I expect our staff to be polite to one another." In a stern but fair manner," he concludes. "These are very simple things that let people know what I stand for."

The Winslow effect can be seen throughout Budget's operations. Last year, I visited Budget's Cape Town operations, Fusion Outsourcing Services. The call centre services both Dial Direct and the Budget motor insurance brand.

While there, Budget announced it would triple the size of the call centre to 700 seats. Half will be filled by staff trained by local agency, Calling The Cape. Focusing on the unemployed, the agency trains staff before they go through a period of unpaid work experience at Fusion Outsourcing. It is one method of reducing South Africa's huge unemployment levels.

Winslow says he would like to build up a range of services around the call centre to create jobs in Cape Town. For example, Budget is investing in a car wash service for its employees, to be run by local people. "This is about making social responsibility fun," says Winslow.

He encourages team building by sending staff on community service days, where they are expected to work together for the good of the community. "As a team building exercise, it is fantastic," he says.

Profit and diversity
Outside of Budget & Dial, the intermediary's affinity arm, Junction, has seen great success. Handling accounts for Marks & Spencer and the Post Office, Junction last year announced a major recruitment drive to accommodate growth. However, Winslow admits the affinity market is becoming crowded, with everyone from budget airline Ryanair, to retailer House of Fraser selling insurance.

It is important, he says, to target key brands which will churn out profitable custom. Equally important is to keep affinity partners happy by revisiting and reassessing products, and refining to meet the needs of the customer.

"There are too few really good affinity deals with a lot of competition," he says. "We are on a twilight road, where it is easy to write business, but profitable business is stretched."

Along with the AA and Swinton, Budget is making waves across the market. Where other brokers are choosing to either take up niche products or sell up in a bid to survive, the major personal lines intermediaries are beginning to diversify.

Winslow lists Budget as his biggest success, but if he were to have his time again things might have been different. It takes some time to decide upon his biggest regret, but he finally settles upon: "Not considering upon a hybrid model at the beginning of Budget." But then there is a flicker of mischief as he hesitates and says: "I wouldn't trade it for the year end results that we have coming up." IT