Arron Banks, chief executive of Group Direct, talks to Chris Wheal about his life and career
Arron Banks runs Group Direct, a company he founded seven years ago as small commercial vehicle broker. He has since expanded through other commercial motor lines into most SME commercial insurance, has a Gibraltar insurance company and part owns an Isle of Man Bank. Group Direct is a top 35 UK insurance broker with a GWP of £85m and 400 employees.
How did you make it where you are today?
I started working at Lloyd’s for what is now Amlin, as a motor underwriter in 1985. I was there for six or seven years and then I was recruited by NU to run Haven. I was there for two or three years and was involved with Hill House Hammond. I underwrote a motorcycle scheme and a few of us decided to go off and set up Motorcycle Direct. That was 1998. After three years, I left there and started Commercial Vehicle Direct in a tiny office above the same bakery shop and Asda we used to set up Motorcycle Direct. There were two people and two desks and we have grown pretty much organically from there, moving to near the Severn Bridge. We moved into fleets and taxis and minibuses and went from the single bloke to the small business and then we set up a personal lines division and a premium finance company. We’re one of the largest SME brokers in the country now.
What are they key challenges ahead?
We have big plans for the company to be announced soon. Our profitability is surging ahead and will help finance some pretty rapid expansion. I expect to see some action announced soon after. We’ll be buying to increase our footprint and we aim to be a top ten broker in a relatively short period.
What has changed the most since you started in insurance?
Regulation. It is an often-made point I know. The products that we sell to the general public in general insurance do not need the level of regulation applied to them. There is no sense of personal responsibility anymore. People now have to have someone else to blame for their own idiocy. We have to tick as many boxes as we can and it’s hard work. It is leading to big companies with the capacity to do all that admin and that is sad. The regulator is consolidating the power in a small number of hands and ultimately that is not in the customer’s interest. But the regulator would prefer to regulate a small number of big players because that is easier. Big companies are not necessarily more efficient. If you specialise, then you can efficient.
What advice would you offer someone just starting out?
Don’t bother. Ok don’t bother unless you have a specialist niche. There are niches out there. We are always looking for them and we do find them but people say we built our business in seven years but we did already know a lot of people. This is still a people business so starting out without already knowing those people would be even harder. I’d like to think that people could get to know the industry working for us and then maybe make the leap, but lots of people are not prepared to take that risk these days. We offered someone a stake in our business if they were prepared to risk some of their own money and they decided not to. We’re going to be creating seven millionaires with our floatation. If you don’t take the risk you don’t deserve the rewards.
What is the biggest mistake you have ever made?
I have made so many it is taking me some time to run through them all in my head. Not taking enough time over appointing someone to a senior job would be the biggest. If you get the wrong person in a position of power they can do a lot of damage quickly. It is also messy and expensive to put it right.
What was your biggest success?
Setting up Commercial Vehicle Direct has been outstanding. We did it from scratch and we did it the hard way – and it was hard – but now we have more than 100,000 vehicles and a GWP of £40m. The other big success was seeing the opportunity to buy into the Isle of Man bank. We bought 25% at 20p a share and they are now worth 80p. We have lots of high net worth individuals and the Qatari Investment Authority involved. It was a good deal and we spotted it.
What is your unique selling point?
I’m a fairly lateral thinker. If I see an opportunity I go after it 100% right, or wrong. There is a phrase that I always think applies to me – I may be right or wrong but I am not in doubt. And I encourage other people to feel that way. That develops into a winning habit and from there you go on winning.
Talk about some of your contemporaries and friends in the insurance market?
I admire the tenacity Shona Robertson has shown since she took over H&R but one of the people I admire most is a person I have fallen out with. I set up Motorcycle Direct with Malcolm Evans and Barry Hulbert and although Barry remains a best mate, I have since fallen out with Malcolm. But Barry and Malcolm knew everything there was to know about broking and they taught me how to do it, so I owe them both.
When you are not working what do you do to relax?
I play a little golf and little cricket but I don’t relax very often. I do a lot of socialising. My wife is Russian and an extrovert so I get dragged to loads of things I don’t want to go to, but then end up enjoying them. I travel a lot. We had a chance to go to China to look at a broker out there so we combined that with a holiday. I read a lot – business books and biographies about interesting people, as well as a load of trash. And I train for the London marathon.
What is your favourite book/film/football team etc?
Book: Gone with the wind – only because of the last line: Tomorrow’s another day, which I like.
Film: Groundhog day – I just like the humour
Day in the life
7:00am I get up, have breakfast and take my kids to school.
8:20am I get to the office and walk round saying hello to everyone, or having chats in corridors. We do not have formal meetings. My business partner removed all the chairs from the meeting room, so we have to stand up. That means a lot of meetings can take place very quickly and we do not even have to be in the meeting room.
9:30am I read my emails and delete most of them. We also hate communication by email. It is just a way of transferring work to someone else, so nobody is allowed to copy other people in on emails. We frown on using emails at all.
10:00am A lot of the time I will be out of the office all day. I go to Gibraltar or the Isle of Man. If I am in the office there are no fixed plans. I will wander about to find out what is happening. I might go to our e-business unit, pick up a pile of new business, or talk to the help desk people about what is happening.
11:00am I am in charge of capital allocation so I am interested in where things are working well and where they are not. Every business has its own manager or leader. There are three directors sitting above that: me, a lawyer and an accountant. We are there to either kick them up the backside or give them the extra money they need to expand. We get figures in from every part of the business every day showing sales for that day, week, month and year. Today I have figures in from one division showing they only made 70 sales yesterday instead of the normal 120 so I shall pick up the phone in a minute and ask why. I do not have a structure to my day. I might have to stay to midnight if there is a problem or I might just go off and play golf.
6:00pm I have five kids, from two wives, so at home there are three young kids and one thoroughly unreasonable wife keeping me busy. It is great. I tap dance to work every day because I love my life. I do not have to work anymore, I do it because I love it.
9:00pm After the kids have gone to bed I will sit on the cross-trainer rowing machine and row for two hours while watching a film. A few of us from work decided to do the London marathon and that is my training for it. This year, we hoped to do it in just over four hours. At the half-way stage I was on target, but then I hurt my knee and managed a crowd-pleasing final mile in a hour. I have realised I need to lose more weight before I do it again. Last time, after rowing for two hours and burning off 2,000 calories I would eat a box of Maltesers. I need to cut out the Maltesers. You cannot run a marathon a stone and a half overweight.