The tough talker

See also: Can networks take on the giants? & The players

It has been a year since Towergate bought Broker Network. Much to the glee of the network’s boss, Grant Ellis, the partnership has created something like a steamroller that shows no sign of slowing – a fitting tribute to his personal style.

Outside the office, Ellis spends time with his wife and three children, plays football and the guitar. But on the job, this fun-loving family man is transformed into a chief executive who viciously guards his network’s position, looking to hammer its rivals any chance he gets.

“What concerns me is that [our competitors] set themselves up to say, ‘We’re a network and we plan to do this and that’,” he says. “But they’re giving [brokers] a few agencies and that’s it. Hang on, you’re either a business that’s doing it or you’re not. Don’t call yourself a network that has absolutely no track record or commitment, and provide a range of pretty tenuous benefits with some fringe insurers.”

For some networks, Ellis is a genuine pain in the backside. Earlier this year, he accused rival OurNetwork of copying marketing material, which OurNetwork denied. But Broker Network is no longer considering taking the matter to court. With a chuckle, Ellis says: “We need to move on, I think.”

Whatever the competition thinks of Ellis, the 51-year-old’s competitive streak is certainly keeping the market on its toes.

Since it was acquired by Towergate, Broker Network has grown from about 140 members to more than 200, with gross written premium of £500m.

An associate membership was launched in April and 45 firms have signed up. The associate deal is similar to an alliance in that it is cheaper than a full membership, but it offers benefits such as enhanced commission rates and compliance services.

Ellis sees alliances as merely a “toe in the water”, however, and says the associate offering is a “taster” to entice brokers into full membership.

Associate members pay £3,000 per year, whereas full members are charged a percentage of premiums, depending on broker size. Charges might range from £10,000 to £25,000. Full members also pay a portion of their commission.

The average commission a broker gets on the open market is 13% to 14%. Ellis says full Broker Network members can get 16% to 17%, and Broker Network would take about 1.4 points of that. He claims 99% of brokers would be better off in a network.

“It’s a bit of a leap of faith,” he admits. “You say to somebody, we’re going to give you these extra commissions but, by the way, we’re going to charge you £25,000.”

Ellis adds that full members are serviced by 150 experts. “No other network comes remotely close to that level of resource. A lot of networks say they’re the same as Broker Network. But with 20 members, they don’t exactly have the same strength.”

Ellis has another reason to be confident. He heads one of the few networks that is in the good books of Norwich Union. The insurer is talking tough on distribution (see page 14), saying it would rather deal with brokers directly than with networks.

But Ellis says Broker Network’s relationship with NU is unchanged. “We’ve got a really, really good working relationship with Norwich Union.

“We’ve had a review with them of all the commission deals we’ve got in place and they’ve all been retained at exactly the rates. So there hasn’t been any reduction on the Broker Network account.

“They’ve been giving quite a few brokers a hard time and a couple of networks have had commission cuts from Norwich Union. We haven’t been one of those.”

Ellis doesn’t believe there should be a defined rate of commission because that would ignore what brokers do to earn their money. “Broker Network firms do a lot of work with insurers in terms of promotion and agency management,” he says.

What about his own growth plans? When asked about the speculation over a buy-out of alliance Westinsure, he says: “I’ve made no secret of the fact that we’re very keen to retain the position as the largest network. We want 1,000 members by 2013, so one way of achieving that is to acquire the competition.

“I think I’ve spoken to pretty much everyone in the past 12 months, except for OurNetwork, about that possibility. In the same way Towergate is listening to [private equity investors interested in bidding for] Open GI, I’m doing the same thing.”

Ellis insists Broker Network has retained its freedom since joining Towergate – its parent doesn’t tell it what to do.

“We’ve got meaningful accounts with pretty much every insurer in the UK now. That’s helped us broaden the offering to members. As it grew, we’re a couple billion in premium spend, so it’s a huge amount and means, even where we were perhaps quite insignificant with one or two insurers, collectively now we’re more significant.”

If that sounds like the combative Ellis can lay down his weapons, fear not. He is still fighting a battle – on the FSA probe into whether brokers should be forced to reveal their commission to consumers.

“I really hope the FSA realises it has more on its plate now than to worry about things customers aren’t interested in at all,” he says. “It keeps saying, ‘We can’t understand why more customers aren’t interested in the commission you earn’. Frankly they’re just interested in, ‘What does it cost me?’.”

He adds: “I would be really saddened if it pursues a regulatory approach because to me, that would indicate it’s nothing other than a political thing. The customers don’t want it, the industry doesn’t want it.”

In the longer term, Ellis has his sights set on ensuring the majority of brokers belong to a network – Broker Network, of course. He predicts that within five years, 80% of brokers will be in a network.

As boss of the UK’s biggest network, Ellis could ignore the competition and focus on his business. But that just isn’t his style. “It’s difficult when you’re the market leader,” he says. “It’s easy for people to try and copy you. I do get a little bit upset.”