A tangible relationship as Zurich reconnects with the broker

Dave Smith is a measured man. As the incoming managing director of Zurich's broking operations, it is a positive attribute to have.

In the past the insurer has come under fire from brokers who have accused it of being a bewildering entity. It is because of Smith's mission to reverse that perception that he is here talking to me today. He is speaking firmly on message about how the insurer is planning to put the broker back at the heart of its operations, in a bid to underline sustainable growth.

Guy Munnoch was announced as Ian Stuart's successor as chief executive of Zurich in October last year. With some urgency Munnoch overhauled the management line up and brought Smith in, say sources, to "reconnect with the broker".

Some brokers would say that under Stuart's leadership Zurich lost its way. Indeed Stuart was accused of being too elusive. In stark contrast Munnoch has already been spotted in Zurich offices around the country. And Smith has a reputation for being a straight talking hands-on man.

"I would absolutely acknowledge that we appeared disjointed to the broker in the past," Smith concedes. But that, he claims, was because Zurich was building up a platform based on "distinct propositions, operational excellence and attracting talent. These three components are absolutely key to providing sustainable pricing," he says. "What we have done is build our solid base of expertise and while we were doing that we recognise that we might have appeared disjointed. What we find is that brokers will deal with eight generic propositions and that might appear slightly disjointed."

Yet Smith is unwilling to go so far as to place blame for this. Instead he wants to draw a line under the past and concentrate on his aims for the future. That involves building on the platform which the insurer has constructed over the last few years.

"In the brokers' eyes we are characterised by simple strategy and execution," Smith says. With the strategy set, the execution is about to start. Zurich's account handlers will be called upon to transform themselves into a one-stop shop, capable of dealing with all the brokers' needs.

"We will provide a single account executive to help the broker understand the propositions available and understand the brokers' business," he says. "They will look at the broker as one business."

If Zurich has appeared to be a closed shop in the past then that is about to change under Smith's leadership. "We will be enhancing access to our underwriters," he declares. "We will let the broker speak to the underwriter." Later that same day, some regional Zurich underwriters ask me how this strategy is going to be played out on the ground. They are keen on opening the doors to brokers, but the practicality of the plan is yet to be proved. Smith is realistic. "We won't see an impact until the end of 2007," he says.

Smith is not averse to repeating buzzwords to drive home his message.

"Tangibles is my favourite word," he admits. This could be interpreted as: "The essence of our strategy is to make it easy to understand and enhance access to expertise." This will be music to some brokers' ears. Just last week a Biba survey found that brokers are rating insurer service standards on just how much access they are giving to brokers. Where is the tangibility in this strategy? Smith says it comes in three ways.

One: providing greater choice in its distribution strategy for brokers. What Smith describes as "transparency and simplicity to carry forward that trend of more brokers using our propositions." Two: "One Zurich sales force will be put in place by the end of the first quarter. They will be covering both personal and commercial lines. We have a determination to bring this to fruition." And finally: "A broker alliance programme which was put in place on 1 January. That means looking at broker remuneration, access to market, broker support and service differentiation."

Most broker managers sit on the fence when it comes to the issue of broker remuneration. The European Union's Competition Commission recently stated its concern over the lack of transparency in broker remuneration, particularly in the UK. It also expressed concern at the ongoing use of contingent commissions. Smith is more forthright than most. "We don't provide contingent commissions," he says.

And on the issue of transparency: "I would rather see a competitive battleground that is built around transparency. We can provide enhanced commissions which can be completely transparent, it is about offering the choice." And what if the FSA introduces new rules? "If regulation happens, it happens. But it is out of our hands. Some brokers will work on a fee basis and that is their choice."

Zurich's recent acquisition of the entire shareholding of Endsleigh was a bold move. Just weeks later it was followed by AXA's takeover of Stuart Alexander and Layton Blackham, sparking rumours that insurers were marching into the acquisition market. But says Smith: "Primary growth at Zurich for the next two years is going to be organic. We want to utilise our propositions but we will never rule out further acquisitions."

Under Smith's leadership Zurich appears to be moving in a new direction. It is a changing market place and he recognises that the insurer has to stay ahead. Smith is not afraid to predict market trends. "There will continue to be a polarisation of the market between the large companies and the true independent brokers. The winner is going to be the person who is going for quality and not volume. There will be people moving out of the aggregators and becoming entrepreneurs." And, he adds: "A lot of deals which have been signed with restrictive covenants will come to an end."

Put like that, it is easy to see why Smith sees a "huge opportunity" before him. "We have tangible support for the CII, so that all our staff are CII qualified. Our platform is built on that expertise and talent.

It is a solid platform, a market-facing platform which will provide some fantastic opportunities."

Smith's enthusiasm is strangely credible, even for a cynical reporter. Maybe he will be able to convert the non-believing brokers. More importantly he is offering the existing broker panel a variety of new services. But as Smith says, the proof will be whether the plan is truly tangible.