The outspoken chief of acquisitive broker Moorhouse explains hypergrowth, the need for commission disclosure and why he receives a phone call from a consolidator every week

Lyndon Wood is not one to court controversy - even though invariably, he does.

In between railing on insurers for not pushing through rate increases and questioning the ability of the consolidators to integrate their acquistions, he delivers a decisive verdict on Biba's bugbear, commission disclosure.

"Brokers are fearful of informing their customers of what they earn and how they earn it," Wood says.

"There is an element of brokers who earn more than they should on certain risks. It's hard to justify 40, 50 or even 60 per cent commission to customers."

Given what he considers an obvious need for full disclosure, he belives that it is only a matter of time until the FSA takes decisive action on the issue.

"It will happen. It's a question of time rather than anything else."

After explaining the reasoning behind the term hypergrowth - that is no less than 50 per cent growth year on year - he ponders the strategic outlook of the consolidators, and their ongoing struggle to grow their businesses by means other than acquisition.

"If you have product and distribution, you can grow organically," he observes.

Wheels within wheels
"But the consolidators generally struggle to grow organically. They buy a broker and leave everything in situ. It becomes wheels within wheels.

“The consolidators struggle to grow organically. They buy a broker and leave everything in situ.

"What they focus on is leverage. They need to focus on cost-cutting and how their acquisitions can blend in with business."

Are any of the consolidators doing this? His answer is uncharacteristically brief.

"I haven't come across one yet."

He has much more to say on rates.

"The industry is fooling itself if it thinks rates are going to jump up significantly in 2009," he quips.

"Insurers like to think they are pushing through rates. But we're still coming across price matching, account transfer deals when its price-matching minus ten per cent. And it's with the same insurers that are preaching 'We're putting rates up'".

Given the difficulty of the business climate, is Wood thinking about selling the business? Though he says he receives an approach on "almost a weekly basis," from interested parties, he insists that Moorhouse will remain very much his business for the forseeable future.

"We're building the business at a rate of knots. We're more than happy where we're set."

Lyndon Wood - Biography

At the age of 19, Lyndon Wood started what became the Moorhouse Group in 1990 from his Caerphilly bedroom.

Despite having little experience, no support and very limited resources, he managed generate 30,000 pounds in his first year.

Nine years later Lyndon launched XBroker which by 2007 was the portal most widely used by brokers to trade with insurers.

In 2004 the Moorhouse Group scooped the accolade of overall Broker of the Year at the Insurance Times Awards.

He plans to grow Moorhouse to 100mn in premiums by 2010.

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