Groupama is not shy about its reasons for buying brokers
Groupama chief Francois-Xavier Boisseau is remarkably candid about why the company is buying commercial brokers.
The simple fact of the matter is that the company is struggling to grow its commercial business in the soft market.
In the face of tough competition from SME heavyweights such as AXA and Norwich Union, the Groupama is not getting a look in.
As a result, its commercial book will not grow this year – the first time this has happened.
Groupama now aims to massively increase its share of the business placed by its acquired brokers Lark and Bollington. Boisseau says that 20% would be a reasonable amount.
But he stresses that this will be done without subverting the independent broker model. Lark and Bollington will not be tied agents.
There is commercial sense in what Groupama is doing. First, if successful it will help to expand its distribution and market share and give the company opportunities to widen its underwriting footprint. It has already made a move into motor trade, utilising Bollington’s expertise in the sector.
Second, its investment in broking will diversify its income and provide a return that is one step removed from the underwriting cycle.
Groupama’s broker investment strategy now appears to be fundamentally different to that of its French rival AXA.
AXA has always maintained that its broker acquisition strategy has nothing to do with buying distribution in the same way that Groupama’s is. AXA claims its purchases are solely about diversifying its revenue stream.
Nonetheless there remains a degree of scepticism about AXA’s long-term motives, despite no evidence to suggest that its ownership of brokers is a play to build business volume.
But Boisseau’s candour about Groupama’s motives will no doubt be seized on by those who fear AXA is following a similar path.
