Ashwin Mistry interview: Championing the independent broker and encouraging the next generation

You might be forgiven for thinking that 42 years in insurance would leave a person somewhat jaded. But Ashwin Mistry is no ordinary industry man.

The BHIB and Brokerbility executive chairman is as enthusiastic about insurance today as he was when he began his career in 1978. In fact, it was only by fate that he ended up in the insurance industry at all. He was meant to start a job with Lloyd’s Bank, but a wrong turn led him into the offices of Guardian Royal Exchange (now AXA) instead, and the rest is history.

Today he heads the Brokerbility broker network, which started life 13 years ago. Business is good. The deals negotiated 13 years ago are still intact. “Either we negotiated really well 13 years ago, or the distributors see value in what we’re doing,” Mistry tells Insurance Times.

He and Brokerbility managing director Ian Stutz feel insurance offers a lot that should attract young people into the industry.

For Mistry, broker and insurer mergers and acquisitions (M&A) is keeping things interesting. “For us its good hunting ground, both in terms of people and business opportunities,” he says. “We’re being sought after both by insurers in terms of distribution and in terms of product placements, and also by brokers who wants to talk to us. We’re in a good spot.”

The main challenge Brokerbility is facing right now is access to finance. Mistry says the network is trying to stay away from private equity for as long as possible, with the preference to raise funding via debt. Another problem is trying to retain proper skill and talent.

M&A

Because of increased M&A, “a load of our people [brokers] are being sought after, and because of the dearth of talent, unfortunately that pushes up wage inflation. it’s an unnatural scenario, but it is what it is. But we do recruit our own,” Mistry says.

“We’ve got to look further afield from just insurance now. The days are gone where you try to recruit people from insurance to stay in insurance. There’s a lot of displaced workers from the construction and retail sectors who are top talent. We can now bring them into the business to provide a different dimension to our sector,” he says.

Key skills Mistry identifies are the ability to listen to clients and have empathy. “You’ve got to be liked, and once you’re liked by the client, the product solutions are relatively simple.”

Brokerbility’s business leans towards commercial lines. The only personal lines it does is high net worth (HNW), which Mistry points out is “extremely lucrative”. Otherwise, he sees employee benefits as a significant growth area, with clients needing advice due to new and recurring risks. Likewise, cyber cover and directors’ and officers’ (D&O). In terms of the former, Mistry believes customers don’t yet understand the risks.

“[Customers] think a cyber incident is not going to happen to them. I’m in the camp that thinks cyber will be the new PPI. My advice to most brokers is you should offer it to your commercial clients because at some point they’ll be looking you in the eye and say ‘why don’t you offer it?’ “

Reinsurers

Mistry sees a potential threat to insurers coming from the reinsurance market. “Reinsurers are now coming direct to market with MGAs and some very bespoke offerings. I don’t think insurers should be complacent at all. I would not discount reinsurers with a good underwriting agency and a good distribution model on an innovative product to be a genuine threat in the market. It’s beginning now and will get more severe.”

No one owes insurers a living, he points out. While acknowledging that actions are being taken to reduce the cost base, such as tackling distribution costs, spending on branches and offices, and investment in technology, there’s a range of things that could be done to stave off long-term threats. It depends on how nimble and agile insurers are.

“The insurance market, and the top four or five in particular, are so hell-bent on M&A. There’re a lot of insurers still playing in the acquisition space and they can’t be doing everything at the same time. They need to be aware of this dark horse that’s coming along on the side-lines.

Consolidators

A natural threat to the network model surely comes from the consolidators, another reason why Brokerbility needs to stay ahead of the game. But Mistry is keen to play down the threat.

“Every broker has a lifecycle. Every business model has to have a succession plan of some sort in place. There is a natural life cycle to most lifestyle brokers. At some point they’re going to want to cash in,” he says. “At the moment the environment is ripe for getting out at a reasonable EBIT level. We don’t see that as a massive threat.

Brokerbility managing director Ian Stutz reminds Insurance Times that ultimately every insurance broker is a private company and every private company sells. “Whatever that date is, it’s going to happen. There’s always going to be a stream of brokers selling.

“We notice that consolidators are good at going and getting hubs, ie overpaying for a central broker, but not good at getting brokers that they have to pay the standard price for. That’s a flaw in the consolidation model.

“Unless that changes, there may be a reduction in the appetite for new people to come in and purchase hubs or seeds to start deals. There’ll be people sitting on the sidelines wondering what the returns are for investing in our sector.

Crossroads

“We’re at an interesting crossroads for the 3,000 or so brokers out there. My biggest concern is insurers talk about the need to have a vibrant and independent market, but are they doing enough to encourage younger people to become the next £15m-£20m GWP broker. There’s a lot of barriers to entry that weren’t there when Ashwin started his business.

“Regulation is far harder. Getting an agency with one of the top line insurers is not as easy as it used to be. Older guys are going to sell their businesses. I believe there’s a need for an empathetic, advice-driven community business. What’s being done to encourage people to start one?

“Insurance is so unique,” Mistry says. “I know you’re going to walk through my door on a certain day. It’s called renewal date. I know exactly how much money you’re going to spend, whether you’re a good customer or not. I’ve 364 days to impress you during that entire journey. It’s a great place to be. And I’ve got unlimited stock. In those 364 days, if I cannot impress you and get under your skin and really look after you in the way you want to be looked after, you don’t deserve to be in business.

“Young people need to have that same level of appetite. One thing I have noticed in my history, I don’t know if we drank different water, or ate different food, but there was a desire for self-employment, self-investing, and having a bit more belief in yourself. I don’t necessarily see that today where people are prepared to put some blood into a business. That’s a shame because if you know your business well, why would the next generation not be gagging to take some of us dinosaurs down?

So, as he celebrates his 60th year, would Mistry do anything differently? His response is emphatically “no”. “By accident or design we’ve taken sufficient baby steps to succeed. Only my inner team can screw it up. We have a great customer base, we’re well regarded, our ethics and values are to be proud of. The next tier will hopefully take it on to another level. I just hope they have the appetite. I just wish I was 20 years younger – my God I’d be dangerous.”