This year’s BrokerFest 2021 conference debated the pros and cons of broker network membership. Here, Insurance Times asks the industry how much value these organisations can really bring to brokers?
Robert Marshall, chief executive, Trident Insurance
In short, it just depends on what you are looking for and what the cost is going to be.
Joining a broker network is not a backdoor way of accessing facilities from insurers and although the commission benefits sound great, this is only if you get natural business in specified areas. If you don’t, it’s an extra 3% of nothing.
Just like being a Biba member or an Investors in People holder, it may boost your ego, but it doesn’t follow that these memberships are necessarily worth the money. With the reputation of the insurance industry decimated by the business interruption insurance fiasco and the endless cost of regulation, everything needs to be examined on its merits.
No SME-sized broker can do it all, otherwise it ends up being a jack of all trades and master of none – brokers should specialise and grow within their remit and sleep way better.
Insurers offer a lot, but the reality is they are not the only kids on the block. MGAs and sub-broking increase the opportunities to place business with no specific ties, save being authorised and registered to do so.
We use the membership of a network to supply compliance help, which is way better than taking on a full-time or part-time individual. As with all things, the brochure is rarely quite as good as the products within.
Olga Collins, chief executive, Worldwide Broker Network
Continual consolidation keeps the broking market on alert and looking for the best competitive advantages.
Network membership provides businesses with the global capabilities, compliance and governance they need to compete, without having to surrender any of their independence.
At WBN, it’s important to us that our members maintain their entrepreneurialism – it gives them the freedom to be flexible and bring innovation to their clients.
Being part of a network also creates more opportunities for collaboration. We hold two global conferences, as well as multiple regional meetings for our members every year to keep them connected on the latest industry issues.
WBN is also entirely member owned. It means members are aligned to the same goals and united around a unique ‘culture of care’, where they truly invest in clients for the long term.
Brokers that join us can also make the most of our Young Professionals scheme, which helps young talent accelerate their careers and achieve a senior position in their firm much sooner.
Nick Hobbs, chief distribution and regions officer, Allianz Insurance
Broker network membership is not necessary, but certainly they serve a significant and legitimate purpose provided they do what they are intended to do - support independent brokers in becoming better brokers, delivering great value to their customers and aiding partner insurers to achieve their objectives.
There are many independent brokers which excel without being connected to any network, but for those that are network members, this can offer an edge they might not otherwise secure by helping them to place business, providing insight and statistics to build their in-house expertise and offering, addressing regulatory complexities, or creating a community where they can share and discuss common problems. It’s collegial business support.
What a network should not be is an unnecessary link in the distribution chain. Most network operators understand that they exist to assist, not confuse.
From an insurer perspective, network members might not individually have the scale or business mix to get attention or prioritisation for what they offer - networks can assist with this. Of course, the quid pro quo is that insurers also look to the network to extend their distribution reach and meet members they might not otherwise be able to regularly connect with.
If that nexus doesn’t work, then that needs network attention - as the representative for both member and insurer. Conversation when it isn’t working or delivering great mutual outcomes can be candid.
Julie Rayson-Flynn, operations director, Brokerbility
For a broker to decide whether to join a network, it should first identify what needs the business has. Does it want support with market placement, access to markets, compliance support, or proposition support for clients?
With current market conditions, an increasing number of insurers are reviewing their broker agency base and offering - we are hearing of brokers faced with losing agencies, access to markets, or having only partial access unless they can meet insurer requirements.
In turn, this limits choices available to brokers’ customers. On this basis, we think there is an increasing argument for brokers to look to join a network that could help with some of these challenges.
Financial considerations are, of course, a determining factor. Networks can offer the opportunity for brokers to increase the growth of their business, enhance earnings, reduce costs, increase the value of their business, or give increased financial stability.
There are a variety of challenges a broker will face, whether it’s the increasing demands of regulation, the training, development and recruitment of staff, sales and marketing, IT and back office capabilities, or sometimes simply needing a shoulder to lean on, bounce ideas off, or to seek guidance on situations they may have experienced.
Joining a network does not necessarily mean giving up independence as a broker or losing control of your business - it’s more about finding the proposition that works best for you.
Elliott Hayes, sales director, commercial lines, Close Brothers Premium Finance
Close Brothers Premium Finance (CBPF) partners with most of the major UK commercial broking networks. We have seen first hand how networks can provide access to the market, giving brokers competitive rates, assistance with marketing, training, financing for acquisitions and help with compliance.
Networks also enable brokers to access service suppliers, including software houses, giving brokers the ability to plug into the latest technology and finance providers, such as CBPF.
Finance is a critical element of a broker’s profitability. CBPF can help enhance a network’s proposition by arranging financing deals for new members, helping to set up agencies and liaising with members through our dedicated networks manager.
For brokers looking to sell their businesses, this is a golden time. But, networks can also give those that want to grow instead of sell the best platform to develop their business, especially startups and smaller independents that might otherwise struggle to attract the attention of insurers.
Finally, if they do sell, many account executives and managers wanting to start again in broking can join a network, become an appointed representative (AR), or become part of a franchise. Networks can help the broking model reinvent itself.
Scott Bennett, sales director, Bravo Networks
You’d be hard pushed to find a business that hasn’t been changed because of Covid-19 and the support of a wider network is another kind of insurance policy that I believe regional brokers shouldn’t ignore.
How much brokers use their network and what they use it for is entirely dependent on their particular needs.
At Bravo Networks, some members are only interested in the enhanced growth deals. Others want to make full use of our human resources, marketing or compliance specialists. It all depends on where they are in their journey, but it’s our job to react to what’s happening in the market so we can help protect and support businesses, as well as assist them to grow.
The last 20 months proved to us there’s strength in the network model. Members needed human resources advice like never before during the pandemic, as well as required support with driving conversations forward with insurers in a considered way and, more than anything, wanted a voice to stand up for independent regional brokers.
Looking beyond the pandemic, we’re coupling the aftershocks of Covid-19 with a continuing hard market. But being part of the right network means that not only can you weather the storm, you can identify exciting opportunities and emerge even fitter and stronger as a business.
Alex Hardy, sales and distribution director, RSA
Over a third of the broker market is part of a network, which shows how vital this can be for their business.
Networks can undoubtedly help support independence and choice and that has to be good for the industry. However, making sure they stay focused on what matters to brokers without distraction is both a challenge and an opportunity for networks.
Much of the appeal of networks depends on where brokers are in their lifecycle. For startups, the access to markets that network membership can provide is invaluable when scale and direct insurer relationships are a challenge.
At the other end of the spectrum, succession can prove an equal challenge. In recent years, this has been a big threat to the health of the network model. It’s possible that recent changes in ownership, if it brings investment and focus, could change that and provide choices for brokers.
For the majority of brokers that are neither at the start or end of their journey, networks have to prove themselves. Those that rely on aggregating scale alone are likely to see member numbers continue to dwindle. However, those that work hard to stay relevant to their members have a real opportunity.
For us at RSA, as we look to continue our close working relationship with regional brokers and broaden our distribution, we want to work collaboratively with those that add value for brokers.
David Hopwood, chief executive, Hedron Network
Global Risk Partners’ (GRP) acquisition of Hedron from Marsh UK earlier this year underscored the importance of having a network in the GRP portfolio and, since then, our brokers have hugely benefited.
Hedron brokers are able to access new insurers with better deals from GRP’s panel insurers, when it has often been hard for brokers to access decision makers.
Brokers can take advantage of GRP’s M&A facilities, either if they want to sell up and create value from their life’s work, or they want to obtain new investment through selling a minority stake.
Most importantly, brokers can choose from a custom built menu of services and products without pressure - the network gives them the power to grow on their own terms.
Our 250 plus network members are stronger collectively. Controlling £800m in gross written premium (GWP) gives the network more influence, deeper market access and the opportunity for individual brokers to generate more growth with the network’s support.
The network model will continue to play a major role in UK commercial broking for years to come.
Roy Standish, partnerships director, James Hallam Limited
Networks in the UK insurance industry come in various shapes and forms. At James Hallam, we have a growing Partnership Programme for appointed representatives (AR) which caters for everything from brand new startups through to long established businesses (advice based, insurtech or both), whether directly authorised but looking to fall under another firm’s regulatory licence or existing ARs who are seeking to change their attachment to a new principal.
The AR model is now widely acknowledged as a robust alternative to the more traditional, directly authorised approach.
In addition to the obvious advantages of overall cost reduction, partnering with a large, independent, Lloyd’s broker enables access to a large number of markets which may not be available to the smaller broker.
Support with the ever increasing regulatory and compliance matters, training, marketing, finance, claims, risk management, IT and human resources all enable the appointed representative firm to concentrate on customer retention and acquisition.
At James Hallam, we don’t have a one size fits all approach; there is no fixed operational or financial model on the shelf. We tailor each proposition according to business requirement.
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