MGA accelerating along the right path

Accelerate managing director Scott Brown pulls no punches when asked how his fledgling MGA’s first two years in business have been.

The straight-talking Scotsman says: “It has been extremely difficult. Nobody said to me this was going to be easy and it hasn’t been.

In addition to the usual challenges of trying to establish a new name in a conservative marketplace and the tough-to-predict technology development costs new companies face in today’s digital age, which are tough enough on their own, Accelerate has also had to cope with the tragic death of its director Keith Jackson, who lost a short battle with kidney cancer in September this year.

Jackson’s death hit Accelerate particularly hard because not only was he a cornerstone of the new MGA’s business development and broker relations push since joining on 11 January 2016, he was also a close friend of Brown’s who had worked alongside him on and off for 22 years, including stints at Fusion and Towergate Underwriting.

Such a confluence of challenges might have prompted other businesses to throw in the towel, but Brown and his small team at Accelerate are made of sterner stuff. The company has continued to develop and sign new deals, and is hopeful that the difficult early years are now behind it.

Here, Brown explains what happens next, and whether Accelerate will play the role of hunter or hunted in the ever-active insurance distribution mergers and acquisitions game.

Going it alone

Accelerate may be a relatively new name in UK general insurance, but Brown himself is an old hand and well-known name in the MGA game. He is perhaps best known as the former chief executive of commercial underwriting at Towergate, having joined the consolidator when it bought his old company, underwriting agency Fusion, back in 2005.

He decided to form Accelerate after a short stint at broking group RK Harrison’s MGA Aqueduct Underwriting – Aqua for short – as executive director, where he had a remit of expanding the MGA’s UK commercial offering through brokers.

RK Harrison was bought by wholesale broking group Hyperion in a deal that completed in April 2015, prompting Brown to consider his options. Accelerate was formed in September 2015.

Accelerate is a technology-enabled MGA that writes specialist business, initially mainly schemes, that would typically not get picked up by traditional insurance companies. One of its early deals, was to provide capacity for specialist broker JRW’s sports book, which included cover for cyclists, golfers and sports coaches.

In addition to its specialist nature, another of Accelerate’s selling points is its AcceleRATER web-based trading platform, developed in conjunction with insurance technology firm Insly, which is designed to allow easy trading with brokers and speedy launch of new products.

While its specialism and its technology helped Accelerate to stand out, winning business has not been easy going.

Brown says that Accelerate’s focus has insulated the company from the heavy competitive pressure in mainstream UK commercial lines, but he adds: “It is still tough. The toughness comes from the fact that we are a new business, we are selling something new, and we need to get our message out there to brokers who haven’t heard of us before.”

A big part of getting the message out to brokers was Keith Jackson. He was based in Scotland, and played a key role in cultivating broker relationships in Scotland and the north of England.

A lot of the heavy lifting in getting the message out to brokers in Scotland and the North of England was done by Keith Jackson. As well as the personal loss Brown felt because of the passing of a good friend, Jackson was also a big loss to Accelerate in its formative years. Brown says: “We have missed him like hell.”

Staying positive

But Brown is determined not to let negativity triumph. He says: “In August when I saw Keith he was asking me how the numbers were doing and that was four weeks before he died. If that doesn’t give me motivation to keep going and be successful then nothing will.”

He adds: “He was very interested in the business and he wanted us to be successful. I am going to try and use that in a positive way to fulfil what we said we were going to fulfil.”

Shortly after Accelerate launched, Brown said that the firm was hoping to hit £50m gross written premium (GWP) after six years of operation and start turning a profit in two years.

On the GWP target, Brown says: “We are bang on track to do that.” On the profit target, October 2017 was Accelerate’s first profitable month, and as the company launched in September 2015 it is slightly behind schedule there.

Brown points out that the technology spend was higher than expected, “which probably meant it has taken us a few months longer than I thought it would to get us into profit”. 

He adds that the technology spend is now paying off when it comes to adding new products and brokers.

New developments

While the going has been difficult, that has not stopped Accelerate from continuing to develop. It has around 30 brokers, and is looking to boost this to around 60. And the company aims to be employing between 14 and 15 staff by the end of 2018 from the current level of nine.

And it has continued to sign deals with brokers. In February this year it signed a three-year deal with Willis Networks member WK Insurance to provide a specialist product for forestry contractors. And in May it signed a deal with specialist contractor broker WWGroup to provide cover for trade contractors. More recently it has worked with Manchester broker Vista on a product for small guest houses.

A more significant development, however, has been the introduction of the Choices product. With Choices Accelerate provides cover for a wide range of trades in cases where there is a non-standard element to the cover that would make it difficult for brokers to place using a mainstream insurer’s extranet. One example is where a business owner has a county court judgement against them, or when a business has two elements, such as a bookshop that is also a café.

Choices was originally developed with JM Glendinning after the Leeds-based broker received a number of calls from clients who were struggling to get quotes form mainstream insurers.

The product is also modular, so the broker can choose which types of cover to include.

Brown says Choices is a milestone for Accelerate for two reasons. Firstly, it pushes the company beyond its previous mainstay of single-line schemes and into something that covers a wider range of trades. Secondly, now the product has been developed in its system, it can be rolled out to Accelerate’s other brokers.

It will not stop there. Brown is considering adding more products in addition to rolling out existing ones to more brokers. He says: “We are talking to people at the moment about potentially looking at European business and more international business.

“I am also interested in product lines such as cyber. I think that is going to be an important development over the next three to four years.”

The more business Accelerate does, the easier it becomes to convince insurers to provide capacity. Accelerate has four capacity providers and is looking to expand this. Brown says: “The underwriting performance of our book is very good and people can see that, and people are happy to look at providing us with capacity going forward.”

Buy or be bought?

The company may also consider hiring individuals or acquiring teams of people to further its cause, although Brown is keen to avoid spreading Accelerate too thinly.

He says: “have seen a lot people and businesses screw things up because they went off track and did things they didn’t really know and that weren’t in the plan where they thought there was an opportunity, and it has gone pear-shaped for them.”

But he admits that Accelerate might eventually become a takeover target. He says: “We are focusing on getting scale in the business and getting us hitting the right financial metrics. But I have got no doubt that at some point discussions like that will happen.

“We said we had a six year plan and the plan at the end of that six years the plan would be to do some sort of sale but we’re not thinking about that right now.”

With that decision some way off, at least Brown and his team can rest assured that the sailing should be a little plainer from now on. 

He says: “I’m hoping we can move into a new phase of the business where I can enjoy it a little bit more.

“Now that we have got the platform, got the products built and got the IT in a good place, I’m optimistic that it will get easier.”