Shaking up the networks

Willis may have hit the headlines recently for its plans to develop a managed general agent facility, but it is networks that new UK and Ireland chief executive Brendan McManus is really excited about.

McManus, who has been in the role for just four months, after joining from Royal & SunAlliance, is itching to talk about the Willis Commercial Network and stoke fears about the future of rival networks.

In the light of Towergate’s acquisition of Broker Network, McManus says Willis’ network will be looking to attract disenchanted Broker Network members and exploit fears that other networks could also become acquisition targets.

“We expect to pick up new members from Broker Network. The membership has been sold on; the emotional contract has been broken,” he says in his typical forthright manner.

“Other network members will also worry. They will wonder what will happen to their network. It gives us a huge advantage. We are not going to sell our network.”

The Willis network currently has 74 members and McManus says he is looking to grow that number significantly. He will not be put a figure on what he would like to achieve, saying only that his target is “some multiple” of the network’s current size.

Increased competition

McManus’s desire to ramp up the Willis network comes at time when interest in networks has suddenly rocketed.

AXA is looking to significantly grow its network while Jelf launched a network, the Purple Partnership, earlier in the year.

While rivals may scoff at McManus new-found evangelism for networks and insist that their members are perfectly happy where they are, McManus claims that Willis is already having conversations with members of the other networks.

So how far will he go to get new members? McManus is keen to take an aggressive approach. “I am not encouraging people to break contracts, but if someone wants to leave [a network] I would help them [to do so].”

Beyond, targeting members of other networks, McManus is keen to attract brokers who are new to network membership.

Next year, Willis is launching two propositions to bring in new network members. One will be for smaller community brokers that have traditionally not been typical Willis network members.

“They want to stay independent and still want to be part of the local community,” says McManus.

The other proposition will be for start-up brokers, providing support through existing network members, for brokers that want to set up in business. “It will be a ‘broker-in-a-box’ giving them the facilities to get going.

“There are quite a few out there [who want to start-up on their own]. We have the facilities and infrastructure to help them do this,” he says.

McManus joined Willis in August after over 20 years at Royal & SunAlliance, replacing Allen Gribben who had been promoted to chief executive of Willis International.

His appointment was seen as a signal that Willis wanted to ramp up its penetration of the SME and mid-corporate sectors.

Currently 20% of Willis’ revenues come from smaller-ticket business, with the remainder coming from larger clients. While McManus does not predict a dramatic shift in this balance, with opportunities to grow across all segments, he is looking for “aggressive” growth in the broker’s SME business.

“There are bigger opportunities for us there,” he says.

Certainly, the SME sector is one that the international brokers have been actively looking to target in recent months, with Marsh and Aon ramping up their activity in this area.

Developing an MGA

A key plank in the strategy for McManus is developing a managed general agency (MGA) for Willis to handle small commercial business.

“Small commercial business is a priority. I want to convert a significant amount to an MGA. I want to be number one for service and with an MGA you control all the touch points. We want to have a differentiated proposition.”

McManus will not be drawn on how much of Willis’ small commercial business will be transferred to the MGA, which will focus initially on simple homogenous commercial package risks. The aim is to extend to some financial lines products at a later date.

There are no plans to offer the MGA facilities to brokers outside the Willis network.

McManus accepts that Willis needs to develop its expertise in order to successfully manage the MGA. “We are looking at hiring and partnering. We have to become a trusted underwriting partner.”

He adds: “My track record is not bad. Insurers have said they will provide capacity.”

McManus rejects the suggestion that creating an MGA, with the potential to earn additional commissions, is aimed at replacing revenues lost when contingent commissions were abandoned.

“It is not driven by [New York attorney general Eliot] Spitzer. It is about good management, improved margins and good customer service. It is not about recovering lost commissions.”

Beyond the SME sector, McManus says he will continue to build up Willis’ mid-market and large corporate business. He says he will develop the broker’s industry specialisms, but would not be drawn on which areas.

He also highlights Willis’ employee benefits division as one that has plenty of growth opportunity.

“It’s only small at the moment, and completely underdeveloped, but I see opportunities to sell to property and casualty clients,” he says.

Recent months have seen other major international brokers begin restructuring programmes, with the potential for redundancies. McManus says he does not expect similar steps to be taken at Willis.

“We have outperformed our peers on expenses management. Other top brokers have seen expenses grow faster than revenues. Willis doesn’t have a spending habit.

“Joe Plumeri (Willis Group chief executive) got a curb on expenses and continues to get a grip on it. It is fundamental.”

But he accepts there is still work to be done in tackling Willis’ cost base. “I am looking at the cost of manufacture. I am at the planning stage at the moment.”

He says there will be no major restructuring in the UK. “We are hiring people, not making them redundant.