We speak with Lea Cheesbrough, Head of Broker Development Advantage & New Start ups at Broker Network, to get the inside scoop on some of the main challenges start-up insurance brokers face, the value of reputations, and the sense of liberation that comes with independence.
“If it was that easy then everyone would be doing it,” Lea jokes, “there are challenges in starting up a new brokerage, sure. I’m a firm believer though that if you want to find a way to make something work then you probably will, and I’ve seen enough success stories amongst brokers to really appreciate how much there is to gain.”
Setting up a new brokerage is always going to create challenges – creating any new company will throw you a few curve balls regardless of your industry. With new insurance brokers though, there are two stumbling blocks that come up time and time again:
- Access to Agencies
- The FCA application process, for example adhering to ongoing compliance, client money, recruitment, HR issues, etc.
These can be accommodated though with the right support and infrastructure in place. “These can be tough if you are trying to go it alone, but more and more brokers are turning to networks these days,” Lea reflects. “At Broker Network for instance, we essentially have a team of 150 dedicated employees on hand to provide all the back office support thus freeing up time to actually speak with clients and prospects.”
Going it alone
Although you do still get them, we are seeing fewer and fewer insurance broker start-ups that are setting up outside of a network, with an increasing proportion opting for the support that a network can bring. This doesn’t surprise her though, and particularly not amongst start-ups:
“A big part of our ethos has always been that strength in numbers comes with independence – our entire business model is built on the philosophy that brokers should be free to follow their own business aspirations without having prescribed processes forced upon them by us; we just want to support them in reaching their goals.”
Concerns about retaining independence after joining a new network tend to come more from established brokers rather than new companies just starting out. If you are used to operating a certain way, then the chances are that you are going to want to follow the processes you are already familiar with and that you know work. Start-ups on other hand will generally be starting from a clean slate and setting up new processes, so the focus tends to be on the best way to set up infrastructure as opposed to worries that existing processes will need to be altered.
Picking up pace from a standing start
Trust between consumers and brokers is vital, and being able to demonstrate the successful longevity of a firm is often used as a springboard to help build brand trust. Should this be a concern for start-up companies that don’t have an extensive history to fall back on?
Lea’s answer is emphatic: “No. I don’t see it that way at least. Reputations count for a lot in this industry, but what is the reputation of a brand? With brokers, it’s generally derives from the collective reputation of the people within the organisation, and that’s key; when you drill down, it’s the reputations of the people first and foremost. This then filters down to the reputation of the brand as a whole.”
It’s very rare that a new insurance brokerage emerges out of thin air. As covered recently when looking at start-up brokers, new brokerages tend to fall into two categories: An individual going it alone, in which case they will have their own connections, their own history, their own specialities. Alternatively, they are an established firm trying to move from Appointed Representative to Directly Authorised, in which case they may have their own client bank.
In either case, there will be history and connections that can be drawn from, and this will ultimately fuel the reputation of the brand as it grows.
How start-ups can present an example for the rest of the market to follow
On the flip side of the coin, new brokers are faced with a unique opportunity to mould a company as they see fit. “It’s often much easier to change technology and infrastructure compared with changing the behaviour of staff within a company,” Lea explains, “start-ups are naturally going to need to put a lot of new structures in place. That’s to be expected, and it’s a fantastic opportunity to innovate.”
“That’s just scratching the surface though. Starting a new brokerage is a one-off opportunity to define your own ethos, your brand culture, your trading style. It’s a truly liberating experience, particularly if you have come from a more regimented background. Start-up brokers are perfectly placed to shape themselves and sculpt their own destiny, and with a degree of agility that is the envy of larger organisations.”
Whilst insurance brokers starting out will naturally keep an eye on larger organisations and how they do business, remember that the opposite is also true, with larger firms watching the start-up scene with interest as it is often the source of innovation. Nowhere else will you find such a direct link between consumers and business leaders, and the results can be fascinating.