How insurance brokerage owners can reduce operational pressure without losing client focus  

The soft insurance market is set to continue for some time yet, potentially putting more pressure on insurance brokerage owners.  Committed, and often community-based brokers, have found their books of business under attack in the soft market and have struggled to find a way of reducing operational pressure, whilst maintaining client focus.

Insurance brokerage owners typically operate their brokerages with few employees, if any.  In many cases, the maximum number of people on the payroll will be one or two.  Much of the operational pressure falls on their own shoulders.

This pressure on insurance brokerage owners can be broken down into:

• Compliance reporting duties and maintaining all the records the FCA requires
• Accounting and money handling
• Employer responsibilities (if applicable) and operating payroll and pension schemes
• Paying for affordable and efficient IT systems
• Sourcing affordable Professional Indemnity cover
• Handling all client administration and issuing of documentation
• Trying to acquire insurer agencies and access to market
• Paying for operational overheads, such as office rental and energy bills
• Trying to put the brokerage in a position where a suitable exit route can be found

Focusing on clients

All of this is on top of the day-to-day focus of the brokerage, which should be on serving clients and ensuring that they are treated fairly, being provided with the best insurance for their individual requirements.

Over and above this is often the major requirement for a broker to build very strong bonds with their existing clients and maintain those relationships throughout the course of a year.

The issue for some, however, is that they are time-poor, having to focus so many hours on operational duties and pressures.  There is little time left in the schedule for relationship building and even less for the outbound sales activity that could foster growth.

The soft market and its pressures on owner insurance brokers

The soft market has brought all of this to the fore.  It is a time when even loyal clients are being tempted to move their insurance arrangements for significant savings in premium.  This is leaving owner insurance brokers exposed and vulnerable.  Without insurer agencies and access to market, they have few defence strategies available. Similarly, they are often not in a position to go after new business, because they cannot compete with the offers other brokers are able to put in front of business owners.

Without growth, insurance brokerage owners are often left in the doldrums, unable to increase business to a level at which an insurer might grant them an agency.

Loss of satisfaction and increased worry

Serving clients well is often the most important aspect of ‘the job’ for an owner insurance broker.  Many take huge pride in their professionalism, their understanding of clients’ businesses and their ability to offer the right level of protection to clients, leveraging years of experience.  To be unable to do this, due to operational commitments and market forces, can be demoralising.

If this is also accompanied by the derailing of pension planning, with no viable exit route on the horizon, it could be even harder to stay motivated.

The new solution for insurance brokerage owners

Thankfully, a solution has been developed by appointed representative network principal, Gauntlet, over the past few years.  Gauntlet pioneered what is known as broker de-authorisation – a means of moving a directly authorised broker to a new trading status of ‘appointed representative’.

Its Gauntlet De-authorisation Fast-track solution provides the answers that many insurance brokerage owners seek and tackles the operational pressures head-on by:

• Offering these brokers comprehensive compliance support and accounting services
• Providing full back-office administrative support, so that they do not need to employ anyone to handle such duties
• Equipping owner insurance brokers with PI cover
• Providing the broker with a level of access to market that makes client retention and acquisition a very real possibility
• Moving them to a position where, backed by award-winning Acturis IT, they can work from home, if they wish, and give up their office and its overheads
• Giving the insurance brokerage owner a new exit route option, should they wish to take it, by selling their book to Gauntlet, in whole or in stages, when the time is right for them.

How insurance brokerage owners are quickly revitalised

Relieved of operational pressures, many insurance brokerage owners can feel revitalised and able to grow their book.  They quickly find more time at their disposal to pick up the phone and have those chats with existing customers that are so important.  They get back to doing the part of the job that attracted them to the profession in the first place.

This ability to focus on new sales and client retention typically compensates for the commission split they operate to, by virtue of being an appointed representative. This is the trade-off that pays for the services and insurance products that they can access.  With attractive commission rates too, they can even be better off financially, than they were as directly authorised brokers.

Other benefits of moving from directly authorised broker to appointed representative

Job satisfaction is usually increased and the level of stress in the working day reduced. There is a new future on the horizon, which can include plans for retirement.  There is also the chance to work to a new schedule, to suit themselves, taking time out of the office, when needed.  With its own internal broking team, Gauntlet can run the insurance brokerage owner’s business, whenever they need a break.  With 24/7 access to client records too, the insurance broker can look after client requirements from wherever they are in the world.

Rather than losing any client focus by not doing absolutely everything in the business, those insurance brokerage owners who have switched their status from directly authorised broker to AR, have increased their ability to focus on clients.

As one has said, “I’ve got back to what I do best – broking.”

How to find out more about Gauntlet De-authorisation Fast-track

So many other directly authorised brokers could be following their example and working more closely with their clients and with new clients too.  If that’s something that sounds like an attractive proposition to you, find out more about it.  By discussing things informally at first, you can quickly assess whether it’s right for you.  You can do that by calling Nigel Law on 07774 690436, or emailing NigelLaw@GauntletGroup.com

It’s probably worth taking just a little time to explore the option and see whether it could help set your brokerage on a happier and more fruitful path.

Photo credit:

Photo by Lena Taranenko on Unsplash

Footnote

For more than 30 years, Gauntlet Group has helped clients navigate the insurance market, while its AR Network has provided practical advice, strong market access, regulatory expertise and hands-on support to AR brokers since 2009.  Now, Gauntlet Group and Brokerbility form the broker network division of the Clear Group, working together to offer even greater choice and value to their broker network clients.

Gauntlet Risk Management Ltd is authorised and regulated by the Financial Conduct Authority (FCA) under firm reference number 308081. You may check this on the Financial Services Register by visiting the FCA website, www.fca.gov.uk/register/ or my contacting the FCA on 0800 111 676.  Registered Office: Gauntlet House, 15 Acorn Business Park, Killingbeck Drive, Leeds, LS14 6UF. Company Registration No 03726095.