Broking success: The scheme of things

▶ How did you get involved with Camberford Law?

I joined in 1996, having trained at Commercial Union. The role appealed to me at the time because it combined underwriting and insurance broking, both aspects [of the industry] I was interested in and wanted to pursue.

I joined as an account executive on our security scheme and did that for about three years. I wanted to try and broaden the amount of schemes we had because we were known as a liability schemes provider but wanted to get involved in others. And that’s what I started doing. I got us involved in unoccupied properties and let properties schemes.

▶ What is it about schemes that you enjoy?

It’s the putting together of the whole package – the policy wording, the marketing strategy and just generally the underwriting of the scheme. And trying to make it profitable for underwriters as well as for us. About 90% of our business is schemes.

▶ What kind of lines do you operate in?

We operate in about five different sectors. Security is what we’re known for, and we do contractors, we do some properties, and we’ve started to get more involved in the leisure industries. That’s been fantastic for us over the last two or three years.

▶ What made you go into the leisure market?

The nightclubs scheme was set up initially because it was connected to security. Of course we had several door supervision companies and what were they supervising? They were in front of nightclubs and so forth. We had a local [security] book, and it just felt ripe for development. There wasn’t a lot of those kind of schemes out there at the time so it ticked a box from that point of view – it was a fairly disorganised market and we felt that we could bring something to it.

▶ What do you need in order to set up a scheme?

It’s useful to have some affinity, some connection – a little marketing edge with the industry. Do a lot of research and really understand the industry. You have to get close to exactly what’s going on, the real granular detail. You need to be able to give good reasons as to why your book of business would create an underwriting profit in the long term.

Some schemes brokers chop and change providers every two or three years, but that’s not our style.

Take our unoccupied properties scheme for example, it’s been with the same lead underwriter for 17 years now. We don’t believe it gives a good name to schemes brokers if they keep changing their capacity provider every two or three years. That to us is the wrong way of going about it.

▶ Who would your main competitors be?

It varies greatly from scheme to scheme. There are obviously going to be the bigger ones, the consolidators out there who have got their own underwriting functions. You just have to try to differentiate yourself. It differs between schemes as to how you do that, whether it’s through coverage, whether it’s through price, or whether it’s through the way you deliver your service out via brokers. Competition is not a problem, it’s always going to be there, it’s about how you deal with it.

▶ You led a management buy-out (MBO) of the firm, how did that unfold?

[The MBO] happened in 2008. It involved a lot of time and effort, including trying to raise finance, putting together projections and plans for the next three to five years. Then we had to go out and actually sell that story to people so they would lend us the money.

▶ What were the biggest challenges around the MBO?

[Finding funding] is always going to be the biggest hurdle because of the size of the loan and the fact that the interest you’re paying back becomes so critical in all your planning and what you do. But what it also did was bring out some other skills, some business skills that hadn’t been concentrated on so much in the past, such as the future planning and projections, and cost implications. It was good to get involved with those things.

▶ Where did your funding come from?

We’re not actually allowed to say who it’s from. Trying to borrow money from banks in 2008 was actually very difficult because the banking crisis was just in full flow and so we organised funds through an insurer.

▶ How do you find insurer relations in the current market?

There are job cuts happening across insurers. No matter what they think or say, service will be and is being impacted. Typically on the claims front, but also from the underwriting side. Certainly with the composites I would say that there is a lack of access to decision makers. We’re slightly fortunate there because we do a lot of our underwriting in-house so we don’t really have to refer too much into insurers. Generally speaking, the Lloyd’s syndicates have probably got it more right at the moment in terms of delivering good underwriting turnaround times and good, sensible responses.

▶ Have you seen much of a difference to your compliance workload since the Financial Conduct Authority came into power?

It takes up a lot more time than it used to, which is probably right. We would always say [regulation] should be proportionate to the risk we actually pose. Do we feel as though it’s becoming disproportionate and too costly and too time-consuming? The answer is probably yes. We certainly want the FSCS model to be looked at, why wouldn’t we want regulation to be a bit cheaper?

And it’s the pace of change as well. There are new client money rules coming out – over the last two years we’ve done a really good job of client money calculations and understanding them, and all of a sudden we’re going to be hit with more changes.

▶ Do you have chartered status?

We don’t, but it is a short-term goal for us, by the end of the year I hope to be applying for it. I’m a fellow of the CII and a great believer in exams. I believe it gives a good grounding in general insurance knowledge that is important to have and helps us to provide good advice to insurance brokers out there when they ring us up. If I know I’ve got people who are qualified to cert CII and beyond then I have a bit more confidence that the advice we’re giving is good.

▶ What other plans do you have for the future?

We’ve got a couple of schemes we want to try and set up for ourselves so we’ll have more products out there. We also have a couple of schemes in the pipeline that we’re setting up for other brokers. Those are the short-term goals.

In the medium term, we would like to go to the next stage of becoming a fully-fledged managing general agent.

We don’t do retail broking as such, and it would be operating in a very similar way to now but perhaps having only one or two risk providers for all of our products. We would become more of a general underwriting arm as it were, in terms of working in more general commercial classes instead of niche classes. We’d hope to do that in three-to-five years. Whether we actually achieve it is another matter, but we’ll have a damn good try at it.