Broking Success: Lessons in growth

Managing director Ceri Langford's office is set in the headmaster's house of a former school complex that used to occupy the site. The flint building just a few metres away, which used to be the school hall, is also occupied by the ever-growing broker.

The company is based in Ware, Hertfordshire, a small town with a population of less than 20,000 that is served by a single-track railway line. The peace and calm when stepping off a train from London is in marked contrast to the hustle and bustle of the capital.

The company has not always been situated in Ware. It was set up as RJ Moffatt & Co in Tottenham in 1932 by Bob Moffatt and two school friends, W Hale and J Amey. During World War II, both Hale and Amey served in the armed forces, Hale on mine sweepers while Amey was a pilot. It was the latter's son, Nick, who moved the company outside the M25 in 2000 to enable the acquisition of RF Saunders and because he believed that Ware would be a better base to expand the business from.

Langford says: "We are predominantly local, that is how we sell ourselves and is one of our key retention factors. We deliver a high level of service and it works for us." Moffatt Saunders is structured as three units: a corporate insurance team, a personal insurance team and a small business unit. Its sales are split 50%, 25% and 25% respectively.

Langford explains that, with no online sales, it deals exclusively in the advice arena and never excludes clients by size. It has secured insurance from the smallest £100 tradesmen liability policy up to clients paying approaching £200,000 in premium. The company's 90% retention rate across the board is matched by its staff retention, a crucial ingredient for success in Langford's opinion. He comments: "We have the same members of staff servicing the same clients over 10 or 15 years. Over that timescale, you build up a very good rapport and understanding of what their business needs are."

In July 2006, Nick Amey sold the company to CCV, now a £220m gross written premium broking empire. The company had reached £8m premium and needed more leverage with insurers and further funds to grow through acquisition. Along with a desire for capital to grow the business, Amey was looking forward to retirement, which he subsequently took in mid-2008.

Joining up

Langford joined Moffatt Saunders in October 2007. He started his career at Willis in Ipswich and also worked for Sedgwick and Marsh, where he had been European commercial director for its political risk and credit insurance teams. Although he had not worked for a high-street broker before, Langford was attracted to the opportunity because of "the freedom to put in place a strategy that is relevant to the local business and to have the authority to carry that forward."

Along with freedom, Langford found two key challenges: "When I joined Moffatt, my assessment at the time was that it was a good-quality, competent broker, though to be fair, sleepy. It wasn't ambitious in what it was trying to do and wasn't as efficient as it could be."

One of the first areas to address was a pro-active approach to generating new business. Langford highlights: "In the two years I have been here, we have almost doubled the level of new business that we win each year." He cites examples of how the volume of business handled by each individual has gone up, such as with time-saving standardised letters, created to be tailored individually rather than written from scratch each time. He also believes that the impact of CCV, with its positive effect on commission levels, has helped the company progress.

Part of the process was a rebrand, which Langford started in January 2008. "What we had looked stale and dated," he admits. "I wanted to bring it more up to date and emphasise what differentiated us as a business."

Over past two years, Moffatt Saunders has also made strategic acquisitions: it bought Insurancemeans of Buntingford in 2008 and, in 2009, acquired Knight Insurance and Investment Services (of Borehamwood) and St Albans-based Centurian Insurance Associates. All the staff have been moved to the Ware office.

With two other directors, Langford leads the management team through the business "from top to bottom" once a month. He also reports the broker's figures to CCV monthly and has a further monthly meeting with the regional managing director. "It is a very light hand," he comments. "You agree a strategy and a budget once a year and once that plan is in place then it is up to you to deliver it." It is a management style in keeping with the philosophy he has tried to foster at Moffatt Saunders. He remarks: "We are not a business that dictates to the staff. We want them to use their own ideas and innovate."

His approach has delivered. In October 2009, Langford won managing director of the year at CCV but he is not resting on his laurels; looking to 2010, he still has ambitious plans. He says: "I am working on a plan for this office at the moment to try to double the size again over the next three years in terms of premium. I would expect the profit margin to increase and more than double."

He continues, "The challenges for Moffatt are to do more new business and do the best we can in a challenging environment. We still expect to grow and increase our profits but it is a much more difficult market. It will mean we need to be careful on costs and keep them under tight control." Three ways to develop new sales that Langford mentions are: approaching clients researched internally or by CCV; cross-selling; and approaching suppliers of current clients through their referrals and recommendations.

Langford stresses that seeking new business should not come at the cost of neglecting existing clients: "I think, if one thing has stayed true in broking over the last 20 years, it is that the relationship with your client is of paramount importance." All clients receive newsletters and as much regular contact as they want. Some choose face-to-face renewals at Moffatt Saunder's office or on-site, while others prefer to carry out the process by phone.

Priorities

For insurers, the need for contact is just as clear. He believes that the key for insurers is to be competitive on price and to have good-quality products along with accurate documents and timely response. The last element is one that Langford feels that the industry struggles with, particularly regarding small businesses: "If we are in a competing environment, if we can get a quote from an insurer and get it back to our client within 24 hours, we stand a very much better chance of winning than if it takes them a week. And all too often it takes them a week."

According to Langford, 25% of Moffatt Saunders' business is placed through 'zone' insurance, which is business placed with any of the specialist subsidiaries of sister company Towergate's underwriting arm. Thereafter, the broker has preferred markets, including national carriers from Aviva to Zurich and open market access of around 150 different insurance facilities.

If there has been one overriding issue affecting the quality of these 150 relationships across 2009, it has been dual pricing. Despite rate increases at the start of the year, the company found premiums falling up to 60% by the end of it. Langford believes that the market will continue to make life hard: "We find it very frustrating. Insurers are expecting us to carry rate increases at renewals, quite often ridiculous ones in the context of the economic environment, but the second we put pressure on them they are caving in. Well you can't have it both ways."

He adds: "What we are looking for more than anything is pricing stability for our clients at a reasonable level. In this environment, it is very difficult to know what is a reasonable level and you certainly can't give any sense of stability."

Concerning the wider economy, Langford believes that 2010 will start with more of the same, though he is optimistic. "By the time we get to the second half of the year, I think that the economy will have turned the corner and things will be starting to ease off," he says.

It seems appropriate, sitting in the former house of a headmaster, that I ask if Langford has any advice for clients that he would like to impart. He answers: "Clients need to think a lot about the stability of their businesses and where they are going; they need to be realistic about their business plans. I think probably the worst mistake a client can make is to cut their insurance because of the economy."