Building up the neighbourhood

As with many local broking markets, Essex is consolidating and LFC is an active player. Since Jeremy Clayton started the business at the age of 23 after consulting his wife - "sometimes in life you have to make a bold change" - there have been nine acquisitions including: in 2003, Clarke Cleverly, £1.3m gross written premium; 2004, MKM £3.5m GWP; and, in 2005, £1m GWP general book of business Graybrook. There will be an option to buy Graybrook's £1.5m GWP book of medical and professional risk solutions, called LFC Graybrook, in four years. Deals are done through a mixture of self-finance, debt and loans from insurers.

A measure of LFC's success is the Claytons' plans to build a new office in Latchingdon, complete with a galleried landing and a car park with fifty spaces. Set to be open next summer, it is one of the stages in a plan to build a £50m GWP business within eight years. Another significant step has been taken to achieve this target by establishing an office in the south of England through acquisition, which will add £8m GWP. The deal is set to close on 31 October, while the heads of agreement and full completion is due for 1 January. Another deal was struck for the goodwill of a £1.2m GWP broker within a week at the beginning of October.

LFC has 4500 clients, ranging from Scotland to Northern Ireland, and is set to increase by a further 2000 with the acquisition. There is also a small business scheme with Sterling, a thriving embassy car insurance book with Royal and SunAlliance - including 50 embassies and 400 diplomats (surprisingly, the embassies themselves are often not insured), and clients ranging from scaffolding contractors to newsagents. There is a 5% personal book, access to Lloyd's via Jardine Lloyd Thompson and a large construction book. Jeremy says: "We will always see a potential client but we won't touch certain business and leave professional indemnity alone. However, we will use specialist markets if we had a cleaning contractor for example."

For small businesses, Jeremy is happier speaking to underwriters on the phone, whilst administering policies in-house. He adds: "A low risk shop is lower than the average car premium - you need something simple."

Recently, LFC was one of 200 firms being visited by the Financial Services Authority to review client money accounts. Seven days before the visit, LFC was asked to supply all necessary reconciliations. The FSA found there were issues with five agency agreements but the insurance companies, according to Jeremy, were at fault. The FSA departed before lunch time.

In order to raise awareness in the local community, LFC has begun to sponsor charity fundraisers and local events and teams. There is also an annual golf day which has become well regarded among the attendees. Meanwhile, the broker is also investigating e-marketing where it sees potential.

Simon Clayton, who stepped in as chairman two years ago following the death of Derek Mitchell, has a wealth of experience in the industry, heads up an insurance consultancy STC Consulting. He says: "The most refreshing thing about LFC is that we make things happen."

Have you heard the one about the broker complaining about insurers' service? For Jeremy it is no joke. He says passionately: "Service levels from insurers are appalling because they think they can get rid of thousands of jobs and keep service up - but they can't. It is prejudicing us with our clients and they (insurers) are letting us down." Simon is equally scathing, commenting: "They are good at a macro level but not at a micro level. For example, it can take insurers eight times to get it right when registering a relatively simple commercial combined policy. Our account handlers are spending more time checking things than placing business."

Insurers might want to provide these brokers some much-needed reassurance on the subject of service. The last word to Jeremy: "It is exciting staying independent. The industry changes all the time and we have grown our book with the big players. Insurers are keen to do business with us."

LFC

Managing director: Jeremy Clayton

Chairman: Simon Clayton

Established: 1988

Number of offices: Two

Locations: South Woodham Ferrers, Essex and To Be Announced

Number of staff: 51

Main lines of business: Commercial

Gross premium income: £23m.