Bonny on the Clyde

MacDonald Reid Scott (Insurance Brokers) hasn't made a single acquisition in its 25-year history and does not shout about extravagant growth targets. As MD Bernard Dunn comments: "Growth is very measured. In 2003 we crossed over the £10m threshold and we want to be a service-led broker. Our latest three-year plan, which was penned last November and is reassessed every six months, is to achieve 15% profitable compound growth per year. We are not in debt and are self-financed."

The broker is almost exclusively commercial. Dunn lists property, casualty, fleets, professional indemnity and directors' and officers' liability as its principal insurances.

According to Dunn, its areas of strength are contracting and construction, financial institutions, charities and in food and drink. He says: "Our clients are mostly based in Scotland, though some have overseas operations in the Far East and the US; we like to control these risks by using independent brokers."

MacDonald Reid Scott is continuing to grow its work in insurance due diligence in relation to management buyouts and other deals, on behalf of venture capitalists and private investors. Dunn says: "We highlight potential areas of uninsured risk for the business which could impact on the deal and purchase consideration. Our input and conclusions can provide vital areas for negotiation on the deal itself. We will charge an appropriate fee for the diligence work, so it is a good new income stream, as well as putting us in a strong position on the main insurance programme going forward. We always deliver this work at director level - it really does make the difference."

Dunn also feels directors' and officers' liability is a significant growth area, especially in the field of investment trusts. He says: "Non-executive directors who are sitting on a number of boards need personal protection. Following what has happened at Equitable Life, non-executives need to look hard at their protections." He adds: "When it comes to corporate insurance, the more complex it is, the more we like it."

Regarding opportunities for smaller brokers, Dunn is adamant that "the element of surprise is still available". He believes super-provincials and smaller national brokers can still lose out to the local independent intermediary, especially as business becomes sectioned into silos and delegated down. He says the Midlands is a fruitful area where "wins have not been causing as many ripples than other areas". In Scotland, he feels that Edinburgh has been fused in the Glasgow market, with Glasgow driving Scotland's underwriting.

Dunn is enthusiastic about the impact of regulation and says the broker now identifies profitable business more easily and that cash and credit flow has improved.

However, he is less satisfied with insurers. He accuses their service standards of ranging from mediocre to atrocious, and is scathing about the need to telephone different departments based in different areas within the same insurance company to deal with the same customer account. The frustration is understandable - as he says, "the acid test for a good broker is getting the claim paid - there is no other test like it."

Dunn also expresses concern about the blurring of lines between insurers, brokers and underwriting agencies. He says: "We are watching the situation very closely - especially where brokers are buying insurers and insurers are being tied into panels."

Bernard Dunn is 47 and has been at the broker for four years, and has previously worked at Marsh. He became managing director of the insurance business last July, taking over from its chairman Ronnie MacDonald in a planned succession.

Away from the office, MacDonald Reid Scott, which also has a separate financial services division, is sponsoring the British Open Curling championships in Stirling - where its name is embedded in the ice - and has plans to celebrate its 25th anniversary with a meal at a posh venue in Glasgow for its loyal customers; there will also be a series of boardroom lunches for insurer partners.

MACDONALD REID SCOTT, Managing director Bernard Dunn

Established: 1981

Number of offices: three

Locations: Glagow, Edinburgh, Perth

Number of staff: 20

Lines of business: Corporate, construction, charities, food and drink

Gross premium income: £11.5m.