Finch Commercial - Forward thinkers

At the risk of sounding like a bad joke from The League of Gentlemen, Finch Commercial Insurance Brokers really is a local broker for local people. Focusing on SME commercial risks in the M3 and M4 corridor, this brokerage is nestled away in rural Berkshire and has risen from a small financial services practice to a successful independent commercial broker with a 10-year plan.

The Finch Group is led by three equity-holding directors and comprises a finance arm (Finch Financial) and a broker (FCIB). Paul Finch heads the financial services sector while brother Matthew Finch and cousin Vincent Gardner head the insurance division. As with many traditional brokers, the Finch Group placed financial services at the forefront of its operation initially and offered small amounts of general insurance to its customers; under the stewardship of Matthew Finch and Gardner however, the broking arm has become more significant for the firm.

Gardner says: "I'd been working for Economic Insurance previously. Just before Economic sold to Hiscox, I moved to the Finch Group and convinced them to make a go of insurance on the commercial side." It was Gardner's drive combined with Matthew Finch's impressive administrative work that saw the broker rise from a commission income of £50,000 in August 1996 to £1.9m this year: gross written premium rose from a mere £300,000 to over £10m in the same period.

Matthew Finch's efforts in getting the back office up to scratch by installing Mysis (now Open GI) in 1996 meant that the essential infrastructure was already in place, allowing Gardner to use his connections built up at Royal Insurance and Economic Insurance to win business. He notes: "Matthew and I have very different skills sets, so we complement each other well. Matthew is not massively ambitious but he's a really hard worker, so I tend to be the one creating all the mess and he's the one who tidies it up. He also holds the purse strings."

Extras

Gardner was the driving force behind FCIB's acquisition of Liphook-based broker Ashcombe Border Insurance Brokers, though he admits that it was Finch who "pulled out all the stops" to finalise the deal. Further acquisitions are on the cards but all of them will be small and low-risk, according to Gardner: "It's been a full-time job over the last 12 months. I've created a pipeline of possible acquisitions, all of which are based locally. We won't want a chain of branches all over the south though; the most we'll want is a couple of extra offices."

Gardner describes his management style as "hands-on", an observation well reflected in the fact that, around 18 months ago, he took the decision to remove himself from the client-facing side of the business and instead concentrate on infrastructure, staffing and business development. A broking manager was employed to ensure consistency in compliance procedures and where the broker is placing business on a day-to-day level, allowing Gardner to concentrate on development strategies. "The key is to hire people who are as good, if not better, at your job than you are," Gardner says. "They might not want the risk of running a business but are great at what they do."

Consolidation is an area that Gardner believes will tail off over the next few months, not least because of the Financial Services Authority's changes to goodwill requirements: "I think that has created a lot of nervousness around trying to grow your business without endangering your capital adequacy." Despite local competition from the likes of Jelf and Towergate, Gardner is determined to remain independent and believes the succession plan left by Finch's father remains key in staying so: "I look around at a number of our competitors and succession is clearly an issue for them."

Having witnessed a number of rivals sell up to the consolidators, Gardner believes that the relative youth of the management team at the Finch Group has resulted in a drive to push the business forward, on which he comments: "The fact that we're all around 40 years old means that we're not at the stage where we want to cash in. We want to try to grow our business."

No ties

Gardner states his biggest market concern as insurers investing in brokers and where this will take the industry as a consequence. "If an insurer buys x million pounds' worth of GWP and then decides it doesn't want to run the broker independently, which is surely what they're going to do if you look at the French model, it'll push a lot of brokers down the road of tied agents."

Hiring school leavers as trainees is a big part of FCIB's recruitment policy. In-house training that runs alongside involvement with a British Insurance Brokers' Association training course has seen two trainees graduating to become account executives this year, both of whom Gardner believes will stay with FCIB. He remarks: "We work with local colleges to attract school leavers. That way, we don't compete with larger brokers, can start the trainees on a reasonable salary and build them up."

Plans for the future revolve around both organic and acquistive growth and Gardner is aware that achieving £10m GWP is a good signifier for when it can become hard for some brokers to make the next step: "You've got to question if you're getting too comfortable and whether or not you want to take more risks. I have one of those 'you're only here once' attitudes."

One plan is to segment the firm's commercial insurance services into five distinct categories, appointing specialist brokers to deal with each client. This approach began with a marketing push that made use of five pamphlets to detail FCIB's specialisms (professional services, retail and leisure, property and construction, industrial and distribution and automotive) and to highlight endorsements from satisfied clients.

Gardner comments: "Providing a local service and a good deal isn't enough anymore. We need to display that we understand their businesses as well as our own. I also envision a support team that can give a client regular legislative updates that are relevant to their industry." He stresses that the change will not happen overnight but that it is being introduced for new business already and that it is imperative in order to safeguard the broker's future. "It will add a third layer of offering to clients," Gardner concludes.

FINCH COMMERCIAL INSURANCE BROKERS

Broking director: Vincent Gardner

Established: 1971

Locations: Woodley, Berkshire and Liphook, Hampshire

Number of staff: 33

Main line/s of business: SME commercial

Gross written premium: £10m.