No more heroes

Mark Boon's career path from 1980s popstar (in New Romantic band The Heroes) to broker may seem like a staggering leap, but his early experiences afforded him an insight into the arts world, which his business now serves.

Having recently celebrated its sixth birthday, Boon's Cambridge-based firm, La Playa, is well-placed for arts business, media business and technology and, growing at 30% year, has ambitious plans to become a top-three player in its chosen niches.

The benefits inherent in starting up a new firm, coupled with its mainly delegated authority - written business model, have meant it is largely isolated from issues such as the direct threat and wildly fluctuating rates, leaving it free to snap at the heels of the nationals and carve out an enviable niche.

The name La Playa translates from Spanish literally as 'the beach' and, as Boon explains: "We needed something distinctive to appeal to the creative industries and that would transfer into newer markets - it has also proved to be a talking point."

Concerning its year-on-year growth of 30%, Boon says: "We have obviously been delighted with the growth rate and it remains our target to grow at the same pace. It may seem harder to sustain - as it is easier to achieve this when growing from low numbers - but actually it is easier because clients are now strong advocates and 50% of new business is referred."

La Playa's client make-up comprises predominantly 50% private clients, including high net worth and farms and estates, and 50% media, arts and technology and, Boon estimates, it is up against between six and eight competitors specialising in this mix of business.

Lack of innovation

While Boon's business has enjoyed the advantages of a start-up, such as a lack of legacy issues both cultural and technological, he laments the lack of innovation generally in the broking sector and the wider insurance industry. "I do not think there is a lot of creativity in the industry and, in the last 10 years, it seems to have lost its verve because of all the merger and acquisition activity. Innovation seems to be limited to products."

One innovator Boon mentions, and that many brokers miss, is the now long-defunct Independent Insurance. Boon comments: "The insurance world is a slightly duller place without Indie - they had a dynamism that the industry could do with more of."

He continues: "But there are insurers that are innovative such as Chubb and Hiscox. Our philosophy and business model centres on working closely with four or five insurers that favour the tripartite approach, where there is a high level of agreement and co-operation between the client, broker and insurer. This is the case whether it is with high net worth, media, arts or technology, and we only have agencies with nine or 10 insurers overall."

And, Boon's view of insurers' mantra to brokers to add value: "Insurers' margins are being pushed and there is a lot of re-engineering going on. Insurers are always going through this but brokers are late to come to that, for example, with technology. But I am suspicious of insurers' motives in telling brokers to add value; it is difficult to know what they really mean."

When it comes to purchasing insurance for clients, many often gravitate to broking houses of a similar size to their own business, or larger. So, is this a concern to a relatively small niche player like La Playa? "It is true there are certain companies that feel they need a big broker and there is the like-dealing-with-like dynamic. In reality, when we have taken business off national brokers, it is because the client is not getting the service," says Boon. He also adds that often there is a lack of ownership among staff in larger broking firms and that there is subsequent lack of engagement with clients as a result.

He continues: "When it comes to service from national brokers there can be a loss of continuity because account managers move onto more lucrative clients. I am not arrogant when we win business from the nationals and I am a great advocate of the maxim: you do not win business, other people lose it."

La Playa has not only won clients from the nationals but staff too. While La Playa is not at all unique in this sense, Boon says there continues to be a degree of fallout from the nationals because staff there become disaffected. La Playa is currently in negotiation with several such potential candidates and, like many brokers, Boon says that development of his business has been held back due to a lack of availability of staff with the right ethos and experience.

Recruitment

He says: "We are looking to recruit people from large organisations and especially someone to head our technology division. One of the largest technology clusters is right on our doorstep here in Cambridge. Our division catering for this sector has grown so big in its own right we need someone to head it up to ensure we can keep capitalising on the opportunity."

In terms of Boon's own career path, following his '15 minutes of fame' in the early 1980s, he says: "I then worked for and learned a lot at NW Brown, also a Cambridge broker, which had 12 partners and 80 staff. It was a one-stop shop for clients with corporate finance and independent financial adviser divisions. And, after several years - armed with a healthy dose of ambition and arrogance - Matt Mullee and I thought we could do better and set up La Playa."

However, he says, he would not have considered starting from scratch now given the current regulatory regime. Even taking into account the argument that doing things properly is more expensive and time-consuming, he says: "I think the Financial Services Authority has, nevertheless, stifled entrepreneurialism and we just could not have set up La Playa under the present circumstances."

While Boon's first-hand and insurance experience of the music and wider arts world was a factor in La Playa's bias towards its chosen niches, Boon explains further: "In 1999, when we started, the writing was on the wall for standard personal lines. We realised the differentiation necessary to create a successful and sustainable business was only available by offering large volumes or niche business to insurers. So, while my experiences prior to insurance and the expertise in the team lent themselves to serving the arts world, the focus and direction of the business was also influenced by the way the market was moving."

Niche benefits

Elaborating on the benefits of being a niche business, Boon says there is a greater stability due to the additional reliance of underwriters on the knowledge of such brokers. He continues: "It works in a similar way to areas that are flagged as a concern by underwriters who may have a perception of a risk but are not in a position to fully appreciate the actual reality."

The concept of providing reassurance and clarity to underwriters about specialist or high-risk business is a key driver in La Playa's recently announced three-year policy for farms and estates; an idea once promoted by a man the industry is "a duller place without" - Michael Bright. Boon explains: "There is a health and safety element integral to the policy - agriculture is the biggest killer in the UK next to construction, so the more underwriters can be assured so, invariably, the more capacity is forthcoming."

One of the central intentions with which La Playa started life has become an enviable part of its business ethos, namely its approach to marketing, as Boon explains: "There is no company-wide strategy for marketing, as there is a need for a different approach for each area, but it is about being visible - it comes back to the thinking behind our name. We do very little advertising, as such, but some of the things we do promotionally include: networking; attending trade shows; and corporate entertaining. This has been very timely recently as some trade body members in certain areas have had difficulty getting the covers they want. We now insure more than 100 arts festivals, most of which have come off the back of this activity, and we have hit a few rich veins using these methods that are now really starting to show some great returns for our effort."

By being active in its chosen markets in these ways, La Playa was also able to see how they were being under-served. With a thriving arts scene in Cambridge, Boon also holds positions in related interests such as chairman of art and design marketing agency Adrenaline Creative and is a trustee of charity Momentum Arts.

The recent missive from the FSA regarding its hasty requirement for brokers to prove they are on top on any conflicts of interest does not faze Boon, who says his firm would not suffer if the regulator were to make commission disclosure compulsory. "We do not have a problem with it either way mainly because of the areas in which we work," he says, adding: "Clients pay a premium for service and advice - a number of our clients pay a fee but it is different for general and professional indemnity brokers. I saw a recent survey that suggested the insurance-buying public, through brokers, took around 10% commission, which is obviously considerably lower than the reality. I suspect a lot of brokers charge a policy-handling fee or a fee for providing a replacement certificate and these little extra charges here and there add up." Boon also says that, for La Playa, the product stands behind the advice in the sense that it is the advice that is the selling point rather than the price.

In answer to the issue of whether the FSA has brought any benefit to La Playa or its customers, Boon says: "I do not think it has added any value to our business but that is partly because, from day one, we were a member of the General Insurance Standards Council. In that time, we were fortunate to have two visits from PricewaterhouseCoopers, as part of the GISC monitoring regime, and they really helped us to set standards very close to what the FSA subsequently wanted."

He adds that, while La Playa's adaptation to the regime under the FSA was a relatively small step as a result of its GISC/PWC visits, the regime change still added significant cost to the business. He explains: "This was mostly due to the time taken by myself and a consultant to work through the regulations. It was not difficult to decipher what its rules mean, but FSA language is very verbose and there are one or two issues that require clarification. Frankly, despite the FSA's great attempts to protect clients and their money, all the rules in the world will not stop bad or unethical brokers putting their hands in the till."

Unlike some brokers who, according to the results of the Professional Broking Sentiment Surveys, have lost clients because of the FSA - ironically, in some cases, because they did not feel they were their broker's top priority due to their time being concentrated on becoming and remaining compliant, Boon says it has not cost La Playa any business. "Clearly, the FSA has a role to play in improving the industry and I hope they get around to insurers' claims departments before too long," he states.

Overall, Boon believes the FSA regime will be good for the industry but, in the meantime, he says it has contributed to the negative image the industry suffers. He concludes: "I think FSA regulation will promote confidence in the industry eventually in both the domestic and global audiences."

Contract certainty

Regarding the requirement for the industry to get its house in order with contract certainty, Boon exclaims: "This is amazing in some ways as I do not know of any contract that provides absolute certainty."

The launch of its farms and estates division grew out of its HNW business and, again, finding the right staff to run it meant the project could go ahead in March last year. While this takes La Playa into new areas of specialty Boon says: "Doug Brown joined us and he not only had a like-minded attitude plus entrepreneurial spirit, but great experience and expertise in the field. This business has all the attributes and dynamics necessary for a scheme and complemented our private clients' business perfectly. One year into it, as with all new ventures, everything takes twice as long as you thought it would."

Commenting on the likelihood of branching out into other new areas and the future, Boon concludes: "I cannot see our main focus on four or five niche sectors being diluted; our growth plans evolve around achieving our stated target of 30% organic growth year on year."

CV

1998: co-founder, La Playa

1995: partner, NW Brown & Company

1988: account executive, NW Brown

1984: underwriter, Pearl Assurance.