Broking Success: In the face of adversity

Setting up an insurance brokerage at the nadir of the recession would strike some people as crazy but it was a challenge that co-founders Adam Baker and Alan Jayne could not wait to face. They had been in discussions since mid-2008 and believed the economic downturn to be the ideal time to fly in the face of received wisdom, proceeding to start trading in January 2009. Baker says: "Even though it was the recession, we felt the timing was good because it is when brokers really should be earning their money for their clients."

With saving money undoubtedly a major motivator for clients, Baker Jayne generated opportunities relatively quickly. Baker continues: "Our initial experience is that there is complacency out there from brokers. I've found that cover isn't always right and there is a distinct lack of understanding of clients' risks."

Baker started his career at The AA in 1992 and has since worked at Independent Insurance, premium finance companies and, most recently, he was business development manager for commercial lines at Evolution Underwriting. Jayne has been in broking for 23 years at companies including Marsh and THB Clowes.

The co-founders purposefully chose office space in the top floor of a converted barn a few miles outside of Kenilworth. The loft location, with views of green pastures and Kenilworth Castle in the distance, is not only competitively priced compared with a city-centre location but also offers good motorway access for Birmingham and London. The co-founders believe that the local presence of consolidators such as Towergate, Bluefin, Oval and Giles in the area has been a benefit.

Baker explains: "People are now looking at their current broker - due for retirement or sold to a consolidator - and they are not getting the personal touch that they had. People like to see the people ultimately dealing with their insurances. It's a cliché but we are offering a personal service." To achieve personal service, both men attend meetings together with clients, offering both the insurer's and the broker's view.

The pair stress that setting up was not done with any plans to sell out. Jayne says: "Our game plan when we sat down was to have 200 clients paying on average £4,000-£5,000 in commission fee income."

Independent pride
At the start, maintaining cash flow and becoming profitable were the orders of the day and the company was happy to spread its wings for business. One of the most important actions it took was joining a network. Jayne says: "We couldn't just jump in and get all the agencies we expected just like that. We felt we needed support and we wanted to start off as something small but part of something bigger. We looked at all the options but Broker Network listened to our story and gave us the best package."

He adds: "We have taken on every agency we feel necessary to survive. We've got some weird and wonderful obscure agencies and we might have one or two policies with them. We'll whittle that down over the next six or seven months to a core that we know we can work and have a great relationship with."

The brokers insist that this means there is no interference with how they run the business and being independent is clearly a source of pride. Baker says: "We sleep very well at night. We don't have any issues in terms of commissions or where we place risks."

A substantial proportion of the company's initial business came through an introducer in north London and Jayne accepts they are yet to fully hit their target of going for local clients. However, with 550 clients, gross written premium of £1.65m in the first year - and a profit - they are doing something right.

Baker believes their value-adding approach is part of the reason for their business' success: "We are trying to give risk management and health and safety advice to make sure clients comply with the warranties on their policies. We are very much about networking with and for our clients and have providers that can help them, for instance for electrical inspections."

Baker cites the guidance he gave to a large motor fleet client with £1m of claims over three years, without the previous broker seemingly trying to stop the flow. Baker asked the client: "I presume you don't enjoy all these claims? What about driver training, tracking, instant reports after the accidents? There are all sorts of things you could be doing to help yourself."

Long-term relationships
Baker Jayne is also upfront with its fees and commission levels. Baker feels that the firm's openness is a strength: "People will only reward us and appoint us as their broker if we do the right job, not just for the premium but for cover, for our approach and service in dealing with them properly."

Although it is still early days, the start-up is yet to lose a client; Baker enjoys the challenge of maintaining its 100% retention rate. Despite having achieved some dramatic cost savings for some clients, this does not mean the firm chases the lowest price. Baker says: "Most clients want consistency of insurer and we don't want to chop and change for the sake of it. It's important to build up a long-term plan with the insurers that we deal with and we want clients involved in the decision-making process."

Baker also believes that insurers have learnt the lessons of the recent past when it comes to keeping clients satisfied: "I think insurers are all realising that claims is where they are judged by their customers. If they want to retain them then they have to be better at it. I'd say 80% of claims are decent, they are dealt with very well and the clients are happy."

With the first year completed, the brokerage is now looking to grow by £1.5m GWP each year. Jayne says: "The one thing we don't want to lose sight of is smothering our clients with servicing. We are saying up to £8m is good because we don't want to overstretch."

The brokers started off by themselves but are already looking to appoint a fifth team member in September; they believe that there are not only customers but also staff available from the consolidators. Baker says: "We have a number of conversations on the go with unhappy account executives who have been acquired and taken over by some of the consolidators. They don't have the same restrictive covenants in place and are not happy being part of the new regime."

The firm is planning to go for chartered status and the founders are fans of the Chartered Insurance Institute. Baker says: "[Membership] is added value for our clients: it gives credibility and shows professionalism."

The firm is also trying to make use of technology by having its own server and hosting clients' documents in a password-protected area on its website. Baker says: "We are quite surprised to be ahead of many of our competitors on this. A lot of people said it's pointless but actually it's been a selling point and we won a very large client because of it."

The future seems bright for a company that has managed to combine being young and energetic with an experienced and thoughtful approach. Jayne has great affection for a local competitor that has been sold on and is working to emulate its success: "As a salesperson, trying to get business away from that particular rival was nigh-on impossible. You'd cringe when you heard the firm's name. That is the footprint we want to follow."

Baker Jayne
Sales manager: Alan Jayne
Director: Adam Baker
Established: 2009
Number of staff: four
Main lines of business: commercial
Location: Kenilworth (Warwickshire)
GWP: £1.65m

Source: PB – June 2010