The Full FAQs

Rationale, Commitment & Relationships

Division of Labour

Service Levels & Markets

FSA Compliance

Systems

Rationale, Commitment & Relationships

Q. Is TEn a network?
A. In so far as the FSA designate us as such, the answer has to be “yes”. In all other respects, particularly our own perception of what we are, the best answer is that we are something significantly different from any previous iteration of the ‘network’ concept.

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Q. Is TEn a franchise operation?
A. No; franchises tend to impose their own branding on local outlets and restrict the products and/or services sold to a limited array. That practice is really quite the antithesis of what we are about; which is a supplier of outsourced broking services to Insurance Professionals who are building their own corporate identity.

 

Q. If TEn is merely a supplier of outsourced broking services, why then must it manage all of the agency relationships with insurers?
A. Start-up brokers can struggle to establish any agencies; hence very few start-ups have emerged over many years. As an established small broker, your support for a sufficient range of markets is spread very thin, resulting in lower service standards, quoted rates and commission levels than could be the case if insurers were delivered the efficiency of one large amalgamated account to deal with; rather than many little ones.

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Q. TEn was a ‘start-up’ in 2005; how did it secure agencies, terms and service levels when others cannot?
A. The simple answer is and was... potential. TEn illustrated an account growth and cost saving potential to insurers that far out-performed that of any individual, team, established small broker or any other ‘consolidator’. Since then, we have delivered on that promise.

 

Q. Does that make TEn a ‘consolidator’ then?
A. In a sense YES, but better. Consolidation often means that the management of the client relationship is moved away from the client’s locality to a regional/national centre; but we most certainly do not propose that shift... in fact, just the opposite.

Consolidation typically results in the Account Executive or Broker Principal becoming an employee; rather than enjoying the status of a valued customer, as in TEn’s case. Arguably, elsewhere, the individual Insurance Professional can be coerced into shifting customers’ insurances away markets where that Professional feels they are best placed for whatever reason. We don’t do that either.

Consolidation frequently rewards the insurer with a reduced number of agencies, yet they still maintain... 5, 10, or 20 accounts with each consolidating entity in return for enhanced commission levels, higher profit share arrangements or whatever. So, not really such a good deal for them either.

Of course, somebody must ultimately pay the price of consolidation and, as everybody within the industry passes that cost on, normally the only person doing the funding at the end of the day is the client. A bad idea!

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Q. Why hasn’t anybody else thought of this?
A. They have now, but TEn has had a good five year run without direct competition.  Why?

A large broker and, therefore, almost by definition, a ‘consolidator’, is hardly likely to put forward a proposition that enables enterprising Account Executives to break-away and ‘go it alone’ for the first time in two decades. TEn’s view is that unless human nature has changed fundamentally over the past twenty years, then once given the chance, those who legally, financially and emotionally can break away... will.

Also, a large broker is not going to initiate a process that enables established small brokers to better survive and trade on more equal terms with themselves. Apart from anything else, these ‘consolidators’ want to buy the ‘little guys’ as cheaply as possible. TEn has no plans to buy anybody; rather to make a compelling case for independence and embrace whoever comes (subject to status).

 

Q. So, if a Practice joins TEn , for how long would it be committed?
A. For a minimum of 15 months; this being 12 months of initial commitment followed by a 90 day notice period at any time thereafter. We believe that TEn is going to work very well for a lot of people, in which case they will continue to support it without onerous contractual commitments of longevity being imposed. If for some reason it doesn’t suit a particular Practice, then it’s completely pointless to have everybody locked into it for years.

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Q. Who does the client belong to?
A. We regard the client relationship as belonging to the Practice/Practitioner; not us, not ever. On the way in, the client must appoint TEn as its intermediary from the point of view of the insurer and, of course, TEn will have certain responsibilities to the client in extremis. Nevertheless, TEn will be contractually bound to the Practice to place no impediment in the way of the client’s departure in the event of TEn and the Practice ceasing to have a relationship; nor will TEn ever initiate a direct approach to a client or via another Practice.

 

Q. Will it be possible to outgrow TEn and become fully autonomous in terms of agencies and completely independent as regards FSA regulation?
A. Very much so... 90 days notice after the first year. In many ways we would regard this scenario as the best possible marketing for our services. Indeed, at some point in the future, TEn would expect to have launched a ‘transitional offering’ that would enable some ARs to begin to assume more responsibility for themselves, without the need to make a complete break all at one time.

That said, we don't believe that it makes economic sense for any AR to think in these terms until they have reached a GWP level of about £4m or more.

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Q. If running an AR doesn’t suit or remunerate sufficiently some people, can they take their clients with them and become employees of another broker again?
A. From TEn’s point of view, yes absolutely... 90 days notice after the first year. It makes no sense to impose any other conditions. We believe that the more open we are as the natural habitat of only ‘the willing and able’; then the stronger we will all become.

 

Division of Labour

Q. How does TEn envisage the division of labour working?
A. Simple... TEn looks after the back-office and each Practice services the client; we feel that this is a fairly clear demarcation that some national brokers successfully adopt between Account Executives and the infrastructure behind them.

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Q. Does this mean that Practices will not need to talk to insurers any more?
A. Yes and No; it depends upon how much insurer contact you want.  Yes, in the sense that it spells the end of hours/days of listening to Vivaldi and Scott Joplin, whilst hanging-on for the next recorded message at whichever call centre over a relatively trivial amendment or a simple renewal. That said, there can be instances in relation to big ticket and complex cases when things can get lost in the translation and direct insurer dealing is required.

 

Q. Does this mean that Practices will not need to be bothered with insurer account reconciliation?
A. Yes... in all but very unusual circumstances. Nevertheless, there will be the odd query coming from the TEn staff performing that function, which Practices will be required to respond to.

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Q. Will Practices be able to keep all of their existing staff?
A. Most of our members are (or have been) start-ups anyway, so this seldom applies. Otherwise, it really depends on how confident one is that they will all make the transition to becoming Insurance focused - rather than remaining an Accounts Clerk - because this function will shift to TEn. Of course, ‘customer focus’ not only includes client acquisition, it also encompasses servicing issues such as better Claims support etc.

 

Q. If Practices have one or more Technicians who could become Account Executives; is that appropriate within the TEn context?
A. Very much so, but that is absolutely their decision. Having said this, however, the way the commission split works between TEn and associated Practices, it is in their interests to devolve some accounts to other people if they can. Consequently, the TEn model is positively in favour of (and encourages) such a process.

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Q. Would TEn be interested in employing my existing back-office staff?
A. This is going to be a question worth asking for a Practice which is near a major conurbation... such a Birmingham, Manchester, Bristol etc, or Aylesbury. TEn expands in Aylesbury and by opening regional offices where there are the largest clusters of Practices and we shall be seeking constantly to employ more qualified staff in these locations.

 

Q. As a Broker Principal, I spend up to 50% of my time dealing with non-client specific matters. How much of this time will I be able to re-capture?
A. It would be disingenuous for us to suggest that you will definitely regain the other 50% of your time; because you will still have premises and possibly some (but fewer) staff to manage. So, it really comes down to how much time you currently spend messing around with insurers, software houses, cleaners and regulation etc. Shall we say that re-capturing something around 25% of your time is about right?

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Q. What would TEn have me to do with the time I have reclaimed?
A. That is none of our business... play more Golf if you like... or go sailing. Alternatively, you could spend 75% of your time servicing and/or winning clients, rather than 50%; in which case we would all make a lot more money as a result. Nevertheless, it is a matter for each Practice to decide the division of labour/leisure time.

TEn is not a franchise operation with targets and objectives. Like any independent business you will have to make enough money to live and to remain solvent, but only your solvency is TEn’s legitimate concern as its regulated AR under FSA rules, not how many hours you choose to work.

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Q. How many people does a start-up AR/Broker/Practice need to employ?
A. Well... none really; unless you need a PA or a Sales/Marketing/Claims Assistant.

 

Q. What accounting functions will be my responsibility?
A. Whether you are self-employed, a partnership or a company, you will be responsible for the proper accounting of your own Practice; but TEn will have taken on the client/insurer part of it. Therefore, somewhat diminished and, typically, a lot of what is left will handled or advised by your Accountant.

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Service Levels & Markets

Q. What will be a Practice’s service level with insurers?
A. Via TEn, the service levels will be much the same as any medium/large broker, which if you are an Account Executive coming from a similar organisation, will be just about what you are used to. If you are an established small broker, then there could be a marked improvement.

Note: we shy away from using words such as “superb” or “fabulous”. As with anybody else, there are insurers involved and so the best laid plans etc...

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Q. What markets will TEn use and how many are there?
A. Somewhat beyond the normal range for a medium/large broker. 

As of now (Q4 2011), the number of TEn agencies stands at about 140.  That said, approx. 80% of our buisness is with 20 and 80% of the balance is with another 20, which leaves the balance of 5% with 100!

 

Q. Is TEn principally or exclusively focused on SME business?
A. No, not really; we can cope with whatever comes, including winds farms in India, diving contractors in Iraq and any other risks with six figure premiums.

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FSA Compliance

Q. Does my Practice need to be directly regulated by the FSA and do I need to pay FSA subs?
A. No to both; TEn does that.

 

Q. Does my Practice have to pay for compliance audits?
A. No, TEn does that. However, if they find your knowledge/procedures measurably lacking, then there may be some remedial training costs thereafter.

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Q. Does my Practice need to reserve up to 1.5 % of gross commissions for a possible call from the FSA compensation fund?
A. No, TEn does that.

 

Q. Does my Practice need to worry about maintaining solvency margins to FSA required levels?
A. No, TEn does that.

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Q. Is TEn an easy option for a Practitioner who perhaps might have acceptance difficulties with direct regulation?
A. No, absolutely not; the same criteria will be applied to Practice Principals (who must be identified by TEn to the FSA) and they will in turn be held responsible for those in their Practice. We are just as concerned as anybody else should be about TCF, Contract Certainty and everything else.

 

Systems

Q. Is it absolutely necessary that every Practice uses the prescribed CDL Strata centralised system?
A. Yes... categorically. For the start-up this may be easier to accept than for an established broker; having got nothing already makes it more likely to welcome something that is that is provided as part of the deal.

A small established broker who is not tied into a broker software house will find it just as easy and beneficial to take the step onto Strata. Larger established brokers with technology investments would find it much harder and, consequently, the TEn proposition does not appeal much to them, nor them to us.

The system is a significant part of our ability to fulfil our FSA mandated role of oversight and, on a practical level, it is absolutely essential for the operation day to day.

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Q. How do I connect to the central system?
A. A broadband connection... i.e. an ADSL line. The size/speed of the connection will vary depending upon the number of people in a Practice, but in any event, we are talking about a monthly line cost of between £15 and £30 plus VAT.

A start-up Practice can, like many new brokers did in the 1970s, quite literally establish their businesses from a back-bedroom, using an already installed home broadband connection. We shall probably find that Business Broadband connections are more reliable and less contended than are Home ones, reflecting the higher prices charged; but, theoretically, anything should do.

 

Q. What hardware will a Practice need?
A. In most cases, no servers and any decent business PCs of less than a couple of years longevity; although we will be a bit picky about what printers and scanners people have, probably insisting on a limited number of units from the hp range.

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Q. Will the data relating to a Practice be accessible only by that Practice?
A. Yes, only by members of that Practice and no other; although, given the nature of TEn’s business model, TEn staff who deal with Practices, do get similar access.