The FAQs

Rationale, Commitment & Relationships

• Is TEn a network?
• Is TEn a franchise operation?
• If TEn is merely a supplier of outsourced broking services, why then must it manage all of the agency relationships with insurers?
• TEn was a ‘start-up’ in 2004; how did it secure agencies, terms and service levels when others cannot?
• Does that make TEn a ‘consolidator’ then?
• Why hasn’t anybody else thought of this?
• So, if a Practice joins TEn, for how long would it be committed?
• Who does the client belong to within the TEn context?
• Will it be possible to outgrow TEn and become fully autonomous in terms of agencies and completely independent as regards FSA regulation?
• If running a Practice doesn’t suit or remunerate sufficiently some people, can they take their clients with them and become employees of another broker again?

Division of Labour (Established Brokers)

• How does TEn envisage the division of labour working?
• Does this mean that Practices will not need to talk to insurers any more?
• Does this mean that Practices will not need to be bothered with insurer account reconciliation?
• Will Practices be able to keep all of their existing staff?
• If Practices have one or more Technicians who could become Account Executives; is that appropriate within the TEn context?
• Would TEn be interested in employing my existing back-office staff?
• 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?
• What would TEn have me to do with the time I have reclaimed?

Division of Labour (Start-up Brokers)

• How many people does a start-up Broker/Practice need to employ?
• What accounting functions will be my responsibility?

Service Levels & Markets

• What will be a Practice’s service level with insurers?
• What markets will TEn use and how many are there?

FSA Compliance

• Does my Practice need to be directly regulated by the FSA and do I need to pay FSA subs?
• Does my Practice have to pay for ICS compliance audits?
• Does my Practice need to reserve up to 1.5 % of gross commissions for a possible call from the FSA compensation fund?
• Does my Practice need to worry about maintaining solvency margins to FSA required levels?
• Is TEn an easy option for a Practitioner who perhaps might have acceptance difficulties with direct regulation?

Systems

• Is it absolutely necessary that every Practice uses the prescribed CDL Strata centralised system?
• How do I connect to the central system?
• What hardware will a Practice need?
• Will the data relating to a Practice be accessible only by that Practice?

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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 answer is that this is 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, based on an assumption of non-qualified franchisee representatives. That view is really quite the antithesis of what we are about; which is a supplier of outsourced broking services to Insurance Professionals.

 

Q. If TEn is merely a supplier of outsourced broking services, why then must it manage all of the agency relationships with insurers?
A. As a ‘start-up’ broker you would 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 2004; 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. Too many vested interests.

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 within the TEn context?
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 Practices to begin to assume more responsibility for themselves, without the need to make a complete break all at one time.

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Q. If running a Practice 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 (Established Brokers)

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... 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.

 

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. That really depends on how confident one is that they will all make the transition to becoming customer focused - rather than remaining an Accounts Clerk or a Technician - because these functions 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, Leeds, Bristol etc, or Aylesbury. TEn will expand 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.

 

Division of Labour (Start-up Brokers)

Q. How many people does a start-up 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”, except in the context of pre-negotiated electronic products.  As with anybody else, there are insurers involved and so the best laid plans etc...

 

Q. What markets will TEn use and how many are there?
A. The normal range for a medium/large broker, with one or two omissions and several ‘A’ rated additions that one doesn’t normally find.

As at the time of this revision (March 2007), the number of TEn agencies stands at about 72, although that includes instances whereby some insurers require a separate agency for this or that.  So, let’s call that mid 60s.

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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 ICS 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.

 

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 to 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 £17.50p and £50 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.