The Tentacle

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... but, is it a profession?

I would contend that insurance broking is not a profession and general insurance advice does not consitute a financial service.

Misconceptions in both respects stem, I believe, from over-exposure to the local newspaper during our formative years. I certainly remember local solicitors, accountants and brokers featuring periodically in the Folkestone & Hythe District Herald following their departure to Brazil with a suitcase full of other people’s money.

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The hidden brokers

The market is expecting another round of broker consolidation and restructuring in the next 12/18 months. Poor economic conditions and further regulatory control will undoubtedly force the pace of M&A activity, but little is heard of the impact on those ancillary relationships that surround a lot of brokers.

Many experienced practitioners have found a safe haven in the form of an Appointed Representative (AR) arrangement, that that official or unofficial, with a known broker ‘friend’ where they can continue to trade in the manner they have been accustomed to.  They rarely tend to have formal agreements in place with their broker partners, preferring to rely instead on ‘gentlemen’s agreements’.

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Homer’s Oddity

I was surprised recently to read that the new Chairman of Biba believes that the future focus of our association might not be centred solely upon brokers; rather it should be the trade body for insurance intermediation of every form.

Clearly, such a notion - had it been muted a few years ago - could have seen Biba embrace the non-professionals at the heart of the PPI mis-selling scandal that has resulted in the imposition of crippling FSCS levies on honest brokers. Biba and its newly merged partner, the IIB, have been fighting hard to separate brokers from these very intermediaries in the consciousness of politicians and regulators alike.

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Start-up advice

Working with start-up broker firms, I see lots of business plans and, given the recent increase in acquisition activity in the market, I expect to see a lot more.  Many will demonstrate a realistic approach to the new venture and give me confidence that the new firm will thrive.  Others will sadly result in a conversation advising the individuals concerned to maybe consider a different path.

A common flaw we see – including among the really good ones – is over optimism.  You might think that I’m being unfair.  Why shouldn’t people set themselves ambitious targets?  That’s what we did, what everybody does, and all that happens is you inadvertently end up not paying yourself for a lot longer than originally anticipated.  This is fine, provided you can personally afford it.

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Social networking for insurance brokers

The natural reaction to the suggestion of social networking for many brokers will be… “I’m in insurance, nobody ever wants to socialise with me.”  Alas this can be all too true.

At parties, in days gone, by I used to say that I was in IT - which was true - except everybody then wanted to talk about the problems they’d been having with their PC or, worse, their printer.  I then developed the self-preserving habit of declaring myself in IT, but with a strong insurance bias - which was true.  Most times this was not enough to put people off and we’d get around to their printer problems a few minutes later than before.

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