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Post Magazine - View From The Top - Oct 2006
Price is a senseless battle...
Howard Pepper, Deputy Managing Director,
Oval Insurance Broking
An interesting – if not entirely appropriate – analogy from Holman chief executive Andrew Holman’s View from the Top contribution likened broker consolidators to the major supermarkets (Post, 14 September, p17).
The clear implication was that the pursuit of volume was the only driver for consolidators, and pushing down price the only differentiator. He may well have a point about certain players in our market. The real winners among consolidators in the future will be those that preserve the traditional client focus and flexibility of service exhibited by the strong regional brokers that first got on board to create them.
Furthermore, the challenge for consolidators is to achieve a common best practice across the segments in which they operate. Scale, used appropriately, will enable these businesses to enhance the value they provide to clients – not only by exploiting leverage in the market but also by investing in sills and resources that will make the effective in those areas that were historically the domain of the major multi-nationals.
Achieving best practice within this framework will make sure our industry avoids becoming a jumbled collection of consolidators and networks but rather a group of outstanding businesses that can truly offer the best of both worlds to their clients and staff.
If price becomes the only offer, the ability to attract and retain clients and to attract and retain top talent will all too quickly disappear. Instead, success will be achieved by exercising care in the acquisition programme – making sure there is a good cultural as well as business fit – and by achieving organic growth through superior price and service delivery.
However, this battle will not be just among consolidators – the whole market will find itself caught up. That will include independent brokers that do not have the means to invest in the resources needed to meet the increasingly complex needs of clients, and the multi-nationals whose preoccupation with internal concerns diverts their attention from the only determinants of our market – clients.
This is sure to be an interesting fight.
