News...
Network members
need to tread with caution
17/01/2008
POST Magazine, View From The Top
Andrew Holman, Chief Executive, Holman's
It's been all go in the network arena since Towergate purchased The Broker Network, and a lot of wailing and gnashing of teeth it has generated too.
While Grant Ellis and his team did a great job in persuading independent brokers to join TBN, and created a very efficient and profitable business, why has the marriage ended like this? After all, TBN was supposed to protect its members against the likes of Towergate wasn't it? So who can blame some broker managing directors for comparing TBN to the French Vichy government.
Of course, there are many who will gleefully say "I told you so" to those crying into their holiday villa brochures courtesy of the handsome prices that have attracted so many to sell up and/or join TBN. But, in the cold light of day, was it inevitable that TBN would sell to Towergate and, if so, what does the future look like for those who now find themselves working for a new master? And what about the other networks?
Towergate has been a fantastically successful model and has, without doubt, revolutionised the industry. The business has some of the best minds in the industry and a scale of resources behind it that most of us can only fantasise about. But what's the end game for them? If TBN can disappear so quickly, what's the long-term plan for Towergate? To date, its business model has been aggressive acquisition and leveraging this buying power with suppliers. But what happens once it can't acquire any more? Will it sell up or fragment under the strain of servicing all the debt - or become the insurance version of Tesco? Whatever the master plan, I doubt those who have just become members courtesy of TBN's sale have any better idea than me.
Networks are not a passing fad, they have changed the face of the UK general insurance market in the same way as Direct Line did and the collapse of the Vehicle and General a generation before that. But it would be foolish to forget that brokers have a choice in their strategic future; and the best people to know what is right for a firm is its own owner managers. So, if you're tempted to throw in your lot with another organisation, be aware that the ending may be very different from the one described in the glossy brochures and slick presentations. And don't forget Chaucer's 14th Century warning that "He who sups with the Devil should have a long spoon".
