Bob Screen Insurance

A small broker in the South West asked me to provide them with a review of their business strategy.  This already successful business had 4 distinct sectors of the business:

• Commercial broking;
• Personal lines account;
• A small, single product scheme facility; and
• A building society agency.

From an initial analysis of income, costs, resources and management time, it was clear that there was a significant disparity in the resources employed versus return between the business segments.

Although the financial contributions of the different segments was important, the most startling discovery was the impact that the building society agency was on resources.  Due to the retail nature of the agency and the relatively small scale of the business as a whole, the simple resourcing of the counter was not only resource intensive but having a very significant adverse impact on other areas of the business, including a disproportionate amount of management time.  the building Society was also the least profitable part of the business.

Clearly each area of the overall business was interconnected in some way and for example many personal lines customers were also clients of the building society agency.  This made the decision making process more difficult. 

Other factors affecting the business were:

• Succession planning in the commercial broking area;
• Increased levels of competition in both commercial locally and personal lines more generally; and
• Future potential for each business segment

Following the strategic review, a clear strategy was formed and implemented which saw the building society agency close (and disposal of those premises; a reallocation of resources into the other areas; a strong focus on scheme development; a holding strategy on personal lines based around retaining profitable customers, and a development of succession to ensure the future of the commercial lines business.

The management team of this particular broker are very impressive and took swift decisive action based on the strategic review.  The result, one year on is a stable personal and commercial business, and a schemes business which is growing significantly due to the increased management focus placed upon it. The loss of revenue from the removal of the building society agency has been more than replaced by the growth in schemes and earnings form personal and commercial and, because the cost base is lower now, the profitability has growth hugely.

Additionally, the management are happier, the business is more stable and the future looks much brighter.