A match made in heaven

Cheam broker, JB Insurance is just over one year into its motor policy transfer partnership with Equity Insurance Brokers. With the honeymoon period over, has the union stood the test of time?

JB Insurance's founding director, Justin Thomas first met EIB's broker development 'matchmaker' Steve Young at a British Insurance Brokers' Association conference and, although it was not exactly love at first sight, they quickly identified a mutual attraction to one another's business aspirations.

Established in Cheam in 1973, JB Insurance experienced steady growth during the 25 years that followed, allowing the acquisition of Leatherhead competitor, Jenner-Baldock in 1999. Currently the company handles a balanced mixture of personal lines and commercial business from larger premises almost opposite its original high-street location and employs 17 staff that between them service in excess of 4000 clients.

Minimal profit concerns

Thomas had long been concerned that escalating administration costs were further eroding the minimal profit realised from JB's motor insurance business and concluded it was, at best, standing still.

"We'd decided to audit our motor insurance activities and found administering the business was taking around 25% of staff time but yielded less than 15% of our annual turnover, " says Thomas, adding, "And when we looked at how much we were actually making on an average motor policy, alarm bells began to ring - about 11% in commission which barely covered writing the letter and posting the cover note.

"It was clear something needed to be done, however, we couldn't just refuse to insure our local clients, some of them have been with us for more than 20 years."

Young suggested that Thomas should consider transferring JB's motor insurance business into EIB's care, effectively passing part of the book over to a specialist that would handle the entire process. The broker could retain the high net worth clients in-house, or nominate key customers as VIPs for special care.

The transfer process itself was straightforward and created breathing space for JB's employees by relieving the pressure of a backlog of administrative tasks that had built up within the brokerage.

JB transferred some 350 motor policies worth around £200,000 into EIB's charge. One year later the initiative had reduced its overhead bills by around £48,500.

Over a 12 month period, EIB downloaded all the policy details of the clients JB had released for transfer - a number were retained as Thomas wished to administer their accounts internally. All transferred clients were notified of the changes with a minimum of 24 days notice prior to renewal and EIB quoted every transferred customer with similar cover from its panel of 17 insurers, and at a lower premium.

"From an administration point of view," adds Thomas, "the transfer was seamless and painless. It allowed the brokerage to concentrate on what it does best; develop new business.

"From a cultural point of view, employee motivation increased, which led to greater efficiencies, renewed enthusiasm and heightened productivity so we can service and grow existing customers more successfully. We put the freed up time to very good use and placed a greater emphasis on sales and staff development."

The improved cash flow JB saw, as a direct result of transferring the bulk of its motor policies to EIB, provided the five figure investment the brokerage needed to install document management and workflow software. Now more than 300 documents coming into and out of the brokerage every day are handled online.

"Quite apart from the fact that we now have all information at our fingertips, the new system has fostered a more professional staff ethos. It also brings management and operational staff closer together and encourages a professional team approach," adds Thomas.

Maintaining service

So what will the next 12 months hold for the marriage made in Surrey?

"Our focus has always been on building and keeping good personal relationships with clients, however, as our customer base grows, the sheer logistics of maintaining service continues to be a challenge, although much less of a problem these days," Thomas explains.

"The benefits gained from transferring a portion of our motor book to Equity are directly improving the bottom line and are expected to have a significant impact on future profitability. We have generated a vigorous attitude toward growing this business and no longer feel the squeeze in a highly competitive market where many traditional high street insurance brokers are struggling.

"The days of pen and ink and filing cabinets are gone and with them go the associated hazards of missing renewal dates and failing to issue cover notes."