the broker network rationale

In recent years the overall number of Insurance Brokers has been in fairly dramatic decline.

Historically, brokers have been privately owned, founded mainly before 1985 and so the Principals of these firms have now reached retirement age.  Unsurprisingly, when they are approached by larger firms with a view to acquisition, they are often open to the suggestion and – in the 1st round of mergers – their offices and the local staff can remain in place.

However, we are now into 2nd and 3rd round ‘consolidations’.  The original acquirers are themselves being purchased by brokers who are, in turn, bought by an even bigger one!  Local presence and client servicing can be sacrificed in the interests of regional centres and rationalisation.

The outcome of this kind of re-structuring is often that nobody quite ends with what they signed-up for.

The upside of ‘consolidation’

Insurance in the UK – beyond private car and simple home/travel/pet insurance – is still predominantly arranged through brokers, because brokers represent the interests of the client in the best light to the multi-national corporations that are the insurers.

Theoretically, the larger the broker, the better the deal they can achieve for their clients and the better the level of service they and their clients receive from insurers. This is simple bargaining power and economies of scale etc.  Provied they don't get too greedy!  Of course, some consolidating brokers have borrowed massively to acquire other businesses and this can effect their motivation.

TEn does not buy broking businesses.  They join the network all voluntarily.

An equitable sharing

It is incumbent upon the broker – and required by the FSA – that the benefit of any muscle they may have is shared with the client. TEn firmly believes that one of the things the client most needs and desires is proximity of service and the ability to deal with the professional advisor of their choice.

In respect of this re-introduction of choice – and in other aspects – the TEn approach runs counter to the prevailing trends in the market.

So why a network?

Since 1985 (and until TEn emerged) the number of start-ups in the broker market had reduced to a trickle. Firms that have been ‘consolidated’ have not been replaced by new entrants; the next generation has not been able – for a variety of reasons – to emulate the entrepreneurship of the one that went before.

TEn was established to level the playing field for small local brokers and broker start-ups; and for those clients who prefer to deal with them. Consequently, we have the facilities with insurers, as would a larger broker, which our membership has access to.

TEn also provides a range of back-office services to its members, as any Account Executive within a larger broker would expect to have. Therefore, any client can choose to deal with a local broker; without compromise.

Appointed representatives

In the parlance of the Financial Services Authority, we are deemed an Appointed Representative Network and the brokers who have joined us are our Appointed Representatives.

What this means is... that TEn is the entity that is “authorised and regulated by the FSA” and the Appointed Representatives are in turn regulated by TEn, having been appointed to represent us in respect of our arrangements with insurers etc.