Regional review: Take a punt

Famous for its prestigious university and people punting along the river, Cambridge probably does not strike many people as a location that is over owing with insurance businesses.

This view is echoed by the fact that Aviva is the only insurer with a Cambridge office and that the number of brokers is relatively small considering the size of the area.

However, members of the local broking community told Insurance Age about an a uent, vibrant and growing city full of opportunities.

Wealthy area

"The obvious advantage is that it is a wealthy, expanding area," said Paul Gibbs, director of Gibbs Denley Group.

He added: "Cambridge over the last couple of years has expanded very, very quickly so it has to be better to work in that environment than being in an area that hasn't fared as well through recent times."

Gibbs Denley was set up in December 1990 and specialises in travel insurance for students who travel into the UK from overseas and language school insurance, as well as property owners.

According to Gibbs most of its customers are based within 45 miles of Cambridge.
Another local broker, which has been around for even more years, is NWBIB. It was previously part of NW Brown Group but was purchased by One Broker in May 2014 and has had a presence in Cambridge for 40 years.

The broker employs 20 staff and specialises in education, charities, technology and property insurance and, according to broking director Phil Thorpe, most of its business comes from "within 50 miles" of the city.

On the more niche side, high net worth, media, arts and entertainment broker La Playa was set up in Cambridge 15 years ago and has since opened additional offices in London and New York, with the aim to branch out to San Francisco and Singapore.

Tracey McCreath, director of media, arts and entertainment, explained that the broker's specialisms were born out of Cambridge and that its newest division, science and technology insurance, was growing fast because of the city's status as a technology hub.

"The tech hub in Cambridge is one of the most well-regarded hubs in the whole of Europe," she said. "There have been several companies that now have billions in turnover that started in Cambridge and have become international, some of whom we are lucky to have as clients."

Speaking to local brokers it became evident that science and technology were the main drivers behind Cambridge's continued growth.

One of the newest brokers in the city is Real Insurance Solutions which is run by husband and wife team Philip May and Sally May-Foulger. Specialising in the oil and gas industry, engineering services, technology start-ups and construction, the broker was set up six years ago.

Technologically minded

Owner and managing director May stated that technology had inevitably become a specialism because of the opportunities the region o ers in that sector.

"A lot of these guys are very academically gifted with the products that they've developed, but don't necessarily appreciate the risks that are associated with those products, particularly when they are looking to develop and commercialise them on a global basis. We sort of see ourselves as a support partner for those aspects."

The only broker with an office on the High Street in central Cambridge is Swinton and branch manager John Graham said having a presence there was a big advantage because they often had new customers coming in from the street.

Swinton has operated in the area since 2002 and its Cambridge branch deals mainly with personal lines.

However Academy, a broker who took over Elstree Insurance Services in October 2014, is based on the High Street in Cottenham, a smaller town outside of Cambridge.

Neil Turner, general manager of Academy, noted: "We bought this business specifcally because it offers something we didn't do. It had some niche schemes and it covered an area of the market that we had no ability to place business in."

The broker specialises in sports insurance, especially footballers, and taxi insurance, but Turner explained he was looking to grow its, currently very small, local presence.

"We will expand this branch, recruit some more sta and actively go after the local community to supplement what it does on the national side with its football schemes," he continued. "We think it's quite a nice area to do business in."

Most of the local brokers seemed to agree that while the area is competitive there is plenty of business for everyone.

Gibbs explained: "It is competitive, but then I'm not sure there is an area that isn't. The customers tend to be fairly loyal so we tend to not have as much competition within our Cambridge clients as we do in other areas that we deal with."

The general consensus was that while there were some well-established brokers in the area, they were mainly friendly with each other and rarely came across one another in competition. John Barnes, head of retail network at Swinton said: "The biggest threat is probably the internet and not other insurance brokers. This tends to be the case in a lot of our branches."

McCreath noted that competition in the area was "healthy" and added: "Being a niche broker allows you to be a bit more protected. Competition in the SME market is fierce, rates are low, and we are still not seeing any potential for them going up. But we're a bit protected from the fight that's happening in the SME market because we're specialists."

However, there was an agreement that the rapid expansion of the city was not exclusively good news. Many of the brokers pointed to the high cost of living and infrastructural issues as being disadvantages stemming from the growth.

Mentioning the natural flow of tech startups from Cambridge University, Thorpe said: "Being a fluent poses its problems on the property market because we've now got people living in London who are commuting and working in Cambridge whereas it used to be the other way around. Property prices in Cambridge have shot up quite a lot. That presents problems for the local economy."

Keeping with the trend, landlord insurance, property and buy-to-let have become important markets for brokers in the city which is booming with construction work.
May added: "With the growth of the scientific and technical and biomedical sectors it's generating huge development both residential and commercial on the fringes of the city and outside. And it's generating huge amounts of traffic congestion as well. So there are some infrastructure challenges."

Staffing trouble

In addition, another downside listed by the majority of brokers involved in the regional review was the challenge of recruiting competent staff. The biggest concern seemed to be the small number of insurance  rms in the city as it resulted in there being no pool of talent to recruit from.

Thorpe said: "There used to be a really buoyant insurance company industry in Cambridge, now there's nothing. I always used to recruit from the best that worked in an insurance company and o er them a job in broking. But there are no insurers around now."

Meanwhile Graham expanded on the issue of the cost of living in the area posing a recruitment problem.

"A lot of the young people around here are students," he said. "The kinds of people we want in here are younger people wanting a career in insurance and it's not easy to get them with the high cost of living for youngsters."

Despite the fact that most insurance companies have left Cambridge, brokers did not seem overly bothered by not having local representatives to discuss business with, stating that the proximity to London made it easy for insurers to visit them and that the internet and phones made the distance less of an issue.

Some brokers pointed to the low insurer presence in the city as both positive and negative and explained that insurers who did not have a local presence had to work harder to secure the business.

However others pointed out that the expansion of the city and the many tech start-ups should make an attractive market for insurance companies.

Gibbs said: "When I started off years and years ago there were a lot of insurance businesses actually in Cambridge itself and a lot of loss adjusting companies as well and that has pretty much disappeared. But that is a shame I think, Cambridge is reasonably large and I'm surprised there's not a greater insurer presence."

Thorpe concluded: "Aviva is the only insurer locally and that really does help. We've done quite a lot of business with Aviva over recent years and I think the fact that they understand the local market and know some of the local key risks helps them go out and target and win that business."