Broking success: thinking outside the box

How did you get into broking?

By accident of course. I was in travel, and as part of that I had a deal with a golf tour operator where I dealt with a number of retailers. JJB Sport asked if I could provide golf insurance so I decided to have a go and put some technology together. Although I knew nothing about it, I could see that it was possible to apply the same model to travel insurance. It was a natural progression. I founded Staysure in 2004. There was no real big vision, I just created the product and got out there and marketed it.

How did your business evolve?

I started really focusing on travel in 2006 and felt like we were getting a grip on the over-50s market. Generally travel premiums are quite low but for the over 50s they are pretty high, so there was margin to play with there. That said, trying to get travel insurance for the over 50s to ‘work’ is difficult as the claims ratio is very high. We started off when you didn’t have to be authorised by the Financial Services Authority for travel insurance and piggy-backed on another adviser for the first year or so. By the time we became authorised we had a real understanding of how insurance worked for the over 50s and started to attack the market.

What was the next stage in your growth?

In late 2008 I decided that we would broaden out to offer other products and services and therefore needed to put together a new structure. I was living predominantly in Spain and set up a call centre there. I hired a woman who had been high up in Direct Line and we employed 40-50 people in an inbound operation for the UK consumer. I went after motor and home and private medical insurance (PMI) and then mirrored this with the ex pat community across Europe.

How did the growth impact your internal structure?

I decided to hire senior managers from the insurance sectors we were targeting who really knew their stuff because, if I am honest, I don’t. I am an entrepreneur, not a broker. I managed to recruit a general manager for motor and home and a finance director who had been with It’s4me, a firm that had sold out to Swinton, while for PMI I hired a senior chap from Pruhealth.

When did you set up in the UK?

In 2009 I was looking into raising funds and one thing I found was, even though we were a UK company, potential investors didn’t like the fact that we hadn’t got a presence in the UK in terms of offices. We got the funding earmarked but it was clear that this would be a key barrier if we wanted to eventually sell the business. I therefore decided to open a call centre in Northampton.

Will you remain an online broker in the UK?

No, we are also planning on opening a retail store in Northampton. I have been told that it is the hardest place to make retail work. Some people think I’m crackers but the cost of online marketing is very high in insurance and I’ve got a gut feeling that the acquisition costs will be less offline than online. We may be an online player in the UK but the call centre is a huge part of the business. Even though it accounts for about 50% of our transactions, it ends up bringing in around 70% of our income. You can purchase every product except medical insurance online and about one in four enquiries go through to the call centre.

What has been a challenging aspect of growing the business?

Getting the panel for motor and home has been harder than I anticipated but we are now getting there. Getting the providers to believe that we could be successful in other areas apart from travel has been quite difficult. It is a real case of chicken and egg as until you get the right panel and rates, you can’t sell and yet they don’t want to give you the rates until you prove yourself. We need to get the support of the right underwriters but if we don’t get that then I am going to do it myself. I am looking at the captive area right now.

How do you take advantage of cross-selling?

The first thing that happens is that post acquisition, customers will receive the Staysure magazine. The starting point for this was to get across that we aren’t just a travel insurer. The magazine is a core element that pulls all of our offerings together. The travel service is the biggest line for us from a cross selling point of view.

The aggregated spend for travel insurance is about half a billion pounds. We are doing a lot of profiling to find out what type of travel over 50s are doing, where they go and what type of holidays they enjoy. Another thing we are doing is putting together a portal for property – retirement developments up and down the country and in Europe. On the back of that we have just got park home insurance underwritten.▶ Most brokers search for a niche, why have you chosen to do the opposite?

Our core business is still travel insurance but the reason I went into other products and services wasn’t just because I thought we could sell them. I just didn’t want to be too reliant on any area. The unforeseen nightmare of volcanic ash last year and earthquakes and tsunamis this year all impact on travel. I wanted to have scope outside of that.

What did you do to weather the recession?

The key in a recession is to attack the market more aggressively. A lot of people make the mistake of pulling back but that causes business to shrink. The fact that we have been aggressive over the past few years has really helped us. It wasn’t difficult; it was just a case of having the balls to spend the money. Over the last three years and this year so far our marketing spend has been nearly £5m and it has doubled year on year for the last three or four years.

What are your growth ambitions?

Last year we were at £15m in gross written premiums and this year we are going to reach £30m. We then have targets for £60m, £70m and £100m. Over the next two and a half years we also hope to raise staff numbers to 400. My personal plan is to sell when we reach £100m with £10m net profit. As I said, I’m an entrepreneur, not an insurance man. I have insurance people but the hardest thing about being a manager is picking the right people. The most important thing is getting them to recognise your vision and buy into it. My strength is seeing where we are going and making sure that everyone is moving in the right direction.

Has not being an insurance man been an advantage?

I think it can be as you can think outside of the box. Some brokers may assume you can’t do something. I think let’s do it and see if it works.