The insurance industry is an extremely well established beast. Unfortunately this means that a lot of the established brokers are not forced to evolve through competitive pressures and in many cases run for generations without updating their practices. This means that the shareholders do not maximise the value within these businesses either during their period of tenure at the point which they decide to sell
Lead Generation and New Business
Growing your customer base and the revenue that is generated from those clients is the life blood of any insurance business. Whilst some verticals have excellent renewal retention rates, there will always be clients who do not renew their policies and in order not to go backwards they must be replaced. Many businesses think they can simply employ “sales people”, give them a copy of the yellow pages and expect them to generate sales. This is an extremely outdated approach which will see you churn staff and lose a significant amount of money. If you engage with Hawthorn, we can show you how to decide on the industries and products on which you should focus, how you can identify and effectively contact these prospects as well as numerous strategies to help you ensure that the investment you make in new business generation isn’t wasted.
Portfolio Consolidation and Facility Creation
As a general insurance brokerage grows, new clients will be secured which have a large variety of differing requirements. In order to satisfy these needs, a broker will typically seek out agencies with a number of different insurers. After some years, this constant agency creation can create a myriad of trading agreements where there is little relationship and no commercial leverage. We will work with you to carry out an in-depth review of your insurer panel on a product by product basis including such cohorts as premium volumes, claims performance and quote conversion ratios. We will compare this data to our industry benchmarks and make recommendations as to how you will be able to reduce your workload, increase your earnings and improve your customer satisfaction and thus retention levels.
Business Disposal Advice
The amount of consolidation in the insurance broking sector is unprecedented and fuelled by a seemingly endless supply of capital. One of the reasons for this is that general insurance is not directly correlated to the performance of the stock market and therefore makes a great place for venture capitalists to invest when the main indices are unattractive. In short, if you’re thinking about selling your business then there is no shortage of buyers. The prices that they will pay will vary a little depending on the the purchasers circumstances however the key driver in determing how much value you can unlock through a sale will be your underlying business.
What is absolutely key before you go to market is that you understand the metrics driving these prices and you adjust your business to ensure that you achieve the best possible price. This is work that needs to start between 24 months and 36 months ahead of your exit. It could result in some fundamental changes to your operating processes, your insurer partners and your management team but whatever is required, it is essential that you get your house in order before going to market. Hawthorn Advisory can help you navigate the entire processes from undertaking a through analysis of your business, helping you create and execute the determined goals through to finding the right buyer and negotiating the best possible terms.