Small business is big business – why the small independent insurance broker casts a big shadow
By Andy Fairchild, Broker Network CEO.
There's no denying SMEs are key to shaping the future of our economy. The rhetoric 15 years ago was that globalisation was the be-all-and-end-all, but the market appears to be changing. The big global brands are still hugely successful, but some economists are saying that the shift away from free trade could have a significant impact. Even Larry Summers, former chief economist of the World Bank and staunch globalist, now feels that global economic opportunities are slowing down. That leaves room in the market for smaller businesses to flourish, and we believe it’s time for the little guys to have a go.
When you look at the impact of SMEs on the economy, the “little guys” aren’t so little. If the UK economy is a ship, then SMEs are its propellers – and it’s their combined force that will empower us to charge forward. SMEs account for over 99 per cent of businesses in every main industry sector across the UK and there were a record 5.7 million private sector businesses at the start of 2017 – an increase of 197,000 since 2016, and 2.2 million more than in 2000. It’s certainly dangerous to underestimate these entrepreneurial businesses.
As an alternative analogy, the UK’s thousands of small independent insurance brokers are our lifeboats – keeping us out of treacherous waters and ensuring the ship never falls into disrepair. The service they provide is often overlooked, but I firmly feel it’s vital for our country’s success. Independent brokers are in the powerful position of not simply being one of the small businesses that drives our economy, but also playing a vital part in keeping their fellow small business owners afloat. They understand SMEs’ businesses in a way no one else can because they have personally experienced the risks – SMEs and brokers are one and the same. Meanwhile, SMEs provide brokers with the business that allows them to keep going. Put simply, by working together, SMEs and brokers can help one another to reach their full potential.
Being a small regional business in today’s economy doesn’t, however, come without its challenges. It’s essential for SMEs – brokers or otherwise – to innovate and be entrepreneurial. From listening to our 600 members, and what they’ve learned from the thousands of SME clients they work with, we know that those who thrive are the ones who take the time to learn from one another and be bold. By their very nature, SMEs are risk takers, and our SME brokers certainly have that gutsy Dragon’s Den charm in spades. We recently saw one of our members become the first broker in space, and although it sounds mad, it certainly helped to make their business stand out from the crowd. Sometimes eccentricity is actually genius in disguise – the first Vikings to sail their longboat across the sea must have thought it was a madcap idea, but they ended up commandeering a whole country.
I believe that the strength in numbers within the network, combined with that fiercely independent mindset, is part of the reason we’re seeing our Premier members, who collectively represent £500m GWP growing at an astonishing rate of 13 per cent. By banding together in a network our SME brokers can enjoy supreme autonomy while also benefiting from the considerable power of their peers. And there are no signs that this double-digit growth will slow down. According to recent research by AXA, only four in ten start-ups said that they had insurance of any kind, meaning that there is room for expansion. Small they may be, but SMEs present a mighty opportunity for brokers.
And it goes both ways. We know from our own research that brokers provide immense value to small-to-medium businesses. More than two thirds of SMEs agree that brokers provide the advice they need to help them protect their business, and more than four times as many SMEs which use brokers agree they offer value for money. If we can help more SMEs to understand the value a broker could provide to their business, the growth potential could be enormous.
So if globalisation truly is swimming against the tide, then I’m excited to see how our fleet of UK SMEs will respond. In any case, it must be with innovation, boldness, and the strength of their local community pushing them forward.
Broker Network is the UK’s largest network for independent insurance brokers, dedicated to enabling community-based brokerages to grow, protect and support their business. Visit www.brokernetwork.co.uk