Crisis? What crisis? COVID-19, market consolidation and harder rates mean there’s rarely been a better time to launch a broker, according to industry veteran David Price, chief executive officer and co-founder of new London Market venture Fenchurch and Partners.
Targeting a year one premium of £20 million ($27 million) and with ambitions for further rapid growth, Price reckons he’s found a gap in the market.
Until December, Price was a former divisional director at Endeavour, a specialist independent Lloyd’s broker and delegated authority expert. He also worked for four years working in the US for Beazley.
The new venture will start small, he admits, but that’s not what he means when he says he plans to build a “boutique”. Instead, he aims to create “something completely different”.
Dislocation in the market
That ambition reflects not just a solid network of US contacts and Price’s 33 years in the industry but also the timing of the launch. There has rarely been a better time to start as a broker, he argues.
That’s for three reasons. First, the technology. The pandemic has put the spotlight on and encouraged the adoption of digital solutions that can massively reduce the cost of business and eliminate barriers to entry.
“We’ve got a huge dislocation of technology and how we operate. The Lloyd’s market is suddenly trading on a digital platform. Who would have thought that? It was tried and tested in the 1990s and failed, but suddenly last year it worked, and everyone’s using it.”
With Zoom and Teams meetings reducing the need to travel, Price is embracing all the technology available to create a “next-gen broker”. The intention is to massively reduce administration and re-keying—automating much of the back-office process, eliminating paper and having clients submit straight into the business’s digital workflow. It should, said Price, give is a significant competitive edge against brokers struggling with legacy systems.
“Every single technology advantage we can use, we’re going to use,” he said. “We’ve looked at every thing that annoys us and said ‘can we make that more efficient?’.”
The second factor Price hopes will support rapid growth is a harder market. Whether that will last only time will tell, said Price; new capacity is constantly coming back to the market, despite predictions of further hardening.
The business’s early experience, however, with 20 submissions in the pipeline in the first two weeks of launching, is encouraging.
The final tailwind that Prices hopes will support Fenchurch’s success is consolidation in the industry, and a market he has said is “dominated by mega-brokers”. It all adds up to a promising outlook.
“You have dislocation of capacity, the dislocation of brokers and mergers, and dislocation of technology, so what better time to start than now?”
“We’re trying to build a brand that doesn’t survive for just one year, but for 10 years and 20 years.”
David Price, Fenchurch and Partners
A pool of talent
The broking industry’s consolidation goes to the heart not just of how Price hopes Fenchurch will succeed, but what he hopes the firm will become.
First, he is determined to get the right people as Fenchurch begins hiring. The mergers the industry has seen should provide it with plenty of choices.
“What they always do is cut their assets, and those assets are their brokers and their people. They are the first ones to go. So, I think the stage is right for a change,” he said.
To attract talent, the business is offering a transparent remuneration plan, and every employee is to have the right to become a partner and purchase equity by 18 months.
It won’t just be looking for those with big books of business. “We’re really keen to build up a culture of how we do things,” he said. “We’re trying to build a brand that doesn’t survive for just one year, but for 10 years and 20 years.”
As well as transparency, the culture is to be one of accountability. Price’s co-founder is Brett Lee, an insurance outsider with two decades’ banking and derivatives experience with Deutsche Bank and HSBC, among others, as a non-executive director. It’s also one of responsibility: Fenchurch has pledged to return 10 percent of its profits to charitable projects.
“There aren’t too many choices for risk managers.”
As well as providing a pool of talented staff in the coming years, Price thinks consolidation has left a gap in the market. While Fenchurch is aiming at the mid-market, it also hopes to pick up bigger business wanting an alternative to the ‘big three’ of Marsh, Aon, and Willis. These businesses are underserved, he thinks.
“There aren’t too many choices for risk managers,” he said.
“What brokers do they go to in London that specialise in risk-managed Fortune 500 businesses? The choice is limited, and the further choice is then ones that are independent firms that are privately-held companies.
“All seem to be owned by private equity firms, or bigger institutions, or part of bigger networks. There aren’t many boutique, small, firms.”
If Fenchurch can offer a distinctive bespoke service, Price thinks it can win not just mid-market businesses looking for expertise but also some bigger business.
“Our overarching ambition is to be known in the marketplace as that specialist independent boutique broker that can do interesting, weird, wonderful, whacky things that others can’t do, and that’s the reason why clients come to us,” he explained.
The hope is that when boardrooms face complex problems wanting to transfer risk and they’re not quite sure what to do, someone will think: “Give Fenchurch a call”.
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