Insurance Age - The name of the game

Insurance Age - The name of the game:

The name of the game

Charles Earle has had a career spanning more than 30 years, working for both insurers and brokers in the UK and abroad. With the first anniversary of Arista approaching, Michelle Worvell speaks to him about strategy, finding the right talent and how he feels independent brokers are the ideal partners to work with

When Charles Earle, the former managing director of NIG Commercial Lines, launched Arista in January 2007 alongside former NIG colleague Lyn Carslake, its stated aim was clear. The new underwriting agency would focus on broker-administered commercial business in the UK, and arrange agencies with a limited panel of independent brokers.

With Arista approaching its first-year anniversary, Mr Earle ponders whether the start-up's strategy has stayed on track. "We have not changed the strategy in any major way," he says. "We are still firmly focused on independent regional brokers, with a start in the South to get our feet under the table and prove the model.

"We have been successful at hiring new staff and ensuring the technology is up and running. If anything has changed, it has been the fact that we have brought out one product before the other because demand has changed slightly. In addition, coping with a soft market has meant that the business has not expanded as fast as we thought it would based on our initial plans."

Despite this, the company has a number of advantages, including a lack of legacy systems, its small, flexible size and the ability to start with a clean slate. This means that Arista has been able to both deploy modern systems and to hand pick its staff.

Mr Earle elaborates: "Day-to-day, we compete with the likes of Norwich Union, Axa and Zurich, as they have most of the small to medium-sized enterprise market share we are after. This is where we have an advantage, as they are old organisations with legacy systems - we don't have that. Therefore, we can be much more efficient in how we deliver both our offerings and service."

He also states that Arista's aim is to speed up the response time to its broker partners, and to get documentation out faster in order to save them money. According to Mr Earle, this means that some of its brokers are saving the equivalent of between 3% to 4% commission. He also highlights the fact that there is no point in brokers cutting great commission deals with insurers, if they then chew it up in the expense of dealing with the errors and misunderstandings between them.

People business

When Arista first formed, many column inches were taken up regarding the amount of ex-NIG staff that initially joined the firm. As this industry is a self-confessed 'people business', the choice of staff in any firm is critical, but how much of a difference has this made to Arista?

"Being able to pick people for the job in hand is a huge advantage as far as I am concerned," explains Mr Earle. "And I am not just talking about the ex-NIG staff. Yes, there were initially five or size of us from NIG, but I very deliberately wanted to recruit people from other companies because it gives us a better view of the world.

"When I was at NIG, I would have been the last person to claim that everything we did was absolutely right. So bringing people from Axa and Zurich, and from Allianz and Royal & SunAlliance, gives us a large amount of diversity. In addition, if you bring in someone of high quality, then they also provide a link to other people of the same standard within that company, and you gain credibility by taking them on."

Mr Earle modestly claims that he is still surprised at the quality of the employees that have wanted to join Arista, especially as they are often coming from large companies that have a safe operating environment compared to Arista, which is a new company with no track record. He concedes, however, that although its staff have a real opportunity to make a difference, if they are not very good at their job then they will also be noticed due to its compact size.

Currently, Arista has 54 staff across three regional offices:

- Redhill - covering the South-east;

- Southampton - covering the South and Central;

- Bristol - covering the South-west and south Wales.

Arista also has a head office in London, and is currently in the process of establishing bases in Manchester and Birmingham.

"We measure how many leads we get in from brokers every day, and which brokers they have come from. Due to this, we know how many people we are going to need to support the business, and we can establish the conversion rates that are needed to work," Mr Earle explains. "We plan to add employees to the existing offices, as they have their own growth plans and will need more people to support these."

The next step for Arista is to establish a Northern office after its initial concentration in the south of the county. Mr Earle and his senior team have been spending a great deal of time in the area recently, conducting market research and gauging broker interest in the Midlands and the North-west. Through this research, they have established that there is sufficient demand to justify establishing operations in the North.

"At this stage, I am not sure what order we will run them in. We have spoken to a number of potential senior staff, and we are at the shortlist stage for both offices. I would like to start the ball rolling by the end of the year, but it will depend on the notice periods of the staff we take on. However, we hope to get one office up and running before Christmas.

"Even if these senior staff are on three-months notice, we will be able to recruit underwriters before then. However, we are not going to hire any underwriters until we know who the business leader is, because they will want to know who they will be working for. It will likely be three or four people underwriting a month or two before the regional manger arrives."

Planning ahead

Succession planning can be a tricky problem for many firms, but Arista seems to have all its ducks in a row after Mr Earle incorporated this scenario into his original business plan. In fact, he says that he will be disappointed if the current top mangers in the business are not trying to kick him out of the door in five years' time.

He explains: "I said to my shareholders that I could see five or six years of energy, as I was 55 when we started. I expect to find my successor within the main team, which arrived early on, or within the people that have been recruited at that level since.

"I wanted strong people in from the start who would want to fill this role, and I guess that my task over the next few years is to get the business built and then focus carefully on how we make the succession steps. Then again, I might get to the end of the five years and say, 'I am actually enjoying this'."

So, in Mr Earle's opinion, how do brokers currently view Arista? He says that the 100-plus brokers that it currently has signed up have reacted well, particularly to its people. "It is the experience we provide when dealing with customers that is the brand, rather than the name. The brokers that we deal with like the service we offer, and the people that they are dealing with.

"We are even being approached by brokers outside our current operational patches. In fact, we are already dealing with several that have said they want to deal remotely with us on the understanding that we will have a regional office and local service in their area later down the line."

Mr Earle stresses that the company does not want to deal with every broker in the UK, and is not going to respond to every approach because some brokers just do not trade the way it wants to. Neither is he interested in dealing with national brokers, or large, aggressive consolidators.

This is mainly due to the fact that he feels that if, for example, it wanted to trade with the latter, it would be at the back of the queue and would have to pay more commission than it is prepared to. Mr Earle adds that this stance means that Arista is in a position to take a step back, and make rational business decisions.

So, is there such a thing as a perfect 'Arista broker'? "It's hard to define an independent regional broker nowadays, isn't it? But when you meet one, you know that they are embedded in their local community or affinity business that they deal with," he explains. "They have a good technical grasp of what they are doing, and a willingness to listen to technical arguments from the other side - when we say 'no', to understand why we said 'no' but to still maintain the relationship."

He adds: "I would say that a perfect broker is one that often mirrors our model - they are determined to stay independent, perform well technically, willing to communicate and happy to trade. And there are plenty of them out there, enough to satisfy our appetite in the market, and there are new ones setting up as well. Just as Arista is a consequence of insurer consolidation, then the same scenario will apply to the broking market."

Mr Earle believes that brokers will continue to be a strong section of the insurance community, although he would like there to be more, rather than less. He concedes that there will be occasions where brokers that Arista are trading with will be acquired, and it will lose those businesses because they will be absorbed into a model that it is not happy trading with. However, at the end of the day, he believes the market is strong, and is an environment that Arista can confidently trade in.

"We want to trade through our offices with a maximum of 250 brokers and, as far as I am concerned, there are plenty around for us to do just that," he says.

CHARLES EARLE - BIOGRAPHY

- In a career spanning more than 30 years, Charles Earle has held insurance and risk management roles with both insurance companies and brokers.

- His previous positions include that of managing director of commercial lines at NIG, managing director at Windsor and Windsor Insurance Brokers, marine insurance director at Citicorp Insurance Brokers, and various underwriting and risk management roles in Hong Kong and Singapore for New Zealand Insurance.

- In 2007, Charles launched Arista, using a combination of local access to experienced underwriters and modern technology to provide a commercial property, liability and motor insurance service to a select panel of independent regional brokers.