A decade of consolidation didn’t destroy the talent that built those businesses. It just moved it inside the acquirers. Something is shifting.
If you have been involved with commercial insurance brokers for more than fifteen years you will remember a different landscape to the one now, this is probably more noticeable by the insurer BDM’s who can recite the brokers in each of the towns on their patch that are no longer there.
Every major town had one. An independently owned brokerage with a team that knew their clients personally, visited them, understood their businesses and gave them advice rather than just a renewal pack. Businesses built on relationships rather than process. On reputation rather than scale.
Most of them are gone now as they were acquired. Bought by consolidators who wanted their client books, their GWP and their market presence. The businesses were absorbed. The names disappeared. The people stayed on, adapted to a corporate culture that wasn’t theirs, hit the targets they were set and got on with it.
Howard Pepper, MD and Founder of Momentum has watched this play out across the whole of his career, put it plainly when we spoke on our podcast:
“Consolidation is a sort of way of life really. We’ve had it supercharged over the last few years. I’ve always felt it has been known as a regenerating business. We’re now regenerating the sector by supporting start-up businesses and small independent brokerages so that they can compete with the consolidators.”
What consolidation actually did.
The consolidation wave was not necessarily good or bad for our industry. Private equity found insurance broking attractive which had recurring revenues, sticky client relationships, fragmented market. The economics made sense. The money came in. The buying happened.
What it left behind was a market increasingly concentrated in the hands of a small number of large consolidators. And inside those businesses, hundreds of experienced brokers who had built their reputations in the regional independent world now found themselves operating inside structures that had moved substantially since they started their careers.
Ben Tweddle, who set up Protex Insurance after a career that included several employers who went through consolidation themselves, described what that looks like from the inside:
“I do think the client needs to still come first. These other businesses say they’ve got a client centric focus but then there’s so many links in the chain with all the different people involved in running one client’s account. The client just needs that continuity of dealing with their trusted advisor. Their one person.”
Where the talent went.
The account execs who built those regional brokerages, or who worked inside them and learned their craft there, did not stop being good at what they do when the acquisition happened. They carried on, adapted and continued to deliver.
But the world around them has changed. Targets were recalculated. Bonus structures shifted. Support teams were reduced or made redundant. The culture that had made those businesses work gradually became something different. And the people inside them, who had come from a world where the client came first and the relationship was everything, found themselves operating in a world where the spreadsheet came first and the relationship was a line within.
Some of them voted with their feet and left immediately but the vast majority stayed for years, hoping it would settle, and now appear to be reaching the same conclusion.
This year alone, 18 brokers have confirmed they are joining us at Momentum. Most of them are starting their own businesses. Almost all of them are describing the same set of circumstances. Targets going up while support went down. Bonus structures recalculated after years of consistent performance. Contractual terms held against them rather than honoured. And for several of them, watching colleagues with ten or fifteen years of loyal service made redundant.
Between them these 18 represent somewhere in the region of £5 to £7 million of income potential, built over careers averaging more than 20 years in the market.
Put them together and what you have is the makings of a substantial regional broker. The businesses that were not only the backbone of the industry but also their community.
What is being rebuilt.
The regional independent broker as a business model was never the problem. The problem was that cheap capital and abundant private equity made scale the dominant logic and everything else became secondary. That environment has changed. The economics of consolidation are more complicated now. The market has softened, growth is harder to generate organically and the people who were absorbed into the consolidators over the last decade are starting to reach a different conclusion about where they are and what they want to do with the rest of their careers.
What this means for the market.
This is not a dig at consolidation or saying its wrong. It is about a market finding its equilibrium again.
The consolidators will continue to exist and continue to acquire. That is their model and it works for them. But the opportunity facing those with client relationships and a desire to do it “their way” is deeper than it has been for a decade and increasingly choosing to use those assets for themselves rather than for someone else’s P&L.
The regional broker is not coming back in the form it took thirty years ago. It is coming back as something newer, better supported, more professionally structured and more capable of competing with the consolidators on service and advice.
