John Elliott (pictured) wanted to run a brokerage where he could give clients the time they needed and make his own placement decisions. After 25 years in commercial insurance, the managing director of Elliott & Associates Risk Management concluded that the quickest way to get there was through a network, not on his own.
He launched his own Coversure Network franchise in August, combining his own client relationships with the network's compliance backing and insurer access.
For Elliott, independence means sitting down with a client and doing what is right for them "regardless of the earnings, regardless of the relationships that you've got with your panel." Large brokerages may offer wide panels, he said, but they work to a business plan and a placement strategy. Nobody instructs a broker how to place business, yet "it's definitely implied that you are supposed to be doing things in a certain way."
He spent seven or eight years weighing his options, including direct authorisation by the Financial Conduct Authority (FCA). That route costs considerably more and takes far longer to get regulated, he said. The franchise let him concentrate on clients from the start, with compliance already running in the background.
The trade-off is the panel: he can choose which clients to approach and how to run the business day to day but must place cover through the network’s panel. He does not see that as a dilution of independence. Most markets set minimum requirements for agencies, and a new brokerage without a book to bring across would struggle to meet them on its own – "there is no way you're going to get the agencies that you would need to be able to trade." He regards the constraint as short-term, since he can leave the network and go fully independent once the business can support it.
At larger brokerages Elliott said, brokers may be told which insurer to use from a small group, perhaps half a dozen. He puts that down to income arrangements behind the scenes: "it comes down to the fact that they may have overriding deals. It's as simple as that. There's other incomes coming in. There's other things that have been agreed." This reflects what Elliott has seen in his own career, not a claim that every corporate brokerage builds its panel this way. It sits directly on top of the FCA's own guidance on panels used for fair analysis, which says selection should take account of product features, premiums and service to customers, and should not rest solely on the benefit to the brokerage.
That extends to leaving a client's unusual cover with a niche underwriter or MGA where it is, if the insurer relationship is sound and the problem lies with the broker rather than the risk. "I've never sold anything in my life," he said. "All I do is ask questions and I'll come up with a solution for the client."
Size thresholds can also decide which clients get attention at bigger firms. "I’ve even been told if it wasn't generating £2,500 income as a client, you do not go and see it," he said. A client worth £600 could be turned away outright, with nowhere in the business to refer them – and Elliott has known small construction businesses worth a few hundred pounds in commission at the outset go on to become substantial.
To avoid making the same call himself, he plans to take on no more than 15 to 20 clients a month, so they get "the personal service that they're paying for," hiring only once demand exceeds that. At some brokers where he has worked, staff handled 80 or 100 clients a month, making it impossible to look after each one properly.
That's the gap Elliott is targeting: businesses paying roughly £10,000 to £50,000 in premium. Below that level, he said, a lot of package business runs through online portals, usually under £5,000 and often under £2,500. Insurers compete hard for risks of £50,000 and above. The band in between gets far less attention from either end of the market.
Part of the problem is definitional. "Many brokerages don't really understand what SME actually is because the definition of SME can be up to £50 million turnover," he said – and under the Companies Act's recently raised thresholds for medium-sized companies, the official figure is now £54 million. Many clients in his target band arranged their insurance when they employed five or six people, and kept renewing it after growing to 30 staff and a turnover of £2 million or £3 million. They often do not understand how their exposures have changed, and in construction specifically he has seen significant gaps in cover as a result.
Elliott sees a large opportunity for brokers willing to serve that middle market properly, provided they don't overstretch and turn into mini corporate brokerages themselves – a discipline that even independents who've deliberately stayed outside the current M&A slowdown are wrestling with, as ownership decisions increasingly hinge on what a small business can actually handle on its own. What that discipline buys is attention: a regional broker has won clients by catching what phone-based service missed – an undeclared log burner, a fire extinguisher used as a doorstop – simply by visiting in person.
Those changes take time to uncover. Elliott's case for the franchise model is that it gives him the insurer access to compete for that business while letting him keep enough room in his diary to notice when a client has outgrown its cover.
