A winning partnership

Helen Brown finds out more about a Hiscox proposition that could help brokers’ businesses

Trading in a recession can be tough. Like everyone else, many brokers are feeling the pinch. Some are keen to improve their cashflow and others want to raise capital to invest in their business. But many are finding it harder than ever to find the finance to do so through the normal channels.

At times like this, it can pay to look for alternative business solutions. Hiscox, for example, is willing to explore paying brokers cash for books of business or customers that fit in well with the Hiscox model. According to Zahid Naqvi, Head of Underwriting Partnerships and UK Acquisitions, now is a good time to consider the options available.

“Many brokers are exploring ways to improve their margins or need more money to grow and make acquisitions,” he says. “Often, they do not want to dilute their ownership to achieve that, so we are thinking of ways we can help.

“Some brokers may have examined their business and found segments that no longer work for them, such as small premium accounts that are generating too little income or requiring too much servicing to be profitable. We can often buy the rights to that business, which then takes the problem away from the broker.” Zahid adds that most brokers do not realise that Hiscox can help in this way and miss out on exploring what may prove a very useful option for them.

Valuable agreement
There are many reasons why a broker might want to sell a book. They might have lost a specialism due to staff turnover, might want to release funds to acquire better margin business, or might have a cashflow hump to overcome. The most common scenario is that they have large numbers of very low-premium policies, which yield little or no margin for them. Servicing these can be costly and time-consuming, so an agreement such as the Hiscox proposition could free up valuable time to spend on other customers.

As Zahid says: “Whatever the reason, brokers shouldn’t hesitate to talk to us about any of these things. We may be able to help them.”