That actions speak louder than words is the motif at the heart of Stubben Edge’s strategic evolution and for group CEO Chris Kenning (pictured), being deliberate in thought, word and action alike is crucial to developing a brand and an offering that meets the demands of the wider market.
Stubben Edge speaks to the market when it has something to say, he said, and lately, the group is not running short of topics – between the acquisition of Genesis Special Risks (GSR), the incorporation of 1Edge Insurance, and news of it securing a further £5.6 million in investment. Last week, the firm announced the purchase of the business financing platform Finpoint, a deal aimed at expanding the line-up of services it offers its network of independent financial advisers (IFAs) and brokers.
Looking back to where it all began, Kenning highlighted how the group evolved from his and his deputy CEO Karen Baretto’s observations of the challenges facing the insurance marketplace – with poor legacy systems, regulatory burdens and incomplete data all impinging on the ability of businesses to do things differently. In 2018, they bought themselves out from the diversified financial services group they worked for and split off to create a new firm – one founded around the idea of making it easier for businesses to grow organically.
“From our perspective,” he said, “if you start out as a broker, you might be able to get 100 clients from your friends, family and people you mug in the pub. To get to 1,000, you’ve probably got some word of mouth and you specialise in an industry. But to get to 10,000 is really hard unless you go digital or you’re doing some fairly punchy marketing. From there, it really becomes a cut-off point for brokers – you’re probably at around the £2.5 million GWP mark and that’s when the [big consolidators] get interested in you.
“And I think the reason why brokers get excited about that is that it’s not clear how you go from £2.5 million GWP to £10 million GWP without external investment. But a lot of that external investment is to buy services or capabilities that you might be able to access in a different way. I believe there are lots of ways brokers can scale up that don’t require them having to sell out or raise equity. An organic growth route is possible.”
Digging into some of the capabilities Stubben Edge makes available to its partners, Kenning noted that these can be divided into several key areas – regulatory compliance, bespoke insurance products, time-saving administration systems, and customer retention boosting services. Having these foundations for expansion ready-made frees up brokers to focus their energy on the value-add they bring to the insurance proposition and on building their businesses.
“My view is that there are three models you’ve got as a broker,” he said. “You can be a sort of Amazon reseller, where it’s digitally driven and you’ve got to have high volume, low cost of administration and you’re continually pushing margins and squeezing the efficiency of the supply chain. And then you’ve got the other side with your niche super-specialist brokers where there’s usually a risk management element to what you’re doing.
“And then somewhere in the middle, there is a department store, Selfridges-type approach where you’ve got the customer and you’re allowing them to come in and buy different things. I think that opportunity is probably the sweetest spot for brokers – and also for IFAs. And the idea I’ve been kicking around with is why a company would want to go to a general insurance broker for their PII or commercial combined policy, or motor fleets cover. Then go to a life broker for their group life and income protection needs. Then go to an IFA to set up their pension scheme etc. Then go to a personal lines broker for their own coverage needs.”
When you start to look at the world through the lens of that question, he said, you realise the wastage in customer acquisition costs across insurance and you can see the efficiencies that are possible. But to leverage those efficiencies requires the back-end tech, the data and the confidence and knowledge necessary to deliver that offering. That’s where Stubben Edge comes in, pulling together that tech and data piece to allow brokers to take advantage of the opportunity to expand their service offerings.
Stubben Edge sees itself as an accelerator for businesses looking to get to the next level, and a service provider of what it takes to get there. It’s time for the next generation of insurance products and services, Kenning said, because consumer tastes are changing rapidly and, while the industry is digitising, firms are struggling to keep pace with the growing weight of expectation placed on financial services providers. The time is right for brokers to exercise the entrepreneurial spirit that is in their DNA.
Coming from an investment management background has given Kenning a healthy respect for that entrepreneurial spirit. When you look at a £2.5 million GWP business, he said, what you’re looking at is a multi-million-pound business built by an entrepreneur. But broker founders often don’t get the respect of that title or enough recognition of the relationships they’ve built across their supply chain.
Brokers have strong relationships with their customers, he said, and at the heart of what they’re selling is trust and knowledge – two valuable commodities. That trust takes a long time to build but it’s very powerful and brokers should be looking for new opportunities to expand their relationships across the wider financial services piece.
“Because most of the time when brokers sell out it’s because they’re frustrated,” he said. “They can see what they need to do to get to the next level but they just can’t push it over the line. It’s a question of being fed up more than financially or intellectually wanting to give up.
“If you can’t launch what you want to launch, at some stage, it will become easier just to sell and then start again to scratch that entrepreneurial itch. I don’t think many brokers sell out and then relaunch the same business model they just had. They want to do different things, and we need to find new ways to support that.”
