Keeping it simple
Much has changed since Insurance Advisernet was formed, but its commitment to authorised representatives is as strong as ever
By John Deex
Ian Carr “fell into” the insurance industry at 17, but a successful career was in danger of grinding to a halt in 1996 when his employer was taken over by a leading brokerage and he found himself out of a job.
However, it proved to be a happy accident – and the start of a trend in the local general insurance sector that’s still flourishing today.
“They didn’t want me because they wanted the brokers that had clients, and I was the general manager,” the chairman and founder of Insurance Advisernet tells Insurance News.
“So I said, well, OK, I’m going to start my own business.”
Insurance Advisernet managing director Shaun Standfield (right) and founder Ian Carr say the business’ success is built around an ethos of “protecting, enhancing and growing authorised representatives’ businesses”
Insurance Advisernet was formed, utilising what Mr Carr believes was the first example of the authorised representative model – where ARs feed off the licence of a central entity, enabling the brokers to focus less on compliance and admin, and more on their clients.
It was already being used in financial planning, but Mr Carr adjusted it to general insurance.
“No one had done that before. There were a couple of brokers that had what they used to call contractors. But no one had done the full-blown authorised rep model of having the central licence, then having an agreement with the broker and clearly defining who was responsible for what, and entering into a contract on that basis.”
From an initial group of 12, there are now 210 Insurance Advisernet practices across Australia, writing $1.3 billion in invoiced premium. Over the past year, the client count is up 14% to 104,000, policies up 18% to 218,000, and AR income up 29%.
Success has been driven by building a reputation for quality service – it has won the Australian and New Zealand Institute of Insurance and Finance award for best AR network five years running – and by focusing almost exclusively on its authorised reps.
While many insurance groups are increasingly diverse, with broking networks and other initiatives as well as ARs, Insurance Advisernet has maintained a singular focus.
“From day one, we said we won’t compete with the ARs,” says managing director Shaun Standfield, who joined from QBE in 2015.
“They run their own book, they own their own book, and any referrals that come to us all go to the ARs.
“We don’t run our own brokerages or anything else, we’re purely an AR model.”
While Insurance Advisernet does occasionally take equity in members’ businesses, usually to prevent those looking to sell a stake from exiting the network, it prefers not to take more than 50% because it “doesn’t want to run the brokerage”.
“We took the view that we’ll back ourselves to be very good at what we do, and we just specialise in doing that,” Mr Carr says. “We don’t try and do any of the other things. We don’t do the life business, we don’t do premium funding. We just stick to trying to be the best at providing product and services to our network of authorised reps.
“And while you question yourself sometimes, 28 years down the track, it’s been successful.
“Our ethos is to protect, enhance and grow the ARs’ businesses. We grow through their growth. And that’s partly why our ARs are so loyal.
“That loyalty has more than made up for any income we might have been able to get by doing some of those other things.”
These days, there’s significant competition from rival networks. But rather than feel threatened, Insurance Advisernet is proud of how the AR model has taken off.
Growth in the insurance market continues to provide opportunity for all, and AR networks’ share of it remains relatively small.
“Ten years ago, people were saying brokers are going to write less and less, and people are going to go direct,” Mr Standfield says.
“But it hasn’t happened. We now know that more than 50% of the premium is written through intermediaries.
“The world has become more complicated. And I think clients really enjoy having someone they can talk to, someone they know in their local community.
So that’s why more and more clients are seeking the advice of their local adviser.
“Most of our business is referral. Someone talks to somebody and they say, ‘Who does your insurance?’ And that’s the referral model that works so well within our network.”
An Australian Financial Services Licence is not the only thing Insurance Advisernet provides for its authorised reps.
A strong compliance regime and effective systems are also critical, along with marketing support, branding and management reporting.
As new business risks such as cyber emerge, Insurance Advisernet’s role takes on even greater importance, not just in educating ARs on the growing threat, but also creating a more robust operating environment.
“Ten or 15 years ago, you’d make payments and you weren’t worried about cyber crooks,” Mr Standfield says. “But you’re paying a lot of money as an AFSL out to insurance providers. What certainty have you got over that?
“That’s what the big AR groups deliver. Financial security and protocols to protect money and the flow of money between entities. I think that’s one of the issues that will come more and more to the fore.”
“We pride ourselves on protecting all of our ARs’ businesses and wrapping our arms around them.”
Shaun Standfield
All Insurance Advisernet practices have been brought onto its email exchange, which prevents phishing emails reaching its ARs and their staff.
“We’ve tightened up our IT security. To log onto our network you need to be in Australia or New Zealand. If you travel overseas and try to log into our accounts, you won’t be able to, unless you let us know and we can free up your device,” Mr Standfield says.
“Most cyberattacks originate overseas. So we’re trying to tighten up all of our protocols around that.
“It’s very hard for a small or medium-sized licensee to be across all of these issues. They are busy just looking out for the client. So we pride ourselves on protecting all of our ARs’ businesses and wrapping our arms around them.”
Transparency on remuneration is another area in which Insurance Advisernet is looking to get ahead.
Debate raged during the last review of the National Insurance Brokers Association’s code of practice. The code requires commissions to be declared to retail clients, but some wanted this obligation extended to include small businesses.
The code is being reviewed again, and Mr Carr says the network is preparing for further change.
“We believe the future is full transparency,” he tells Insurance News.
“Years ago, you might have had brokers getting a couple of quotes on insurance and then just sending the invoice out. That’s not actually giving advice, that’s getting two quotes.
“Where this is moving, we believe, is that to charge a fee, you need to be professional, you need to give the client professional advice.
“We are going down the track of saying to our guys, ‘The era that we are in is transparency and fee disclosure. So let’s get ready, and start getting on the front foot.’ ”
Brokers should be proud of the support they give clients, Mr Standfield says, and the small number of complaints indicates the good work being done.
“If you’re not prepared to tell your client [about remuneration], it’s usually because you’re embarrassed to tell them.
“That’s wrong – you should be prepared to tell them what you’re doing. Because we are good advocates for our clients.”
Looking ahead, Insurance Advisernet is not aiming for anything revolutionary. By retaining its focus on ARs and strong reputation, “good people” will continue to be attracted to the network.
“We won’t chase growth and it’s not about a number with us,” Mr Standfield says. “It’s about having the right people and the right culture.
“We want to be very good as an AR network. That’s all we do. And we’ll keep investing in infrastructure to protect and enhance our practices.”
Mr Carr looks back fondly on a journey that started with rejection in 1996 but went on to exceed expectations.
“The best thing from my point of view is that some of our ARs have been with us now for over 20 years.
“To see them start from zero to now have substantial practices, with 10 or more staff under their wing, growing beautifully and enjoying life, is a very rewarding situation to be in.”
‘Inferior’ no more: the AR’s model way of working
Insurance Advisernet believes the authorised representative model can bring significant advantages to ambitious industry professionals.
Letting someone else handle licensing and compliance frees brokers up to fulfil their primary role – working with clients to better understand and protect their businesses.
Owning their own book also appeals to the entrepreneurial spirit, and brings flexibility for working parents and carers.
“You’re in charge of your own destiny in a way,” Mr Carr says. “But it’s not for everybody. Some people are happy to be an employee, and that’s fine. There’s nothing wrong with that.
“But for some, it’s that allure of, I want to run my own thing, I’ve got my own clients. And I’m happy to work my backside off to get the rewards.”
Mr Standfield says ARs’ entrepreneurial spirit can resonate with like-minded clients. “They can speak about their journey, because guess what, the person they’re talking to at that small, medium-sized business has been through the same journey. They’ve taken a punt to start their own company.”
Mr Carr says in the early days there was a stigma attached to being an AR, but the networks’ success has put paid to that.
“It’s certainly seen in a lot higher regard today than what it might have been 10 years ago. The internationals would perhaps look down their nose at you and suggest you were inferior.
“That’s completely changed now. That stigma that was there initially has gone, and we’ve got some very, very successful practices that would stack up against any quality brokerage.”
