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Why customers should fear rising regulatory costs, and also cyber risks

At a glance

  • Darren Young of Melville Burbage Insurance believes brokers’ customers will have to bear brunt of the increasing cost of regulation, while data losses could prove expensive following EU ruling
  • Young also reveals some strange requests, including insuring a timber property on stilts in the middle of a river
  • Broker says for his contemporaries to prosper in the future, they need to continue to embrace technology

Darren Young, a Director at Melville Burbage Insurance, is the latest broker to discuss the challenges he faces on a day-to-day basis.

He opens up about the cost of regulation, cyber risks and the labours of being a Tottenham Hotspur supporter.

Q: What lines of business do you specialise in, and what are the opportunities and challenges you see there?

Broker Voice gives UK brokers the opportunity to voice their opinion on the state of the insurance industry, outline what makes their own personal style of business different from their competitors, and what personal interests enhance their professional life.

A: No specialities as such, a very typical provincial general insurance broker. However, we do tend to assist a larger proportion of clients in the IT/business communications, construction and social welfare sectors.

Q: Are you on social media? If so, what’s your Twitter handle?

A: Yes, we see a huge importance in social media for interacting with existing clients and potential prospects and for delivering beneficial and (hopefully!) interesting information. Our Twitter handle is @MelvilleBurbage and this is our LinkedIn page. We also have Facebook and Google+ pages.

Q: Does the rise of the aggregator model worry you?

A: Not particularly, threats to the provincial broker are not new – either by aggregators, direct insurers or consolidators. In my opinion, conscientious business owners will always seek the guidance of a trusted advisor. Despite all of the technology available, I still believe we work in a ‘people business’.

Q: What industry changes keep you up at night?

A: The increasing cost of regulation continues to be a concern. We have embraced the increasing demands of regulation and feel it is has helped improve our business, but I do worry about the costs involved, part of which will inevitably end up being met by the customer in some way or another.

Q: What do you think are the biggest emerging risks, and why?

A: I know it is very much the insurance topic of the moment but cyber risks are a huge threat. The forthcoming introduction of the European data breach notification requirement could lead to significant costs for businesses that suffer a data loss.

Q: Is the market hardening?

A: No, not in my experience. The market remains aggressively competitive, particularly for well-managed risks and I see no sign of this changing in the near future.

Q: What is the biggest challenge for brokers these days?

A: I think continuing to embrace technology and being able to interact with the business owners of the future in an entirely different way.

Q: Do you think brokers are recognised enough by the public for the value that they add?

A: No, I think as an industry, brokers are poor at highlighting the benefits and consultancy we provide to our clients. It is vital that we promote the advantages of seeking professional advice and ensure service levels exceed client expectations.

Q: What’s the strangest thing you’ve ever had to get cover for?

A: I once obtained cover for a 100% timber property on stilts in the middle of a river, only accessible by boat and without electricity or running water. A customer was using it as a weekend retreat.

More recently, I was asked to seek cover for the casting and shipping of a pair of six foot solid gold stereo speakers which were due to end up in the lobby of a hotel in the Middle East. Unsurprisingly, I couldn’t obtain cover for those and I have no idea if they ended up being made.

Q: Rugby or football? And what team do you support?

The increasing cost of regulation continues to be a concern. We have embraced the increasing demands of regulation and feel it is has helped improve our business, but I do worry about the costs involved, part of which will inevitably end up being met by the customer in some way or another

A: Watch a live rugby match, but play football. I have supported Tottenham since childhood and there have been far more lows than highs.

Q: Fees or commissions?

A: We have always worked on a predominantly commission basis and I think it is fairer for the majority of our client’s overall. I feel that inevitably, the market will move to fees and I worry that this could penalise SME clients and they, arguably, need professional advice the most.

Q: If you were the head of the Financial Conduct Authority, what would be the first thing you would do?

A: Review the contributions made by general insurance brokers to the Financial Services Compensation Scheme, particularly in respect of products they have never sold – the letters P, P&I spring to mind.

Q: What would be the title of your autobiography?

A: ‘He did OK for a little bloke with fat legs’. Not glamorous, but sums me up pretty well.

Q: Newspaper or iPad?

A: Despite being a bit of a techno-geek, you can’t beat struggling with a broadsheet on a Sunday morning.

Q: What is your favourite word, and why?

A: ‘Daddy’ – always makes me smile and reminds me of my greatest achievement and biggest responsibility in life.

Q: Can’t get through the weekend without…?

A: A long run, spending time with my family and a real ale.

Image © Getty

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