March 2010 www.broking.co.uk Tax bombshell Confusion reigns over IPT Legal expenses An explosive start to 2010 for LEI Beyond Zenith Why Markerstudy’s Gary Humphreys is so bullish Contents March 2010 24 The PB Interview View from the rock Gary Humphreys of Gibraltar-based Markerstudy tells Andrew Tjaardstra why Zenith is such a good opportunity. CONTACTS 05 News Analysis 28 Market Watch Editor – Andrew Tjaardstra Late payments on the rise; property under- Legal expenses Tel: 020 7316 9316 insuranceisanincreasingproblem;Jelf’sresults A flurry of changes makes LEI an exciting [email protected] Reporter – Emmanuel Kenning mightspelltroubleforconsolidators. arena, discovers Emmanuel Kenning. Tel: 020 7316 9653 [email protected] Sub editor – Laurence Gunn 10 Editor’s Comment and Viewpoint 30 Disaster recovery Art editor – Nicky Brown Promoting disaster recovery Group editor-in-chief, insurance division Anthony Gould 12 Legal Many businesses still fall well short with [email protected] Mathew Rutter warnsontheincreasing their continuity planning, writes Jane Sales manager – Oli Henry likelihood of punishment for bribery. Bernstein. Tel: 020 7316 9071 [email protected] Head of key accounts – Sajeeda Merali 14 Management Clinic 34 On the Move Tel: 020 7316 9765 [email protected] Ian Ritchie clarifiesthemireofcharging Sales executive – Insurance Premium Tax. 35 Director’s Q&A Chris Finnegan PB Tel: 020 7316 9632 Martin Thatcher of Thatchers tells about [email protected] 16 Broking Success his cider brewery’s broker requirements. Commercial director – Phil Davison Group production manager – High expectations in High Wycombe Lorna Graham EdwardFinchofMRIBtellsEmmanuel Kenning 36 Statistics Production controller – Matt Parle about the wisdom of spending on marketing. Thetop-20UKpersonallinesinsurers. Marketing manager – Ro Osborne Circulation manager – Sarah Smith Publisher – Alex Broad 18 Focus 37 Policy Market Tel: 020 7316 9382 [email protected] Regulation Group publishing director, Ralph Savage reviewsthecomplexwaveof 42 Competition and Puzzle insurance division – Derek Peck Win £50 of John Lewis vouchers. Managing director, insurance division incoming national and international regulations. Graham Harman Subscriptions and enquiries Incisive Media, c/o WDIS For the latest insurance industry news Units 12–13 and views, go to Cranleigh Gardens Industrial Estate, Southall, Middlesex UB1 2DB Broker market intelligence from Professional Broking and Insurance Age www.broking.co.uk tel: 0845 155 1846 fax: 020 8606 7303 [email protected] Subscriptions: UK £95pa, Europe £100pa, Rest of World £130pa ISSN: 1355 N/0519 Reprints and e-prints enquiries to Alex Hall otherwise disposed of in a mutilated condition or in any Sales and marketing manager unauthorised cover by way, or by trade, or annexed to Incorporating Policy Market The Reprint & Licensing Centre, 4 Ingate Place any publication or advertising matter without first obtaining 32-34 Broadwick Street, London, SW8 3NS written permission from the publisher. 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News Analysis Cash flow 35% Source: The FSB-ICM Liquidity dangers Voice of Small Business Annual Survey Emmanuel Kenning reflects on the 30% cash flow challenges facing broker managers in 2010 25% 20% ACCORDING TO research by Data from the IoD backed up information services provider the challenges that this poses for Experian, 27% of debt payment brokers running their own busi- 15% in December 2009 was overdue nesses and advising clients. A and businesses making late pay- survey of more than 1,000 direc- ments were remitting at an aver- tors found that, since 2001, the 10% age of 20.88 days after agreed number of IoD members financ- terms; the insurance sector was ing their businesses through marginally better at 20.6 days. bank loans and overdrafts has 5% Further reports in February fallen from 85% to 64%. by the Federation of Small Much of the slack has been Businesses and the Institute of taken up by the use of credit 0% Directors have also shown that cards, with 20% using them to NHS broker managers and their cli- finance their businesses. Olympics and colleges and quangos Private sector ents remain under severe cash EU institutions flow pressure despite recent Credit warning Local authorities Central government Schools, universities Devolved government Government agencies signs of economic recovery. While credit cards can provide Police and Fire services The FSB surveyed nearly access to quick finance, Miles 10,000 members and discov- Templeman, director general at Hall of shame: late payment rates in 2009 by sector ered that the private sector has the IoD, pointed out: “Any con- the worst record for paying bills traction in credit card finance late. Central government was could see significant price hikes, more in 2010 because they are One way in which brokers the next worst offender, despite adding to the already grave dif- coming into a challenging area have avoided the pitfalls of cli- its Prompt Payment Code and, ficulties that many businesses for them. It would be naïve to ent cash flow problems has been in 2008, promising to pay within are having in accessing funds.” say that things will improve third-party funding. Howard 10 days. Research from Moneyfacts dramatically; the economy may Lickens, chief executive officer When a customer pays a bill highlights that interest rates grow but it will be tough.” at New Malden-based Clear late, in effect, the business owed on credit cards are now at a 12- Insurance Management, said is providing a loan. According year high. Call for restraint that his business has seen stable to the survey, 43% of businesses Trade credit insurers are ide- Share also pointed out that uptake of such funding during had used a bank overdraft as a ally positioned to forecast future companies that survive the the recession and that it is ben- source of finance in the previ- economic conditions: they recession need to take care with eficial for client cash flows as ous year, 41% had dipped into know when firms stop paying their cash flows, not overex- well as brokers’. their own savings and 4% took their bills, which can occur well tending themselves as growth He also pointed out that it out a second mortgage. Concern before they actually go out of returns. Brokers may also find should remove the risk of errors over cash flow (42%) was beaten business and adversely impact a that clients have deteriorat- and oversights in payment flows only by the recession (72%) as supplier’s cash flow. ing credit ratings because the for clients with multiple insur- the main obstacle to the success According to Andrew Share, information that credit ratings ers: “All too often, an insurer of a business. credit management services agencies use will be based on forgets to set payments up cor- John Wright, national chair- director at Coface, the situa- recessionary statistics. rectly and clients can find them- man at the Federation of Small tion remains challenging: “The He concluded: “Some can’t selves with catch-up payments Businesses, said: “Late payment number coming to us for collec- publically show that they have that can really hurt. It is by no has been a particular problem in tion was increasing in the fourth rebuilt their balance sheets. means an unusual experience.” the past year. It is more impor- quarter of 2009. Cash flow for Communication flows are key With challenges ahead, it could tant than ever that this worrying small and medium-sized enter- to get an accurate view of a well prove to be a key area for practice is brought to an end.” prises is going to suffer even company.” brokers this year. March 2010 5 News Analysis Under-insurance tions, which is fine for a couple Cunningham Lindsey, added Double trouble in property of years but not for 15.” that brokers should be aware Loss adjuster finds market IanShelley,technicalmanager of some policies having a pro- (property) at Aviva, pointed