Martin Cantor Director Cantor Atkin
Martin Cantor
Dan Stoneman Associate Director Cantor Atkin Broker Services
Dan Stoneman

A Lloyd’s Broker FD’s View of the “Back-Office” By Martin Cantor

by martin-cantor | | Insurance Broker Support

In this first article on a Lloyd's Broker's 'Back-Office' function, I explore the importance of having strong processing systems sitting behind the broking and account handling roles to be found in the Lloyd’s broker’s office. How the personnel doing such work should be valued and how we should  encourage a more positive view of these key roles.
Look out for my next article where I consider the issue “in-house vs. outsourced” and the factors to take into account.

A Lloyd’s Broker FD’s View of the “Back-Office” By Martin Cantor

Over the years that I was the FD of a Lloyd’s insurance broker I came to the view that the value of an efficient back – office team was never appreciated quite as much as was deserved.

Great weight would be attached by management to the business – getters; those who could put a deal together or could bring a book of business with them and improve the top line of the P & L account. But those in the “engine room” of the business were seldom seen to be worthy of much attention. Or at least as much attention as they deserve.

And as with so many aspects of business it is relatively easy to assess what something costs but not so easy to assess what something is worth. When it comes to internal processes and who runs them, opinions can vary widely as to what it is worth paying to get a job done.

It is self-evident that every business activity involves a process which takes the parties from an initial agreement that one party does something for the other party, through to completion of the task and payment being made upon conclusion.

In the insurance world it seems to me that this simple description does not quite adequately encompass the multiple elements that can apply to the insurance broking role. Furthermore, the arrival of regulatory regimes around the World has created new issues for management to handle, many of which feed straight through to the design of internal, or back-office, processes.

These days the role of the insurance broker often extends beyond the traditional role of simply recommending the best insurance policy for a client and earning a commission from an insurance company for doing so. These days brokers can act in a quasi – insurer role as a Managing General Agent (“MGA”), as claims handlers and risk managers. And many brokers also undertake Financial Services activities, in particular pensions and financial advice.

Most of these activities are regulated activities, which, in the U.K. are therefore within the remit of the Financial Conduct Authority or the Prudential Regulation Authority. In particular Systems and Controls (“SYSC”) and Conduct of Business (“COB”) rules create significant obligations for management and staff alike.

As a consequence brokers need to implement robust, transparent processes to ensure that compliance with regulatory requirements is delivered and can be easily verified or audited. But more importantly the employment of highly competent, knowledgeable individuals to run these processes day by day is what ultimately adds real value to the quality of service provided to clients, as well as making regulatory compliance as stress – free as possible.

In the Lloyd’s of London environment there is the additional need to understand the very specific way in which insurance transactions are communicated to and from underwriters. Lloyd’s is, as we know, a “subscription” market by which we mean that a single policy may be underwritten by more than one insurer – or “subscriber”. In order to handle the efficient flow of policy documentation, claims data and premiums between brokers and underwriters, an Insurance Market Repository (“IMR”) is used. This can be thought of as an electronic filing cabinet into which we can place all relevant insurance policy information which can be captured by reference to client name, policy number, broker name and underwriters.

Understanding how to create, submit, store and correspond via the IMR is truly a specialist skill which takes time to master. And it is also very helpful indeed if this process is in the hands of individuals who have more than a basic grasp of what goes to make up a complete insurance policy.

Of course software packages exist to make processing work as simple and as seamless as possible but my contention is that there is often too much emphasis on process and not enough on people. This is understandable as cost is a key driver in decision – making whereas “value” is often overlooked in making decisions about how to optimise a back – office process.

I think we should give the back-office the recognition it deserves by seeing it as an area where added value can be delivered for the benefit of client and organisation alike. The skill set needed to deliver a high quality back office function is very different from that which distinguishes the role of insurance broker but in an ideal working environment they should complement each other so that the needs of clients and underwriters, as well as those of the broker itself, are all met efficiently.

The back-office role is not high profile; it tends not to attract the highest achievers or driven souls and that fact is perfectly understandable. However, we  underestimate the role that processing functions within our businesses at our peril. The timely production of accurate insurance documentation is a regulatory necessity as is the movement of premium and claims monies between the parties. And this feeds, in turn, into the regulatory reporting regimes with which we must comply.

Finding competent, knowledgeable personnel to manage and run efficient  back-office systems is not easy. This is probably due to the fact that such roles are not accorded sufficient status within an organisation which leads, in turn, to lower salary levels than more high-profile broking roles.

To respond to this situation, I believe that the importance of key back - office roles should be elevated so that the general perception is that electing to become a back-office specialist is a positive career choice and one that carries as much weight and merit as those business development or broking roles which traditionally are seen as being of greatest importance.


If you would like to find out how you can have a highly competent low cost back-office then please give me a call now on 01737 845586 , or email