The Globalized Broker Network
Assurex Global
Year Founded: 1954
Locations: 500 offices on six continents
Employees: 20,000
Annual Premium Volume: $28 billion
Annual Revenue: $3.4 billion
Assurex Global wasn’t fully “global” until the late 1990s, when it changed its structure to meet the challenge of an increasingly integrated insurance market. Assurex, which is actually a partnership of the top independent insurance and risk management brokers worldwide, (www.assurex.com), was founded in 1954.
Over the next 30 years or so it developed a strong presence in the United States and Canada. It also established some links with international, i.e., non-U.S, affiliates. “However, they had no shares and no voting rights,” explained John Rodwell, vice president, International Business Development, in a telephone interview. “That began to change in the late ’90s, as we realized we had to get bigger, or decline.”
As a result, he explained, Assurex altered its basic structure. The group is set up as a corporation, with each member/partner owning shares in the enterprise, electing directors and setting group policy, as well as serving on the committees that oversee Assurex operations.
Partners are selected from the most competent and dedicated independent agents and brokers, according to the group. They are committed without reservation both to their independence and to providing top quality service to their clients. Assurex members occupy a large niche, or second tier, market — between Marsh, Aon and Willis, or companies such as A.J. Gallagher and Lockton — and smaller agencies.
It’s a model that fits like a glove with U.S. firms in the same market — see Insurance Journal‘s Top 100 Independent Agency Profiles — and it has propelled Assurex Global to the top spot as the “world’s largest privately held brokerage group,” according to its Web site.
In total, Assurex has 110 partners, who collectively write more than $27 billion in premium volume from more than 500 offices in 80 countries.
The Expansion Trail
The growth from being essentially a United States and Canada network to a global one has been remarkably swift. Ten years ago the existing shareholders, realizing Assurex had to grow, instituted a sea change. They contributed a substantial amount of new capital, earmarked for expansion, and began to seek likely firms to join the network from outside the United States — as full partners, co-equal with existing domestic shareholders.
They soon struck gold. In 1997, Aon bought the U.K.-based broker Frank B. Hall, which had established a network of partners that included, as they are currently known, France’s Verspieren Group, the U.K.’s HSBC Insurance Brokers Ltd., Germany’s Leue & Nill GMBH, and Italy’s GPA Pulsar.
“As we did not want to become part of Aon, we formed our own group,” explained Jérôme Flach, directeur adjoint (assistant director) for international operations at Verspieren. Their network, Synérgie, was the largest independent broker network in Europe, based on its member’s strong presence in the European Union’s four largest economies.
But, the four companies realized that, if they were to expand further, they needed to establish a presence outside of Europe. “We were seeking an international network that would generate cross border business,” said Flach, and “we particularly sought a partner in North America.”
Enter Assurex, which was looking in the other direction. The four companies became Assurex members in July 1999, forming the cornerstone of its international operations.
“Joining Assurex was absolutely essential for our future,” Flach continued. “They are the same as us.” Both the European and American partners are independent, dynamic, highly skilled, and focused on the welfare of their clients. Both cater to the middle market — from large commercial enterprises to smaller firms. That model has guided Assurex since its beginning, and continues to do so.
Further expansion followed. “We now look at it [Assurex presence] on a region by region basis,” said Rodwell. They are: The United States and Canada; Latin America; Europe; the Middle East and Africa (EMEA); and Asia/Pacific. He explained that the Assurex board of directors now consists of representatives from each of the regions.
“We no longer just meet North American needs; we also see what the rest of the world needs. We’ve become much more effective in terms of understanding the nature of the global economy and the exigencies of international trade.”
The Web site explains: “We can tailor client programs to meet specific regional or local needs nearly anywhere in the world. Clients deal directly with the Assurex Global partner in their own market. In turn, the partner works with other Assurex Global offices around the world to expertly serve the clients’ needs. It’s a simple way for clients to manage an often complex insurance portfolio without losing personalized, local service. We manage the diverse details so that the client doesn’t have to.”
Benefits of Having Partners
Those “details” are an important part of what Assurex offers its members. “What’s great about Assurex is that it’s not a huge global broker,” said Ron Wanglin, chairman of Pasadena, Calif.-based Bolton & Co., a longtime Assurex member. “We can call on regional brokers across the U.S. or abroad.”
Depending on what kind of business is involved, Bolton either cooperates with other Assurex partners in solving problems and placing coverage, or, usually where smaller firms are involved, gives the business to the broker who’s best placed to handle it.
“We work with the client and with our partners, and we strive to be the best, but we chart our own course,” Wanglin said. “It’s not all done in Chicago, or New York.” Part of that process, he noted, is being sure that the partners they deal with have the same high standards. One of Assurex’s greatest strengths is that it assures that each partner meets that criteria, Wanglin said, describing it as a “guarantee of best practices,” adding that partners have to “live and breathe Assurex.”
Partner relations within the United States are relatively simple. The language is the same and for the most part so is the legal system. Assurex domestic partners have built personal relationships with their counterparts over the years. Beyond the United States’ shores it gets a bit more complicated.
“International business requires dealing with different languages and different cultures,” said Flach. “Even if the international business language is English, each partner has their own point of reference.” Over-coming those barriers is part of what Assurex does.
Flach described his main activity as being a “gatekeeper.” Not so much in the sense of keeping people out, but guiding them to the right person within Verspieren who speaks their language and has the requisite expertise to handle the specific business they require. “It’s a question of language, culture and communication,” he said, adding that “Assurex is the key” to gaining the necessary understanding to be able to reach a successful conclusion.
Assurex’s business model is predicated on having one firm for each country outside the United States. Rodwell explained that this prevents unnecessary competition and promotes openness. As a result, agent and broker partners in developed countries are usually a good deal larger than their U.S. counterparts. They have to be in order to have the expertise and the capacity to handle the multitude of different types of business that comes through Assurex. Verspieren employs more than 1,400 people, with offices in most major French cities, as well as branch offices in Spain and Portugal.
However, another foundation of Assurex’s business model is to eschew standardization. Assurex members greatly value their independence and would resist any attempt to impose uniform procedures, modeled on the United States, or on any other type of operation. “Each region has its own approach,” Flach explained. “Just as each state in the U.S. is different, each country has its own peculiarities. Our goal is to meet those regional needs.”
Selection Process and Oversight
Dedication alone, however, isn’t sufficient to be admitted to one of the world’s most exclusive clubs. As the Web site says: “Every Assurex Global Partner is carefully selected following a rigorous (and ongoing) evaluation process.” A prospective partner is chosen by a committee when the need to expand the association becomes evident.
“What we want to do is review and refine the partnership network,” said Wanglin. “We’re not interested in filling in dots on a map.”
“Initially we define the need,” said Rodwell, “then we see what carriers they [a particular broker] work with. We telephone affiliates and we ask Assurex partners who, in their opinion, might fit our criteria for that region.” That’s just for openers. “We are looking for quality brokers, who are responsible and who function as we do,” said Wanglin. “Can they offer multiple coverage? What is their local reputation? How strong are their financials? Do they have broad capabilities?”
Assuming a candidate meets all of the above, Assurex undertakes a comprehensive “due diligence” examination. The final step involves personal meetings with Jim Hackbarth, Assurex current president and CEO, as well as with the board of directors and the selection committees. “We’re very selective, because we realize that one bad apple can spoil the whole barrel,” said Rodwell.
Once a broker has joined Assurex, however, they remain under scrutiny. “All firms are evaluated every three years,” said Rodwell. “Our evaluation committee looks at whether they are still a strong global player; are they participating with other partners? And are they helping others to become better partners?” It is essentially a “peer review” process.
Over the years, very few partners have left Assurex. “It does happen,” said Rodwell, but he could only remember three or four occasions when it has. The reasons were either financial, or because the firm involved lacked the same principles and dedication as the other partners.
Given the rigorous selection process, the ongoing peer reviews, as well as the twice yearly board meetings, and regional meetings between the partners, it’s not surprising that so few have left. Joining Assurex is not like joining the local Lions Club. “It’s really like an extension of our own firm,” said Wanglin, we count on the reciprocity; we work with our clients and our partners; it’s a ‘win-win’ situation. Plus they’re good people; I’m happy to meet with them.”
Passport to the Future
In return for that commitment Assurex partners get more than a few business leads. The reciprocity principle means they can call on the support of other members of the network any time they need it. While the growth in technology has made global cooperation easier, Assurex remains a people to people business. The Internet hasn’t done away with face to face meetings, which, Wanglin said, “happen frequently.”
“Each country has its own needs,” he continued, “there are no definitive answers, therefore we look for solutions, but we don’t impose them, which gives each partner more freedom as to how they serve their customers.”
Transferring knowledge and expertise has never been easy — even within the same company. Assurex first tackled the problem with its United States and Canada partner network. Following its expansion those efforts took in the global partners. The association recently developed a new tool — Passport — to make it easier to transfer expertise from one region or country to another.
Wanglin explained its usefulness by citing the example of Mercedes-Benz. The auto manufacturer has plants or does business in the United States, Mexico, France, Germany and Italy. “We are able to put all of the documents, policies and related information into the Passport system, so that everyone involved can receive by instant communication all of the data necessary. It doesn’t have to be shuttled back and forth by e-mail or snail mail.”
In another example he posited a broker who needs information on writing country club risks — a field that it hasn’t worked with before. “If you send out a call for information to Assurex partners on Passport, you’d have more information than you’ll ever need about country clubs.” The system has been in operation for almost four years, and, Wanglin said, “we’ve pretty much worked out all the bugs in it.”
That statement could apply to Assurex as well. Its system has proven itself over time. It combines both loyalty and flexibility, and has avoided becoming too static to accommodate new risks, new technology, and above all new partners. “We’re not yet at maturity, we’re still at the development stage in a number of countries” said Flach.
“The Assurex business model has held up for over 50 years, through generations of changes,” said Wanglin. “It works because the partners are committed to each other. But ultimately it’s all about people. The senior partners explain the value of Assurex to their employees, so that they understand, and are engaged at various levels.”
That commitment bodes well for Assurex’s continued success.