Big interview: Ben Bailey on bucking the trend insurance broker Clark Thomson

Plying his trade in Aberdeen though the winter of 2010-11, Ben Bailey dealt with plenty of small firms in need. The season of the coldest December for 100 years generated an estimated £1.4 billion worth of insurance claims across the UK, creating a surfeit of work for the likes of Bailey, who at that time headed the Scottish and Northern Irish commercial division of Willis Insurance Brokers.

Ben Bailey near Clark Thomsons Perth office. Whatever we do, we dont want to lose our DNA in client service and community broking, he says. Photograph: John Devlin

A year on after that rather chaotic period, Bailey decided to jump ship and join Clark Thomson, the privately owned brokerage set up in 1965 in Perth by John Clark. As successor to retiring managing director Derek Barnes, Bailey inherited a business with 170 staff and gross written premiums of more than £40 million, as well as ambitions for further expansion.

On a personal level, he found his way back into the ethos of what first lured him into the profession upon graduating from Napier University back in 1983.

“Yes, it’s a business and we need to make money,” Bailey says, “but I believe that our real job is to help clients in their darkest hour of need.

“What led me to join Clark Thomson was what was happening in Willis, which was they were running the business almost exclusively for profit, and the customer service was getting diluted and diluted. That was not an environment that I wanted to work in.”

Fine words, to be sure, but they could easily be brushed aside as marketing spin in an industry where customer confidence is at an ebb.

In a survey this year by YouGov on behalf of campaign group Access to Justice, 73 per cent of those polled said they do not believe that insurers care about them, versus just 15 per cent who said they do. Seventeen per cent said insurers are the least trusted among a number of service providers including energy suppliers (14 per cent), banks (13 per cent), mobile phone companies (11 per cent) and local councils (10 per cent).

But Bailey and Clark Thomson appear to be successfully avoiding the animus. In October, the firm was recognised for “bucking the trend towards centralisation and achieving outstanding growth by delivering a local and personalised customer experience” through its network of nine Scottish offices employing more than 200 people.

That commendation at the Scottish Financial Services Awards, run by Scottish Financial Enterprise and supported by The Scotsman, led to Clark Thomson taking the top gong over other big-name finalists such as Clydesdale Bank, Standard Life and Virgin Money. Accepting the award on behalf of his team, Bailey hailed the firm’s ability to “constantly re-invent and develop its proposition for all stakeholders, at the same time remaining true to the tried and trusted fundamentals that underpin success”.

Born and raised in Edinburgh, Bailey joined Commercial Union upon graduation as a trainee in underwriting, which evolved into a six-year stint that gave him extensive insight into the elements of risk assessment that drive the insurance industry. He then transferred into broking with UK giant Sedgwick, now part of global US firm Marsh & McLennan, which took him to Birmingham where he was put in charge of the West Midlands division.

In 1996 he transferred to Sedgwick’s office in Aberdeen, but following the acquisition by Marsh & McLennan in 1998, he moved to the Aberdeen branch of Willis. By 2015, as the head of Clark Thomson, he was leading the acquisition of Willis’s commercial business unit in Scotland, the same operation that he left three years earlier because he was no longer comfortable with its profit-driven agenda.

He admits that deal seems a bit “counter-intuitive”, but adds that it was a good move for Clark Thomson. With that agreement, Clark Thomson acquired 25 staff and doubled the size of its business in Dundee to an annual revenue of £4m.

“We were able to change it,” Bailey says. “Because the Willis team was largely based in Dundee, we were able to bring them under our strong management team that was already based there.”

This shifted the corporate culture within Willis, he says, and also gave Clark Thomson some new lines of specialisms. The firm now has purchase in the agricultural sector, and is also the UK’s biggest insurer of timber growing operations.

Now trading more than £60m of premiums annually, Clark Thomson generated revenues of £10.3m in the year to the end of March, and is on course to hit £11m in the current financial year. It is still roughly 50 per cent owned by the family of founder John Clark, though others are gaining a foothold.

“The shareholding is changing as we go along,” Bailey says. “There are employees getting involved – I am progressing a shareholding as we go along.”

One of the on-going debates in the industry is the contrast between direct insurers and the traditional broking business. In the former, underwriters claim to provide lower rates by cutting out the “middle-man”. In the latter, brokers can provide advice across the whole of the market, offering the best in terms of price and specialist coverage.

Bailey says the rise of direct insurers has altered dynamics within the personal insurance market in areas such as home, contents and motor coverage, but has to date had negligible effect in Clark Thomson’s commercial heartland. Business insurance accounts for 80 per cent of the firm’s annual turnover, with the majority of its 40,000 clients in the SME sector.

It has a strong presence in areas such as the motor trade and haulage businesses, while the food and drink sector also makes up a significant part of the book. Business in sub-sea and wind renewables has been on the rise for the past decade, and the oil and gas sector has long been a significant generator of revenues.

Bailey says the firm is unique in that it has a wide spread of offices that includes a presence in smaller markets. In total, some 200 people work across its sites in Dundee, Elgin, Glasgow, Inverness, Kirkwall, Nairn, Oban, Perth and Thurso.

“Our network of offices is where we set ourselves apart,” Bailey says. “We are in the communities where we do business.

“You can walk into any of our offices and access all of our services. That might sound simple, but that is very different from what our competitors are doing, which is to centralise claims or even encourage clients to deal direct with insurers without giving them any advice.”

The Willis acquisition has been the biggest deal to date in the history of Clark Thomson, and though nothing is imminent, the firm remains on the lookout for further opportunities. Bailey says there is scope within Scotland to achieve growth ambitions through both acquisitions and organic expansion, though “at some point” the firm will need to look further afield.

“But whatever we do, we don’t want to lose our DNA in client service and community broking,” Bailey says. “That is what makes us who we are.”