Taming the broking menagerie

Global broking is not a new idea.

It first took shape in the 1920s with the construction of global alliances.

These were sensible trading arrangements that enabled the first multinationals to get service, but they were a long way from being fully integrated entities. It wasn’t until the 1970s that strong historic transatlantic relationships were cemented via the acquisition of major Lloyd’s brokers by US counterparts.

This was partly because it was the only way into Lloyd’s then-closed shop, but it was also the first recognition that a shared profit and loss account can do wonders for harmonious collaboration between the brokers in a supply chain.

Through the 1980s, cross-border M&A exploded in all directions.

The M&A symphony hit a crescendo in the mid- to late-1990s as MMC and Aon raced to build 100 percent-owned, 100 percent-aligned global broking houses.

Then, at the turn of the millennium, the deals stopped.

Like two vast serpents after a feeding frenzy, the first two global brokers lay down and started the work of digesting what they had swallowed.

The visionary broking duo had been like the first globe-trotting wealthy Victorians, collecting exotic plants and animals for the arboreta, glasshouses, gardens and menageries they wanted to build when they got home.

They had the creative drive to envisage confections of beauty and wonder, but when they got back to Britain with their crates of flora and fauna, they soon realised they needed to hire the people with the technical skill to make all the plants thrive and the animals multiply in the UK climate.

Before alien species were transported and transplanted, people had never had to think much about what made them tick. Native plants just grew and native animal species just existed. You didn’t need to understand why this was. You just needed to know the ‘what’.

The new sciences of horticulture and zoology made rapid strides as a consequence.

Because of its global nature, London became the physical manifestation of the broking menagerie phenomenon.

Almost every acquired intermediary had its own London office that needed integrating. In 2000, Devonshire Square and the Bowring building were like Natural History museums and science labs of insurance broking, housing expensive collections and all manner of curiosities and specimens.

The less generous might have described them as zoos where the animals had run wild.

It takes a long time, but it is clear that same science-driven change is becoming evident in broking that so revolutionised horticulture and zoology in the 19th century.

Like the Victorian collectors, the logical consequence of Aon and MMC’s actions was that there needed to be a fundamental analysis of the universal attributes of what made a good intermediary.

Then for the execution, a clear and transparent methodology had to be formulated and a new culture that staff could buy into had to be developed.

Of course, in this brave new world, there were missteps.

Major ones.

Spitzer found the vast serpent feeding itself on both its customers and suppliers, to the ultimate detriment of all.

But 14 years later, and the level of sophistication has moved on beyond recognition.

Supply lines are compressing and blurring and the original customer can be brought ever closer to the capital that wants to profit from taking on his or her risk and volatility.

So, as long as no-one loses sharp focus of who that customer is and looks out for their best interests above all else, there will be much to welcome and little to fear from Aon’s latest bold evolutionary move.