There are three ways to grow an Insurance Business: –
1. Organic growth
Being better at what you already do, Marketing to new potential clients and keeping more of your existing clients. Basically, doing it better and scaling up.
2. Opportunity Growth
Find new niches, exploit opportunities with existing clients, develop and launch new products, find and develop existing routes to market together with creating new ones.
3. Acquisition & Merger – (Buy readymade growth)
* Purchase competitors either to merge with or to reduce competition.
* Find and acquire new players in new marketplaces.
* Merge to increase scale and reduce costs.
* Buy orphan clients.
* Buy new routes to market.
* Purchase existing broking teams with existing client banks.
The successful Insurance businesses that grow and can maintain continued growth year on year, will be expert in processes and infrastructure, quality of product sold, pricing, marketing, keeping their promises, and understanding that the client is central to all they do.
That’s all very easy, but as a CEO, Business Owner or an Investor how do you know that your return on capital is assured? What are the pitfalls of having a growth strategy?
Organic Growth
Is the business and market you are servicing scalable? What are the potential returns? How will you grow your market share while not suffering from the rule of diminishing return? Do you know the real cost of acquisition of the client? How do you control growth ensuring it doesn’t control you?
Opportunity Growth
Have you really got a niche, does it have substance, are your team entrepreneurial enough to see the opportunities or are they painting by numbers? Does it never happen as it takes too long, and the moment always seems to pass?
Acquisition & Merger
* Is it the right business/merger to invest in?
* Are the Clients ones we want, and can we service them?
* Will it integrate?
* Is the price, right for what is being brought?
* Does the business have medium, long-term potential? Does this matter?
* Is it being brought for vanity?
* Will you buy something now for it to evaporate away and condense elsewhere?
Growth who needs it, remember stagnation and challenges are opportunities and all opportunities are good.
You have to invest to get a return, there are no returns without risk, you just need to understand these and have the right people who can steer you through.