From Corporate to Independent: Navigating the Insurance industry with Entrepreneurial Grit
I have recently interviewed several Insurance entrepreneurs to talk through their journey to success, some of the challenges they faced, lessons learned and advice for anyone looking to grow and develop a successful business
Today’s interview is with John Shepherd, Chief Executive at Shepherd Compello Ltd. & White Oak Underwriting Agency
What motivated you to leave a large brokerage and start your own business?
When I was working at a large brokerage, my business that I had built over the years wasn’t being serviced. There was a real possibility of losing clients because of poor servicing of my accounts. At the time, our business was being managed out in country offices, but the quality of the service was not up to the standards I expected for my clients, so I had to consider my options. Additionally, the larger corporate structure imposed numerous costs and recharges that severely impacted my profitability, putting a cap on my division’s earnings. There was also a push to corporatise our clients, which didn’t align with my vision. I worked closely with EPG Insurance Services, our largest client at the time, based in Memphis Tennessee, which specialised in industries like forestry, construction and trucking and I knew that we had a strong enough relationship that they would support me if I decided to go at it alone. So essentially, my decision to start my own business wasn’t driven by a desire to build an empire, it was purely to provide the right service to my clients to keep them and ensure our accounts were thriving.
How did the desire for more flexibility and freedom to write different types of business play into that decision?
One of the biggest advantages of starting my own brokerage was the freedom it gave me to work with whoever I wanted. When one is tied to a large corporation, often one is restricted by their policies, which can mean turning business down or passing business over to a different department. By going independent, I was able to say yes to opportunities I believed in, without being held back by corporate red tape. And while we professionally specialise in certain lines of business still to this day, we will always see if we can service the business we’re approached with, no matter what class it is. As long as we have experts that can provide the highest quality of service, we’ll see if we can find it a home.
With compliance and set up costs on the rise, how did you navigate these challenges when starting your own brokerage, and how do you see these factors affecting new start-ups today?
When I started, I made the decision to leave my existing employer with just three people on board, and I sacrificed 50% of my brokerage for the first year to get things off the ground. Back then, compliance was nowhere near as stringent as it is now, but of course, it was always something to think about. We didn’t have that many accounts in the beginning, but the ones we had were large accounts, and they were predominantly binding authorities rather than open market, so the paperwork wasn’t too onerous. So, I would definitely say quality over quantity is the rule to follow here – having those really solid strong accounts got us through and made us what we are today.
We operated under an umbrella arrangement, which is similar to an Appointed Representative (AR) for a Lloyd’s Broker today, which hugely helped with compliance and regulations. Today, things are a lot more challenging than they have ever been – the levels of compliance are more detailed and rigorous, which makes the costs significantly higher. However, for new start-ups, entering the market as an AR can be a time and money saving approach, allowing them to build up their client base while leveraging on the compliance support provided by the umbrella company. Peer-to-peer knowledge sharing is also crucial in navigating these complexities. We have a number of ARs at Shepherd Compello, and I’m passionate in helping them build their business as I know how hard it can be, and that support can go a really long way in the early stages.
Given that the market has changed significantly since you started, how is Shepherd Compello working to ensure that new startups have the same opportunities to succeed, despite the challenges that exist today?
Starting a business requires a certain amount of ambition and courage, but the risks can be significantly lower than going at it completely alone. Said startups would be supported by our back-office teams, such as compliance, claims, finance, marketing, HR and so on, which ultimately takes away that massive chunk of investment needed for a team to get a business off the ground. I sacrificed a regular salary for some time, while my focus was on building the infrastructure needed to make our business model work – and this was tough, but important at the same time. Hopefully with the support of Shepherd Compello, our ARs will have the opportunity to grow their business, and gain independence.
Shepherd Compello has evolved from its origins as EPG, which in turn became a third-party administrator, then Shepherd Compello was born, being the Lloyd’s Broker as it is today and then later, White Oak, the Underwriting Agency was formed when we were foreseeing opportunities in Transportation market. So, we have much experience in Broking, Underwriting and Administration, making Shepherd Compello a platform that our ARs can leverage on. We support new startups by providing them with a robust infrastructure and guidance which reduces barriers to entry and allows them to start trading in a much quicker time frame, than if they were to become their own verified broker. By aligning with Shepherd Compello, entrepreneurs can benefit from the experience and support of an established player, helping them to navigate the complexities of the modern insurance landscape with more confidence.
As an ambassador for entrepreneurship in the insurance industry, how do you encourage others to pursue similar paths, and what advice would you give to those looking to start their own brokerage?
The most important thing is to have courage to believe in your business. If you’re confident that your client base is strong and that the accounts you manage will continue to support you, then you’re already halfway there. It’s also essential to ensure that the type of business you’re focusing on has longevity – some classes of business are more sustainable than others. Finally, its crucial to find the right home for your business, one where your values and goals align with those of the larger organisation. This alignment will ensure that your business is serviced properly and that you have the support needed to succeed.
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All the best,
Gary Pike
Founder & MD Right International
garypike@rightinternational.com
