As an avid football fan – and a former keen non-league player/manager – Glenn Thomas would no doubt be familiar with the term: “You only sing when you’re winning”.
And given the success of Jelf’s healthcare business since Thomas started working with Peter Elliott at the organisation back in 1997, you would think that the managing director of what is now known as Jelf Employee Benefits might be getting a little bit hoarse.
But Thomas remains an example of humility, in spite of the fact that the intermediary is now regarded by insurers – although official statistics don’t exist – as the largest SME healthcare broker in the industry. In terms of group risk, meanwhile, estimates from insurers suggest that it is in or around the top 10 brokerages in the UK.
It’s a far cry, Thomas says, from 1992 when he first joined the organisation, which had been founded in Bristol three years earlier by (now group chairman) Christopher Jelf. While the organisation was making good progress in other areas of financial services, the healthcare side of things didn’t really get going, Thomas explains, until 1997 when Elliott joined the group. And while the senior management team at Jelf has always been an “optimistic” group of people, they didn’t expect the organisation to grow to the size and stature that it is today, he says.
Singling out Peter Elliott as crucial to that growth, Thomas explains: “If I look back to October 1997 when Pete joined us, it would have been a stretch even for our own optimism. Saying that, as well as being optimistic, we’re also very ambitious.”
To help to achieve those ambitions, Jelf, Thomas and Elliott decided in 2001 to appoint Alex Alway as CEO.
“We felt at the time,” Thomas explains, “that it was important to employ a professional manager to run the business.”
Previously a business accountant with BP and having held a number of senior roles at AXA Sun Life, Alway, Thomas explains, brought a greater sense of business discipline to the enterprise before helping to oversee Jelf’s launch onto the Alternative Investment Market (AIM) in 2004.
Now, the group, as at 30 September 2009, operates out of 34 locations, seven of which are locations for Jelf Employee Benefits, the division which now represents 26% of the group’s overall revenue. Within Jelf Employee Benefits, healthcare remains strong and the intermediary now boasts some 4,250 corporate clients and 3,500 individual clients, while healthcare revenue grew 11.3% in 2009. The intermediary is also gaining more traction in the group risk market, with £1.5m turnover in 2008/09 and a client portfolio of 600.
Of course, it hasn’t always been plain sailing. The recent economic crisis triggered some rationalisation at the Jelf Group as a whole, which closed three locations in 2009 and reduced headcount by 5% to 1,087 (2008: 1,138). Thomas says, however, that most of that rationalisation was in Jelf’s Wealth Management division and core service areas such as finance. Job losses at Jelf Employee Benefits have been “very minimal” and targeted on where roles were duplicated following a previous integration of the two businesses or in service areas where strategy has changed, Thomas explains.
A falling share price has also been the subject of media scrutiny over recent months, while Jelf’s push towards intermediary consolidation had stalled somewhat.
But, Thomas explains, a £19m cash injection thanks to US private equity investor Capital Z Partners (or Cap Z) means that Jelf is now “reinvigorated” and ready for further growth following the exit of previous backer 3i. The funds raised will be used to reduce group debts, provide greater working capital and pursue acquisitions, including, according to Thomas, in the healthcare sector.
Consolidation has, of course, been rife in the health insurance intermediary sector and Jelf had, until recently, been leading the charge, counting six specialist healthcare intermediaries among its many other general broking acquisitions over recent years. Ironically, perhaps, the boss of one of the earlier acquisitions is now helping to head up one of the more recent ones. Business development director Wayne Pontin, who sold Pontin & Stein to Jelf in 2003, is in interim charge of Manson Warner, the heavyweight regional healthcare broker based in Manchester which Jelf acquired in 2008. Pontin will eventually return to a senior role at Jelf Employee Benefits, Thomas says, once Jason Britton, the former commercial manager at Bupa, assumes the reigns at Manson Warner.
But Pontin’s ongoing senior role at Jelf – along with former business partner Jamie Cleall-Harding – demonstrates the way in which the organisation is keen to tap into the management skill of those intermediaries which it acquires. Thomas points to the likes of Chris Ford, who heads up Jelf’s group risk business after Jelf acquired SPS Wellbeing in 2007, as an example of the way in which the organisation is keen to integrate not just annual premium income, but intellectual capital too.
“If you look at the senior management team at Jelf, many joined through acquisitions,” he explains. “When we acquire a business we look to learn from that business as much as the other way round. We don’t always get it right, but we’ve got a very good culture in that sense.”
So should we expect some more big name acquisitions in the near future? “We’ll be looking on a selective basis, although perhaps not on the scale of previous acquisitions,” he says. “We’re certainly looking to focus on insurance broking in healthcare, largely because of the recurrent revenues streams.”
COMMISSION AND PMI
Recurrent revenue streams are something which Thomas believes is one of Jelf Employee Benefits’ key strengths. However, Thomas is concerned about some industry practices which look far more to the short-term and which – in his opinion – risk the long-term sustainability of private medical insurance (PMI).
While Jelf takes a flat commission across its PMI book, the tendency of some other brokers to demand high initial and reduced renewal commissions is something, Thomas says, that needs to be addressed.
“The initial and reduced commission basis can create poor behaviours among consultants,” Thomas argues. “It can encourage movement [of a scheme] for no reason, it puts pressure on the finances of insurers because their lapse rates increase and it can distort the buying process for customers.”
While he has some sympathy for smaller brokers that perhaps don’t have the deeper pockets or clout of a Jelf – after all, that organisation was once a smaller firm itself – those intermediaries which don’t offer a flat commission structure have an unfair advantage over those who do, he argues. Brokers who charge higher initial commissions can obviously rebate some of that to companies in a bid to sweeten the deal for them to use them as their adviser. Flat commission rates, meanwhile, makes more long-term sense for companies.
“It creates better, more consistent behaviours and it puts the client at the heart of the situation,” he says.
So why don’t insurers take more of a stand?
“A lot of the discussions we’ve had with insurers about this suggest they would like to move away from initial commissions,” he explains. “They say their lapse rates are higher. They would like to move to level commissions but it would take all of the insurers to do it in unison. It would be very hard for one of the big ones to act alone.”
GROUP RISK AND THE FUTURE
Another bone of contention for Thomas is in the group risk market – an area where Jelf is growing in strength year-on-year.
“We really only started to get into the group risk market in 2001-02,” he says. “We’re now particularly strong there and that was helped by the acquisition of SPS Wellbeing.”
Jelf is also investing heavily in growing its group risk business and to that end is developing an online benefits platform which it hopes to launch later this year. However, Thomas believes that the larger intermediaries such as Jelf, which plough a good deal of time, money and effort into group risk are not getting the credit they deserve from insurers. By investing in support staff, administration and technology, intermediaries are better able to present more accurate risks to insurers; that, he says, is something that should be rewarded.
“For all the major group risk intermediaries, insurers fail to differentiate in terms of price or commercial terms, which I find disappointing,” he explains. “It’s wrong that they’ll still provide the same terms to an intermediary who handles just a few schemes.”
Thomas concedes that it is easier to make concessions in terms of flat commission or invest in growing areas such as group risk when you are in charge of an intermediary firm of a certain size. But it’s clear that he is not interested in playing a short-term game. Training & development is clearly a major focus for Jelf and Thomas himself is leading by example. In spite of now having a non-client facing role, Thomas has completed the GR1 group risk examination and is adamant that the relevant individuals across the rest of the organisation do so too.
“I’m a great believer in technical competence and qualifications,” he explains.
Thomas says that 169 individuals out of a workforce of 200 at Jelf Employee Benefits have gone through some form of formal training, and that includes a combination of sales, presentation, relationship management and management training.
“If our people are going to be speaking to clients, they should have good relationship skills and know what they are talking about,” he insists.
With that in mind, then, will Thomas and the rest of Jelf Employee Benefits be talking about – or perhaps singing about – victory in October at this year’s Health Insurance Awards? Having won 17 gongs since 2003 – and having scooped the Intermediary of the Year Award for the past three years running – you’d expect them to be in with a shout at least.
Glenn Thomas joined the Jelf Group over 15 years ago as a financial planning consultant before becoming a director when the business first incorporated. He led the development of Jelf’s group pensions, flexible benefits and group risk teams.
In 2008, Thomas was appointed managing director of Jelf Employee Benefits, additionally assuming control of the group’s healthcare teams. He sits on the Jelf Group operating board.
Prior to joining the Jelf Group, Thomas was a partner in an IFA firm following regional pensions manager roles at two major life companies.
LIFE OUTSIDE OF INSURANCE
Glenn is married with two children and lives in Bristol where Jelf’s head office is located. He is a keen sportsman, enjoying cricket and football and is an avid Arsenal supporter.