Platform for growth Expansion of a partnership business is a key focus for Coverforce as demand for support services grows By Wendy Pugh
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ith a myriad of challenges facing brokerages in the current environment, Sydney-based brokerage Coverforce sees plenty of opportunities for a partner network that can offer strong support and add value to businesses. Coverforce Partners, a relatively recent addition to the insurance intermediary landscape, is stepping up its expansion under a model that involves acquiring equity positions and providing access to a platform of back-office and business support services, technology and supply arrangements. “There is growing demand from brokers to be properly supported,” Coverforce Chief Executive Jim Angelis tells Insurance News. “We see our partner offering as the solution and we are investing in that. Our investment in the platform of services is significant and continuous.” The 2017 launch of the partnership business was a natural progression for the Coverforce group, which has grown to become Australia’s largest privately owned insurance broker. Businesses within Coverforce also include its own general insurance broking operation, the Quanta underwriting agency and group life insurance. “From inception we were focused on building a company that would scale efficiently,” Mr Angelis says. “The aim was to have centralised back-office teams that were well coordinated to service all entities in the group. “Growth by joint venture best preserves the business and relationships we are investing in – so it made good financial sense.” Mr Angelis says the insurance industry is rapidly changing. Regulators are imposing tighter requirements as they aim to protect clients’ interests, and smaller independent brokers are increasingly looking for services that can help them in running their businesses. Coverforce Partners will generally take about 3050% equity, while income divisions typically see about
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25% of revenues charged as a fee for services provided. “We are building a model where the bulk of the revenue goes to the partner, and through scale we are able to make that a viable business model and continue to invest in that platform of services to continuously improve those for the benefit of the partner,” he says. The network had 26 partners as of early March, generating about $230 million in gross written premium (GWP). Those joining are typically growing at a minimum 13-15%. Having established the foundations, the group is now raising its profile and welcoming more participants. A pipeline of around 400 prospects has been identified and the business is actively talking to potential partners. “We needed to prove the model first, and we have done that, so now we have got significant interest and quite a bit of momentum,” Mr Angelis says. Feedback from existing and potential partners suggests many competitors promise a laundry list of services, but when it comes down to it they sometimes “simply clip the ticket for the use of their Australian Financial Services Licence”, he says. “We never want to be accused of doing that,” he says. “Coverforce Partners’ mission is to be the best partner in the world to an insurance brokerage.” Mr Angelis made the move into insurance after starting in the construction industry, working with Lend Lease early in his career and later running his own business in that sector. Coverforce began in 1994 when Mr Angelis took up an opportunity to provide group life insurance, mainly to blue collar workers. The enterprise entered general insurance broking in 2006 after acquiring Crown Insurance Services, Swissco Insurance brokers and Bookers, with the life side continuing as a small part of the overall group. “In the years that followed we continued to grow organically and through successful acquisitions, joint ventures, and partnerships,” Mr Angelis says. “The one
