Manchester, Liverpool and the buoyant North West are under the spotlight

When you think of finance and the North West of England, your mind wonders to Manchester. And with some justification, given that a recent study by UK trading company CMC Markets ranked Salford in Greater Manchester as the city with the second largest finance centre in the UK based on number of finance and insurance businesses as a percentage of total firms.

Indeed, Salford has 1,450 financial services businesses out of a total 10,910 companies overall, making it the largest group ahead of professional, scientific and technical ones with 1,315 businesses, and construction companies with 1,170.

However, Manchester isn’t a lone ranger when it comes to the North West. Its neighbour Liverpool – while maybe not punching as much clout in terms of insurer presence – also has a prominent insurance sector. Brokers from both cities have expressed optimism for the future of their local insurance markets despite inflation and recruitment challenges.

Land of opportunity

Managing director of Mason Owen Financial Services, Andrew Gibbons, said: “The North West economy seems to be buoyant if you look at the number of tower cranes [there are] in Manchester in particular, although hospitality and some service industries are definitely struggling due to the rising cost-of-living crisis.

Manchester – and Liverpool in particular – are starting to recover and grow. If you look at the Spring Statement, we had around £80m of investment thrown into both cities.

Nicola Hurst

“There is tremendous opportunity in the region, but a continuing lack of government investment in infrastructure continues to frustrate many people.

“Uncertainty over HS2 and the downgrading of Pennine rail links does not help with investment decisions.”

Liverpool-based Mason Owen Financial Services specialises in commercial property, legal indemnity and general business insurance. It has a headcount of 38 and £21m in gross written premiums.

Gibbons added: “Most insurers are suffering in terms of service due to staffing shortages and other structural issues they are facing, but there are signs things may be improving.”

Regional broking director at PIB, Nicola Hurst, also detailed signs of improvement in the region following recent difficult market conditions.

She said: “Manchester as a whole – and Liverpool in particular – are areas that are starting to recover and grow. If you look at the Spring Statement, we had around £80m of investment thrown into both cities. 

“We have got a tonne of money going into research and development, so this will add to Manchester being an area of innovation.

“It is looking good. However, placing property risks has been particularly difficult over the past three or four years. But risks that were difficult to place have become that little bit easier. There is capacity coming into the market and insurers are open for business again.”

I’ve never underestimated the entrepreneurial spirit of the North West. I know most of the UK are trying to do this and diversifying into different sectors, but here we have been doing it for years.

David Martland

Also at PIB, managing director of the North West & Scotland, David Martland praised the region for its ability to buck the trend against a perceived negative economic outlook nationally.

“I have been amazed. I am old enough to remember various recessions and problems in the economy, but I’ve never underestimated the entrepreneurial spirit of the North West. I know that most of the UK are trying to do this and they’re diversifying into different sectors and territories, but here we have been doing it for years,” he said.

Operations director at amb Insurance Services, Peter Lycett, is also confident about the local market’s future.

Lycett stated: “In the North West we are seeing more and more success stories of companies that have broken through their growth restrictions. The cheap, easy to obtain cash from lenders, following Covid-19, is showing a return on the investment made.” 

In the North West we are seeing more and more success stories of companies that have broken through their growth restrictions. 

Peter Lycett

This adds to the picture of the area being a booming region for new businesses. 

Chris Patterson, regional managing director of the North West at Gallagher said: “The North West has always been a buoyant insurance marketplace, and continues to be well represented from both a broking and insurer perspective.

“While broker consolidation has impacted on all parts of the UK, including the North West, the region is well represented by independents, nationals and start-ups.”

Local competition

Offering an insurer perspective, regional manager at Allianz, Chris Everett, also affirms that the North West is in a healthy state.

Everett says: “You always see a lot of businesses in leisure, and especially small independent companies. We are seeing more insurance broker start-ups – of which the majority are joining networks. There is quite a lot of acquisition activity and there are several hungry brokers out in the North West market looking for opportunities.”

Managing director at Kingsbridge Insurance Brokers, Gary Williamson, detailed that, while the national insurance market has been challenging, the region remains resilient.

Williamson commented: “From a broker perspective, trading wise, business has been good. We come up against the bigger competition, local and across the UK. But there have been more positives than negatives. 

“Brokers are doing good business, I have never spoken to a regional broker that is not growing. They are retaining 95% of their clients and getting great business results.”

Kingsbridge Insurance Brokers is based in Liverpool, and specialises in cyber, professional indemnity and group personal accident insurance. The firm also has a risk management business.

Williamson added: “There are lots of strong brokers in the region across both Manchester and Liverpool. That lends itself to being a good, competitive and fun place to be.

There are lots of strong brokers in the region across Manchester and Liverpool. That lends itself to being a good, competitive and fun place to be.

Gary Williamson

“There are a lot of consolidators now. I have acquired brokers, but we are still pulling our punches against the big competitors. There’s a good mix of strong regional and those top-tier brokers. The biggest challenge that has come with this is that we are facing a talent gap; a recruitment struggle.” More of which later.

However, Patterson believes there could be less appetite for deals in the coming months, and said: “The largest [local] deals in the past few years were Bollington into Gallagher and, more recently, Reich into Howdens. There have been a number of smaller acquisitions, but none that have materially changed the dynamics of the region.

“With the changing economy and rise in interest rates, we are expecting a slowdown in the appetite of private equity and other highly leveraged deals. This in turn presents opportunities for brokers and allows us to structure excellent propositions for businesses and their staff.”

Recruitment challenges

With the market booming, this has led to an uptick in recruitment, and the competition for the best talent is getting fiercer as Williamson alluded too.

He stressed: “Everyone is recruiting right now, which is driving salaries up. We are starting to see people think about moving, and to get the best talent is costing us a lot more than it would have done previously.

“The market is desperate to encourage younger talent into the industry, and we want to encourage [the view] that insurance is fun and interesting. It echoes what is going on in the rest of the country. The slight difference in the North West is there is a really strong group of quality brokers.”

Also feeling the pain of recruitment is Gibbons, who agreed that it remains a major issue, adding: “A large number of people have left the industry in the past few years, and the market cannot train enough people or recruit enough trained staff fast enough to fill and plug the service gaps.”

This means talent retention is even more of a key priority for Everett who has a more optimistic view of recruitment in the region.

Manchester has a healthy and robust pipeline of talent, but there is a lot of competition.

Chris Everett

“We have a strong track for talent retention and hiring new staff. If you are looking for new staff there is definitely a lot of competition because, understandably, our rivals take a similar approach to keeping their talent as we do. We have a successful graduate intake as we have a scheme where we take in a number of graduates every year across the business. 

“We look at apprenticeships and employ school leavers too. That works well for us in terms of training and growing our own people. Manchester has a healthy and robust pipeline of talent, but there is a lot of competition.” 

On the other hand, according to Hurst, demand still outweighs the availability of good people.

She commented: “There is not a huge amount of new talent entering the industry. The North West market is so saturated with brokers and insurers that it really is an employee market. They can choose where they want to go and there is a lot of choice. They can carve out their own careers which is great.

“There are not enough youngsters in the industry, and experience is hard to find. It has been difficult, and we are trying to train people. We have apprentices that we are training up in specific areas.”

Martland continued: “Training the youth and retaining the experts that we have is key. Since Covid-19, we have seen a lot of people working from home. The world has shrunk significantly, people can easily work from home, but when you’re doing that you’re not getting the benefits from your peers. Younger people joining the industry need to be trained face-to-face; it’s vital.

“There is a black hole of recruitment in the country, not just the North West.”

Growth and the future

While it is clear that recruitment has been an issue for the industry alongside inflation and the cost-of-living crisis, there is still hope that the future will bring further growth to an already bouyant North West.

Gibbons stressed: “Like the rest of the economy, widespread growth is being restricted by the costs of delivery and the cost-of-living crisis. We operate nationally, so perhaps we are protected from more local issues that affect growth opportunities.

“We are optimistic for our business, but concerned and sympathetic about what the immediate future holds for many people. There is however a cause for optimism for the North West with the Eurovision Song contest and the Open Golf coming to Merseyside in the Spring and Summer of 2023.”

There is a cause for optimism for the North West with the Eurovision Song contest and the Open Golf coming to Merseyside in the Spring and Summer of 2023.

Andrew Gibbons

The year ahead is full of ambitions for Kingsbridge, and Williamson is confident that the region will continue to be home to many top-quality brokers.

He said: “For us, we have huge growth plans and ambitions to operate in new sectors. We have budgeted so we can continue to hire people. There has been a lot of acquisitions in the region, and I think this year will look the same.”

Regardless of the Covid-19 pandemic, Patterson detailed how the region has seen growth in certain sectors, which will have a positive impact on innovation in the North West.

“We have seen the construction sector in the North West continue to grow significantly over the past few years. This growth has had a knock on effect with the number of property businesses in the region also increasing considerably. 

“There has though been a surprising contraction in a number of sectors, including information and communication, professional, scientific and technical sectors. That said, these sectors remain the largest in the region with the North West continuing to be a centre of excellence and innovation,” he commented.

According to Everett, Manchester businesses retains good service from brokers and insurers, which he would like to see continue.

“A key objective for us is keeping our people motivated and happy and continuing with the service we give to our brokers, certainly from the branches that I look after, especially in Manchester.”

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