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Establishing a European strategy with local traders

Jose Ribeiro, director of international markets and business development at Lloyd's of London, discussed the market's strategy for Europe with Business Insurance Europe.

Q: Does Lloyd's want to expand in Europe and if so, where and why?

A: We decided some time ago that we wanted to expand in Europe, but not currently because market conditions are quite soft. We are not seeking to increase the existing business now—but from the long-term perspective we are laying down the foundations and infrastructure. To date, our focus has been on the [largest European] economies. We currently have offices in Germany, France, Italy and Spain, and we are looking at other parts of the Continent. These offices basically support the London managing agencies and help them expand into Europe. They allow the agencies to operate more efficiently by giving economies of scale, help with brokers and regulators and so on.

Q: What kind of help does Lloyd's offer managing agents?

A: These offices can organize licenses to operate. They provide syndicates with information and intelligence on the local market. We have a specialist team in London whose job it is to research markets, and the dynamics that drive them and the distribution systems. This information is fed into the managing agencies. We also have strong relationships on the ground with brokers and can offer support on a local level. This could be help with office space, licenses, business support. The syndicates focus on underwriting and we try to help with all the other functions as much as we can.

Q: Have you considered creating a trading platform in Europe as you have in Singapore?

A: There are no plans to do so as we have our trading platform in London. I will not say that it will not happen, but there are currently no plans. It would be quite difficult to decide where for starters. I am not sure how much French business you would generate through a German-based operation and vice versa. London is the main business hub for Europe and will continue to be so. But as Europe expands and develops, [this may become] a possibility.

Q: Your three year plan sets a goal to make it easier for local brokers to place business with Lloyd's by 2010. How do you propose to do this?

A: This is one of the biggest challenges worldwide, not just in Europe because it is not just about technology but also language and legislation. One of our main focuses over the next three years will be to seek solutions that will differ depending upon the region. The end goal is the same: to provide access to the Lloyd's market via the brokers.

Q: What are the practical barriers that prevent local brokers doing business with Lloyd's already?

A: There are challenges like technology, language and regulations. There is also the Lloyd's Act, which is quite clear on how business should be done with Lloyd's (via a registered Lloyd's broker). In some cases legislation prevents brokers from carrying out cross-border business, particularly in the newer member countries of the European Union that have not yet adopted all the directives on cross-border trade.

Q: Do you expect opposition to this from established Lloyd's brokers who will not like the fresh local competition?

A: In everything we do, we have supporters and those who do not support us. Generally most of the brokers support what we are trying to do. Many of them have offices in these countries anyway that could bring business direct to London. But there are London based brokers that do not have offices outside of London that could oppose this. We need to work with these brokers and show them that it is an opportunity.

Q: Do you receive enough support from the market itself?

A: We identified Europe as a key priority after discussing everything with all the syndicates. It is quite clear that Europe is high on the list for many managing agencies. Some are already in one or more countries and want to grow their business. We are able to provide a focus and work as a team.

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Consideration for Self-Employed business Insurance

Seven steps to self-employment success
By Helen Castell
May 23 2008

Climbing out of your comfort zone is always a big step, but the rewards of setting up as self-employed persuade thousands every year to go it alone.

Autonomy, hours to suit and the chance to steer your own career are just part of the attraction. Success however needs a firm foundation, so before you take on the big boys, make sure you've crossed your Ts, covered your back and polished up your permits.

1. Plan for perfection
Even if you plan to work alone on a freelance basis, you should still treat your new situation as a business - therefore a good business plan is essential. Setting out exactly what you'll be doing, who your target customers and competitors are, how you'll promote yourself and where you hope to be in five years' time will help you think strategically, and address any weaknesses in your plan before they become problems. You should also try and forecast what your expenses will be and how much revenue you'll need to turn a profit.

Bank managers or other investors will need to see this business plan if you want to raise money - and in this case you should also detail exactly how much money you'll need, what it will be used for, and how quickly they can either have it back or start to see returns.

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2. Brand yourself
A good business name can make all the difference. Research what your competitors call themselves and think up something catchier, or go the sweet-and-simple route and give your business the same name as yourself.

Whatever you choose, be sure to have it printed on all your stationery and open a business bank account in the same name.

3. Polish up your permits
Before you take on your first job, double-check what your license or permit requirements are. Some kinds of business, such as child minders and street traders, require that you hold a local authority license, while with others you must hold certain qualifications to trade.

Many businesses and self-employed professionals these days need to be able to show that they have insurance. Clients often won't use services which aren't insured. Depending on the type of services you offer, you might consider taking out public liability insurance and professional indemnity insurance as a starting point.

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4. A beautiful base
Escaping your tired old office and finding your own perfect premises is half the fun of setting up shop on your own. Look for somewhere that you can afford, that is close to your customer base and that complies with all the relevant health and safety regulations.

If you're working from home you may need to pay business rates and to obtain planning permission from your local authority, especially if clients or employees will be visiting the property.

Home-based workers also need to make sure that they inform their insurance company of the change of circumstances. Having home contents and buildings insurance will no longer be enough - you now need to consider business contents cover, public liability cover, stock cover, computer equipment cover and portable equipment cover.

5. Tax and tribulations
As soon as things are up and running, contact HM Revenue & Customs (08459 154 515) to register your business. Failure to do this within three months of going self-employed could land you a £100 fine.

You'll need to tell them whether you're operating as a sole trader, partnership, limited company, cooperative or franchise, all of which are dealt with differently for tax and national insurance purposes.

As a self-employed worker you now need to complete a tax return every year, which can be done easily online.

If you expect your turnover to exceed £64, 000 per year, you'll also need to register to pay Value Added Tax. If your business activities involve paying out VAT on a regular basis, you can register for VAT at any level of turnover in order to start claiming it back.

6. Cover your back
Going self-employed opens you up to a whole world of new risks, but there are plenty of business insurance products out there to help you handle them. For example, you might worry about what will happen if you're too ill to work and as a result become over-cautious in your business dealings, but you could take out business interruption insurance to protect you against such a scenario.

Professional indemnity insurance is often taken out by individuals whose work involves advising other businesses and consumers or carrying out services for them. Having this cover can protect your business against claims and legal costs arising from bad or negligent advice or services, which you have given, for example an accountant might give a client some bad tax advice resulting in the client making a claim for compensation. Professional indemnity can also cover legal expenses.

If you use your car or van for work you'll also need separate commercial vehicle insurance or to at least amend your existing policy for mixed use.

When you get to the stage where you employ other people, you'll need to take out employer's liability insurance. This is a legal requirement and if you do not do so you could face a hefty fine. Employer's liability covers your business against claims by employees based on accident or illness occurring in the course of the employment. This insurance doesn't cover business owners, so you should think about taking out personal accident cover if your new role involves risky activities (such as working with power tools).

7. Balance the books
Before you start trading you should have a clear idea how you will get finance if you need it, and how you'll balance your books on a day-to-day basis.

If your business activities are straightforward, and you are good with accounting software or Excel, you might wish to give it a go yourself. Otherwise hire a good accountant or book keeper right from the start and they'll set you up with a solid system for recording your incomings and outgoings.

The fees you pay them will count as business expenses - as can the cost of business equipment, office rental, stationery and even part of your mortgage and utility bill if you're working from home - so can be offset against your tax bill. You should also be able to claim capital allowances - tax relief on plant or machinery such as computers or tool kits that you need for your business.

Managing your invoice book and chasing payments from clients is something you'll need to master fast. For small businesses that offer credit terms to customers, invoice financing or discounting facilities will advance you cash based on your invoices, and can also manage your sales ledger for you. Many small and growing businesses find that such a service can help remove some of the headaches of cash-flow management.

The content and materials provided in this web site are for informational and educational purposes only and are not intended to supplement or comprise any precise facts, although we have researched sufficiently for the facts and information to be reasonably accurate. All content and materials including research papers, case studies and testimonials summarizing facts have been done by individuals working for this website. We cannot be held responsible for any inaccuracies, as we have described that information is for educational purposes and therefore maybe a few weeks old.

Resources:
Lloyds of London | money.uk.msn.com