JMMB formulating new plan for loss-making brokerage
Published: Friday | February 13, 2009
Jamaica Money Market Brokers (JMMB), facing major losses in its insurance brokerage business over its five years in operation, has taken a second look at the operation and is pumping in new capital to leverage growth.
Keith Duncan, JMMB group CEO, says his company is making another go at breathing life into the business through a new information technology platform for more effective customer service, as well as a marketing programme centred around the insurance segment that can bring in big revenues for the insurance arm.
Over the past four to five years, the brokerage has accrued losses of $70 million to $80 million per year while top-line income was last reported at an annual $15.6 million.
"The focus now is around the general insurance business which is where we can make some good returns and a good fit in our operation," said Duncan.
"General is a better fit with our client base, having a large client base through our loans, so we focus on the general, put life and health in a maintenance mode and scale down on employee benefit," he added.
Duncan believes the new strategy can take the brokerage to break even by the end of the next financial year, March 2010, saying that while the focus will be on general insurance - the insurance brokerage will continue to sell all types of policies.
"We're not looking to drop any," he said. "Employee benefit fits into corporate solution lines and life and health fit into financial services," said Duncan.
Broker One system
JMMB has purchased an advanced insurance brokerage system, Broker One, which it intends to go live with by April.
Insurance revenue for the 2007/08 financial year was stated at almost $15.6 million in JMMB's annual report, which also pointed out that the investment in general insurance has proven to be strategically valuable, now accounting for 37 per cent of JMMB-IB business.
Last year, after a series of reviews that considered four options - including closure, expanding the brokerage, or stripping it down to what was now seen as its core competence, the group opted to eliminate sellers of health and life policies, while still retaining those business lines, and hanging on to its general insurance sales staff, said Donna Duncan-Scott.
It was the insurance brokerage team that suggested the ramping up on the general insurance side, said Duncan-Scott, making the proposal in January. Now, the company is in search of a general manager with the competence to take the company in that direction, while finalising a strategic plan for the brokerage.
The general insurance portfolio currently has 600 clients, which JMMB says it will be seeking to grow by leveraging business from the group's client base.
"What people most buy, that we must focus around and in this environment of economic downturn where people have to watch their discretionary income, there are certain things which they must do," said Keith Duncan.
"We're looking to grow that business where our sweet spot is, in terms of potential for revenue," said Duncan.
The group itself has had to readjust in the midst of the economic slide, cutting 50 employees or about 14 per cent of its workforce.
The slim-down hit the insurance brokerage hard, where six or 43 per cent of 14 employees were made redundant. Those six were the health and life insurance sellers, said Duncan-Scott.
The unit is currently run by Cecile Cooper, the interim manager who took over from former general manager Michelle Neita after the latter's departure from the company at the end of January.
Duncan said that they would be looking to put a sales manager in place as the unit becomes more integrated in the overall operation of the company.