Restrictive entertainment budgets and a regulatory crackdown are forcing London’s insurance brokers to rethink how they entertain clients – even the pubs and wine bars of London’s insurance district are feeling the pinch.
The corporate ski weekends and all expenses paid sporting events are out the window, after anti-bribery regulations introduced by the Financial Services Authority in 2010 have left brokers wary about throwing lavish events. They’ve retreated to their traditional haunts, the pubs in the postal code of EC3 in London, but even here budgets are restricted.
“There’s been a definite decline in the amount that customers are allowed to spend,” said Lianne Anderson, manager of the Jamaica Winehouse in EC3. “Whereas previously they would have stayed a few hours here drinking quite heavily, they tend to spend shorter periods of time here. Some brokers would have used other restaurants or swankier bars, but it’s a lot more informal now.”
“Everyone’s watching how much they spend,” said another wine bar manager who declined to be named. “It’s frustrating, but most insurance firms now have a cap.”
An insurance broker acts as the link between companies and clients to find the most suitable policies. Entertainment involves not just schmoozing clients, but also the development of relationships with underwriters in order to keep informed about competitive prices.
“In early 1990s, business development as an insurance broker invariably meant spending a lot of time in the pub and, while most outings were a few drinks, there could be some hardcore nights out,” said Andy Edwards, a former London market broker who is now head of technical insurance at recruiters High Finance Group.
Brokers said that they’re now not allowed to spend more than £100 on a single night out with a client, and there are restrictions on single items, such as £30 on a bottle of wine.
Insurers Aon and Marsh declined to comment on their corporate practices. JLT and Willis didn’t respond to requests for comment.
“The company limits the amount of money we can spend on client entertainment throughout the year, and to around £100 for a single occasion,” said one insurance broker working for a large US firm in London. “This means you may go for a sandwich and a beer with an underwriter, but when a client comes to town, you have to look after them. People don’t go into the sector unless they’re a “gregarious person who enjoys socializing,” said the broker.
Less booze also means fewer hangovers as well as fewer serious drinking problems. “I certainly don’t miss having three big nights out most weeks entertaining clients,” said Edwards. “It’s rare that many past their mid-30s can stick to such a schedule.”
Jobs that involve a lot of client entertainment can often result in years of alcohol abuse, said Don Serratt, a former banker and founder of the Lifeworks Community, a rehabilitation centre for substance abuse addicts.
“The ethos is the happier the client, the more business you bring in and invariably this means getting the client drunk. But, of course, the broker has to drink with them and if you’re doing this three times a week, gradually their body builds up a tolerance level, so it takes more alcohol to achieve the same affect and they develop a physical dependency,” he said.
People who work in the insurance sector do tend to spend years over-indulging, said Serratt. “Some people will abuse alcohol for a number of years and then at a certain point will pull back, when they realise that they don’t want this lifestyle any more, but alcoholics will continue regardless of the negative consequences.”
Most people in the industry, however, know their limits. “You need to keep up on market movements and gossip and a quick drink is the perfect way of doing this informally,” said the broker we talked to.