The Exchange provides 8,500 IFA's around the country with instant quotes for a range of life insurance and pension products from over 50 insurance groups. It has revolutionised the insurance industry by removing the need for IFAs to go through the lengthy process of obtaining quotes from different companies every time they want to sell a product.
The buyout will please IFAs, who had worried that The Exchange's independence would be threatened if it fell into the hands of a larger group. A number of technology companies are thought to have been interested. The group has grown rapidly since it was set up with a small user base in 1991 and made revenues of pounds 14m last year. The system is currently accessed 12,000 times a day.
However, the MBO is likely to trigger an influx of competition into the market. The Exchange previously had an effective monopoly as insurance companies had no incentive to work with other information providers since they had a stake in the business.
In response, the management team, led by the managing director Paul Lindsey, aim to widen the range of products offered. They also plan a pounds 5m investment to improve access to the information. This will be done by converting the system to a private internet-type system, known as an extranet, which IFAs can access from a browser installed on their computers.
Mr Lindsey estimates the Exchange's system has helped cut the price of insurance products by dramatically reducing the cost of obtaining a series of quotes. The company is trying to convince the insurance companies to introduce a system which will allow customers to complete a proposal form online, further speeding up the application process for products.Reuse content