In a recent interview with John Tallarida, co-founder and CEO of Costero Brokers, we explored the dynamics of the UK and US general insurance markets, the unique value of Lloyd’s of London, and the cultural nuances that shape cross-border success. Dive into the Q&A's below.
Q1: What inspired your career journey and eventual move into the UK market?
John Tallarida:
I started in the insurance industry in 1986, underwriting for Chubb Insurance in financial institutions. After three years, I transitioned into broking with Alexander and Alexander, and later joined a small broker in California in 1991. That firm grew from 19 people and $1 million in revenue to 900 people and $300 million in revenue today.
In 1994, I met brokers from Lloyd’s of London and began trading in the London market. Over time, I developed a deep appreciation for Lloyd’s and its accessible capital. Nine years ago, I opened a firm in the UK, co-founding Costero with Nick Murrell.
Q2: Why did you choose to invest in the UK market when many firms focus on domestic growth?
John Tallarida:
Having traded directly into the London market for nearly 30 years, I’ve always valued the capital and expertise it offers. Initially, my focus was on expanding direct access to Lloyd’s capital for US placements. However, I also noticed a shift in the market culture due to consolidation. This inspired me to build an independent broker in the Lloyd’s market, combining accessible capital with a collaborative, entrepreneurial culture.
Q3: What makes the Lloyd’s of London ecosystem unique compared to the US market?
John Tallarida:
The concentration of talent in London is unmatched. In the US, the talent you need could be spread across 50 states, but in London, everyone is within walking distance. This proximity allows for face-to-face interactions and makes it easier to get deals done. It’s a unique attribute that Americans who work here immediately recognise and appreciate.
Q4: How should ambitious US brokers approach international expansion over the next five years?
John Tallarida:
Most US brokers approach UK capital through intermediaries, which I believe is the wrong strategy. Instead, they should build direct relationships or partner with key UK brokers. Many brokers either don’t know which brokers handle their business or don’t care, and both approaches are flawed. Strategic alignment and control over where your business goes in the Lloyd’s market are essential.
Q5: Why does London remain relevant in an increasingly digital and global insurance world?
John Tallarida:
While digitalisation has its place, especially for commoditised business, the creativity and flexibility of the Lloyd’s market can’t be replicated by computers. Face-to-face interactions with underwriters remain vital. Additionally, the global perspective in London is unparalleled. Unlike the US, where brokers often have a myopic view limited to their geography, London brokers are constantly impacted by global events, from wars to weather catastrophes.
Q6: What challenges did you face during the UK acquisition process?
John Tallarida:
Regulation in the UK was more challenging than I anticipated. I had to adjust my US mentality to navigate the regulatory environment effectively. It was a significant learning curve but ultimately a valuable experience.
Q7: What separates successful cross-border M&A deals from those that simply add scale?
John Tallarida:
It’s all about the people. Talent and cultural fit are critical. If the people don’t align with your vision, the deal won’t create long-term value. At Costero, we prioritise collaboration and a silo-free culture. Everyone works together and we encourage open communication.
Q8: Where do you see the greatest untapped opportunity between US distribution strength and UK specialty expertise?
John Tallarida:
US brokers often lack a strategic approach to accessing the Lloyd’s market. Consolidating relationships with UK brokers and having a clear strategy can significantly enhance effectiveness. Many North American brokers underutilise Lloyd’s capital or view it as a short-term solution, which is a missed opportunity.
Q9: How do you expect client expectations to evolve as brokers become more international and data-driven?
John Tallarida:
North American brokers often see Lloyd’s as a last-resort market, whereas European brokers view it as a strategic partner. Fixing this mindset in North America is crucial. Brokers need to adopt a long-term approach to leveraging Lloyd’s capital and expertise.
Q10: What would success from this acquisition look like in three years?
John Tallarida:
For Costero, success means doubling or even tripling our footprint while maintaining our culture. Growth is important, but I’d sacrifice it to preserve our collaborative, supportive culture. Hiring the right talent and integrating them into our culture is our biggest challenge and priority.
John Tallarida’s insights highlight the unique strengths of the UK and US insurance markets and the importance of strategic alignment, cultural fit, and long-term thinking in cross-border ventures. As the industry evolves, brokers who embrace these principles will be well-positioned to thrive in an increasingly global and interconnected market.
Take a behind-the-scenes look at what it’s like to work at Costero through videos from the team themselves. Learn about the culture, opportunities, and what makes Costero different, here.
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