My First Million: Sam White, car insurance tycoon

Sam White, a car enthusiast and founder of Freedom Services Group, a motor insurance business, is this year launching Stella, a brand aimed at women drivers.

White tested the idea in Australia, starting the brand in July 2020, in the midst of the first wave of the Covid pandemic.

She set up her first motor insurance business, Action365, from her sister’s conservatory in Stockport in 1999, just three years after leaving university.

The Stockport-based company now specialises in selling motor insurance, mainly via price comparison sites. The UK group turned over £23mn in 2019 just before the pandemic, but Covid hit the business hard, with turnover decreasing by £10mn in 2020 and 2021, as drivers stopped using their cars and the 240 staff had to be cut by 30 per cent.

But the business has recovered well, largely due to launching — in 2020 — competitive black box insurance policies, where monitors are fitted to cars to help manage the risks. After a £5.5mn loss in 2020, the group last year made a £450,000 pre-tax profit.

Did you think you would get to where you are?
I always thought of myself as an entrepreneur, but I did not imagine that my business would grow to the size it has. I gave up job security and the chance to travel when I started on my own, but I made money straight away.

At 13, I was desperate to learn to drive and bought my first car with some money I inherited from my grandad. It was a Triumph Spitfire convertible, made in 1975, the same age as I was. It cost £1,500, but I sold it for twice that when I was 17, after doing it up in the garage with my dad. We had two garages and my parents loved classic cars.

My father agreed to teach me to drive in a B&Q car park, so I learned at 13. I still could not use the car when I was 17, because I could not get insurance. The premium was about £3,000 a year because of my age.

I sold the Spitfire and bought a Morris Minor for £1,500. That car was 27 years old, so I could get classic car insurance for £800. The vehicle had to be 25 years old to be considered a classic car. At 17 I was already experiencing some of the anomalies in the motor insurance industry.

Did you consider your first £1mn a major milestone?
I first exceeded £1mn in pre-tax profit in 2007 when, with 100 staff, the company made £1.57mn. I did not really pay any attention to the figure. I remember my accountant telling me I was now officially a millionaire, and I felt rather shocked.

I was more focused on growing the business and finding new opportunities. In 2010, I used some of that profit to invest in a motor claims business in California. It did not take off in the same way as here, but it was a good adventure for two years. I had to come home because the UK business was under stress, due to changing regulations.

Has the coronavirus pandemic affected your business?
It was devastating. Our business was affected almost immediately because once we were in lockdown, people stopped driving.

We had to restructure, making 80 people redundant. It was the hardest thing, having to make these decisions. I wanted to concentrate on the 70 per cent of people that we could keep.

Being leaner now than pre-pandemic has helped to improve profitability. We are using technology in a more efficient way. I think customers’ expectations have shifted during the pandemic. Today they want more flexibility and to be able to buy insurance only when they need it.

Did you need to diversify to survive?
Absolutely. Pre-pandemic we did not have any black box insurance. We had a very successful launch in August 2020. It is insurance that partly bases your premium on your driving behaviour. We provide a special black box for your car to obtain data that we analyse. It is like a Fitbit in a car.

People got frustrated in the lockdowns, paying for annual policies that they were not using.

Also using black boxes, we are now developing mileage-based insurance, a new product that should be available as an option by the end of the year. We already have about 30,000 customers with black box technology, so they could choose to take up mileage-based insurance should they wish. The drivers who do lower mileage would benefit from lower premiums.

Have you had difficulty recruiting staff?
Yes, there have been a lot of resignations, with people seeking a different type of life. The pandemic has made them reassess what they really want. We are competing with London firms, which offer higher salaries and allow staff to work from home.

For me it is all about working on the atmosphere in the office, trying to make the environment as enjoyable as possible. Though we cannot offer the same money as London employers, we also allow staff the flexibility to work at home. I remain company chair but I’ve replaced myself as chief executive with a psychologist/business coach, and the team dynamics have improved immeasurably.

What was the most challenging period of your career?
In 2013 I had to wind up my motor claims business in Los Angeles. It was my first brush with failure, and it was not a gentle one.

The UK claims side of the business needed me at the helm because there were changes in UK regulations. We were hit by a 60 per cent loss of income in four weeks after the government reduced the fees that solicitors could charge for handling road traffic accident claims.

I genuinely believe my challenging childhood was the best preparation. To set up on your own you need a huge amount of emotional resilience

I had to reduce staff numbers, then diversify into other areas of the market. I started doing work for other insurance companies, providing third party intervention. This is where the insurance company which insures the client responsible for an accident seeks to offer support to the innocent party who was also involved. The idea is this should quicken the process and save the client’s insurer money.

It was touch and go for a good 12 months, trying to balance the books. Of our 350 employees, we had to let 250 go. I used the money in our reserves for redundancy payments, but it left us with zero in the bank.

What was your best preparation for business?
I genuinely believe my challenging childhood was the best preparation. To set up on your own you need a huge amount of emotional resilience. That only comes from getting through difficult times. My mother was a dysfunctional alcoholic for most of my school days and that was very hard on me and my sister. My father tried to be both parents.

What is your basic business philosophy?
Always be open to change. There are lots of changes in the insurance market now because there is so much new technology. People want to do things differently all the time.

I just want to have an open mind and keep in contact with people in the industry and outside the industry. I am always receptive to new opportunities and new technology, because I cannot afford to be left behind. My strength is that I am good with new concepts. You can always find someone who can develop new technology. The important thing is to learn how that technology relates to what you are trying to achieve.

What do you consider as an indulgence?
I like to spend my money on experiences, like going on the Inca Trail, and I once drove a Lotus Formula One car around a track in France. Over the years my indulgence has been cars that I keep for a year or two just to have fun with them. I have had Lamborghinis, Ferraris, an Aston Martin, and a TVR. The most expensive car I ever bought was a new Lamborghini Gallardo in 2009, for £140,000.

Do you want to carry on working until you drop?
I love what I do so I cannot imagine ever not wanting to be involved in business. I will certainly create more flexibility in my schedule to accommodate my children, but do I see myself out of the industry? Absolutely not.

Have you made any pension provision?
We have a scheme for the staff, but I opted out. I’m not overly keen on the idea of a traditional pension. As I am self-employed, I am building up equity in my business which should eventually be my pension pot.

Do you believe in giving something back to the community?
In September 2018 I joined a group of 15 insurance professionals to do a Mont Blanc trek. We got individual sponsorships to complete the trek, and that was quite challenging because the lower slopes are very steep. The plan was never to take on the summit. I raised £8,000 for an Alzheimer’s Society movement, Insurance United Against Dementia. Between us we raised over £100,000.