The pace of change in the broking industry has never been quicker and it will speed up over the next few years as the effect of the consolidation of insurers, the time bomb of succession and a harsh regulatory environment takes effect.
Industry commentators feel that the number of brokers in five years time will be fewer than half those at the moment.
The question brokers should ask is: Who will survive and prosper in the 21st CenturyNULL
The chances are there will be five types of brokers who will be successful.
1. The Industry Specialist
The industry specialist will focus their business on products and service specific to a particular industry or segment. They will use their expert knowledge of that segment to gain a competitive advantage and back this up with focused marketing activity. They will try and put together a bundle of services, only part of which would be insurance, to meet the needs of the sector in managing the risks that face them.
2. The Added Value Service Provider
These brokers will pride themselves on their in-depth client knowledge and concentrate on clients for whom service levels are of paramount importance. Examples would be high maintenance industries and wealthy personal clients. They will be viewed as totally professional and may work for a fee or employ a premium pricing strategy. They will only be interested in clients who require high added value service and will not hold themselves at all in the commodity sector. They are likely to have a limited number of clients but for those they deal with they will offer a full service including financial services.
3. The Flexible Relationship Manager
The flexible relationship managers will offer freedom of choice and superb value for money. They will segment their client base according to need and offer differing service levels according to the type of client they are dealing with. Their pricing will reflect the service level the customer wishes. They will have a reputation for excellent service and professional advice but will build their business based upon a knowledge of what sectors are profitable and what it costs to service them.
4. The Community Broker
Community brokers are well established figures in their areas. They will have long term relationships with their clients, often specialising in the local industry. They will be successful because of their networking ability among local business and reputation for being "Mr Insurance" in a particular town. They will manage the local presence through sponsorship and PR and the firm and the principles it stands for will be widely familiar in the region. They expect to have a strong market dominance over a limited area.
5. The Virtual Broker
The last kind of broker is one for the future. Virtual brokers will work at the cutting edge of the insurance industry, transacting business over a web site, providing a number of schemes for small to medium enterprises. They will be highly competitive and will only offer a personal service at a fee.
Brokers should consider where they fit into the scenario for the future and ensure that they will survive and prosper.
- This article is taken from CGU's Cutting Edge report which will be sent out to selected brokers in the middle of September.
DO YOU AGREE?
We'd like your thoughts on this subject. To email us, click below.
