How does a small but growing broking business make the most of the opportunities available?
By Matt Scott
The UK broking industry is a competitive landscape, full of entrepreneurial firms that are all working to pull ahead of their competitors and win business in their respective markets.
For many of these broking businesses, the ultimate endgame is to sell their business – in all likelihood to one of the growing number of consolidators.
But in such a crowded marketplace, what does it take to standout from the crowd? And how does a small but growing broking business make the most of the opportunities available?
First and foremost, brokers need to be quick to adapt to market changes, whether those be fast-evolving economic conditions, changing consumer behaviours or the introduction of new regulatory requirements.
Technology is key here, with many of the insurtech distribution companies entering the market today making use of the latest developments in AI and data management to offer a better customer experience at a fraction of the price, and then quickly pivot to whichever new normal is next to emerge.
This technology can also help brokers to improve productivity – something that is essential for brokers looking to steal a march on their competition.
Insurance DataLab’s Broker Performance Report 2023, released at this year’s Biba conference (10 May 2023), found that the average UK broker reported turnover per employee of a little over £150,000, according to the 2021/22 set of accounts filed at Companies House.
The most productive brokers in the market, however, reported turnover per employee in excess of £500,000, which demonstrates the potential for improvements in this area.
Another way brokers are standing out from the crowd is by carving out their own niche.
By focusing on a particular sector of the market, brokers are able to develop specialist knowledge that can help them to deliver best-in-class service and become the go-to broker for individuals or businesses looking for cover in that specific area of the market.
This is particularly effective in small and complex markets where that knowledge is hard to achieve and creates a significant barrier to entry that allows experts in that field to quickly win market share.
This makes for a particularly appealing business, as it allows a larger firm to gain a substantial foothold in a specialist market, without having to spend the time developing knowledge and winning new customers that are already being well-served by an established broker.
This, of course, doesn’t mean that mass market firms can’t achieve success – far from it, the top two performers in the Insurance DataLab Broker Performance Report 2023 are both players in the UK personal lines motor market.
But it certainly does make it easier to stand out from the crowd. And with so many firms all vying to be snapped up as part of their exit plan, that can only be a good thing.