If insurers are struggling in the aggregator price-led market, it’s even harder for intermediaries. But there are ways that brokers can succeed despite the challenges

Esure’s announcement on the London Stock Exchange last month that it’s solvency capital coverage ratio for the end of 2018 had fallen to 110% from 155% in 12 months is reflective of the challenge facing personal lines brokers.

Removing the layer of cost added by a broker already gives direct players an advantage. When they are willing to price this competitively to pick up business it gives brokers little chance of winning on price alone.

What’s more, former AXA boss Brendan McCafferty says general insurers are increasingly looking to operate more prominently in the direct market.

“They may not shout about it from the rooftops, but they will have a preference for building their own direct channels over working in the intermediary market, and paying for the cost of that distribution,” McCafferty, now chief executive of personal lines broker Brightside, told Insurance Times.

In a market where 70% of policy sales are fed through price-led aggregators, it means brokers have to increasingly focus on other parts of their offering to remain successful.


Aviva’s head of intermediaries Phil Bayles’ advice is that having a unique offering is the best option for personal lines brokers.

“If you can establish a point of difference through a niche offering, data sets or something else unique then you can give yourself a great chance.

“For example, if you’ve got some telematics capability it allows you to price clients differently and better.

“If you’ve got a unique brand that customers recognise and value or if you can provide a niche offering like short-term insurance you give yourself a strong chance. The key is determining what your position is in the market.”

Among many success stories in personal lines broking, an impressive digital capability has often been what constitutes this niche offering.


In the space of 10 years, IGO4 has gone from start-up to Top 50 broker, led largely by investment in telematics technology.

The promise of rewarding better driving with cheaper policies has brought the company 200,000 clients, and also seen it partner with its direct rivals to provide their telematics products.

Its chief executive Matt Munro said the firm’s digital capability to acquire unique data on customers had been a core ingredient in this.

“Success in personal lines broking requires investment in powerful digital capabilities and in strong partner relationships,” he said.

“Intelligent use of data is also driving product development, enabling us to work closely with insurers to create unique propositions based on different rating factors, across all types of insurance products.”


But one area McCafferty disagrees with Munro and Bayles on is the importance of investing in brand.

Munro said the company sees “huge value” in marketing for brand awareness, primarily due to the dominance of price comparison websites in the distribution channel.

However, when competing with well-established brands built over a long period of time, McCafferty says it is “delusional for brokers to believe they can compete on brand”.

McCafferty believes to be successful in personal lines, a broker needs three things – scale, a niche, and digital capability.

He explained that insurers want to work with brokers that have access to data, and that if smaller brokers cannot offer this on a big enough scale, it won’t be worth the insurer’s time.

“The threat to the smaller high-street broker is that you haven’t got the headroom to make that investment; to keep up with the know-how, to provide a new and different route for insurers, that from their point of view is not just a new and more expensive version of what they can do for themselves,” he said.


Aviva last year launched personal lines products to brokers at a cheaper rate through its e-trading platform.

In five months mostly regional brokers have written into seven figures through the platform, and Bayles expects the platform to have written £10m by the end of the year.

It’s a sign smaller regional brokers can have a future in the personal lines space, but it might require the support of a larger business.

David McGowen, director of Ipswich-based Woodward Markwell, said that being part of the Willis Towers Watson Network has been crucial to his firm’s success in the personal lines space.

Along with the benefits of being able to discuss business decisions with fellow members, the independent broker has benefitted from an app generated by the network, making it easier for customers to make a claim.

He said: “It’s not feasible for a broker like ourselves, with around 50 staff, to develop and market an app that is what millennials are looking for.

“We couldn’t afford to get it made. Being part of a network, the brokers can discuss with the network ideas for what they need.”


With the support of a network, the concerns raised by McCafferty connected to a lack of scale could be overcome.

Willis Towers Watson’s Eddy Castles, who has overall responsibility for the network, said he believed in the coming years personal lines brokers could survive without the support of a network, but that they wouldn’t be able to thrive.

“I’d like to think that we bring to the relationship lots of things that are really useful,” Castles said. “These aren’t things that you would use every day and on your own you wouldn’t invest in them. But having access to them and having the ability to move up scale in terms of client size is increasingly important. This is something we can facilitate.”