SME package schemes may have delivered the most commission for brokers, but will the Covid-19 pandemic change the broking landscape?

The second edition of the Insurance Times Schemes Index in association with SchemeServe has revealed that SME package schemes have delivered the most commission for brokers, bringing in a total of £2.3m of commission from gross written premium (GWP) of £13.1m.

The Index revealed SME package schemes had an average commission rate of 17.8% at first premium, increasing to 19.6% at renewal.

But it was contractors’ all risks policies that delivered the highest levels of commission as a percentage of premium, with a renewal commission rate of 22.5%, up from 14.9% at first premium, making it the only business line to exceed the 20% commission rate level.

“Per policy, contractors’ all risks was by far the biggest earner for brokers over the period,” SchemeServe founder and chief executive Adam Bishop said. “These schemes scored high on new business volumes and good commission levels at first premium, as well as good overall average commission levels, making them the most profitable schemes for brokers.

“The data shows it delivered £1.85m in commission from £12.4m GWP.  This is likely to reflect the corresponding growth witnessed in the property construction market pre Covid-19.”

At the other end of the scale, car insurance schemes had the lowest levels of commission, with rates of less than 0.1%. Meanwhile, legal expenses (0.6%) and motor trade (0.5%) were the other two business lines with commission rates of less than 1% of gross written premium.

Schemes Index Chart

And the Covid-19 pandemic is already seemingly having an impact on the schemes market, with premiums for event insurance schemes increasing almost six-fold at renewal, way ahead of the other two business lines experiencing a huge increase in premiums, namely excess of loss liability ( 305% increase) and caravan and trailer insurance (213%).

Bishop said that the coronavirus crisis will be a game changer when it comes to which schemes are likely to prove most profitable in the future, with cycle schemes and cyber insurance tipped to perform strongly.

“It will be very interesting to compare the forthcoming figures during and post the pandemic to see the impact this has had on these schemes, as well as for other product lines,” he said. “There are likely to be winners and losers; as well as highlighting those areas where products have understandably taken a hit, we would expect there to be a clear indication of which schemes are performing or show potential in the new post-Covid era.

“For example cycle schemes and cyber are expected to be high growth areas.  Together with our clients we will be analysing the data the platform gives us to track any evolving trends with interest.”

Schemes Index


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