‘Never underestimate a direct writer’ was one key message from the latest gathering of young brokers who seized the opportunity to share views on industry challenges. They debated the long-term future of aggregators and the potential loss of SME clients in a market ruled by price
Britain's second largest city, Birmingham, came up trumps as a venue for the seventh Insurance Times IT Pack gathering, with a wide selection of well-informed and talkative brokers in attendance. One of the hot topics thrashed out was the battle for personal lines brokers competing with aggregator sites. The cut-throat nature of broking was revealed as some IT Pack members agreed that their customers were being poached by aggressive broking competitors.
The assembled brokers gave great feedback. Brett & Randall commercial account broker Luke Clarke said: “It was enjoyable and very informative. Good to hear the views of people of a similar age with a similar amount of experience.”
Bennett Gould & Partners commercial account handler Kirsty Bronson commented: “It’s a great way to meet like-minded people within the insurance industry with a similar level of experience. This helps you to build relationships, broaden your horizons and find out where you can go within insurance.”
A people business
The conversation opened up, with delegates explaining how they became involved in the insurance industry, with many agreeing it was a career they “fell into”. However, there was a consensus that broking is a challenging and varying industry. Aon client manager Victoria Goodwin spoke highly of her firm: “Aon leads the way in pushing people forward for their skills and exams. It offers a really good package in terms of paying you to pass your exams.”
Louise Bowyer of Thames City Insurance Consultants been working in the industry for 11 years and is enjoying teaching people how to sell. She said: “It is a feelgood factor, teaching people to the standard where we are, making them realise it is about more than money.”
Head of trading at Aviva’s Midlands office, Roy Stirzaker said that 35 years in insurance had not dulled his enthusiasm for his career.
Stirzaker explained: “Not many people choose this path; they fall into it. I have not regretted a single day. You learn something new every day. It really is a people business. Insurance gives people peace of mind and it is important to get it right.”
The advance of aggregators
Aggregator pricing was the first subject to be opened up to the floor, with a discussion of the way in which aggregators have seized the personal lines market. The debate embraced the effect aggregators were having on the reputation of the industry and whether their success would continue.
Goodwin remarked that when using an aggregator site, she was fed back factually incorrect information.
Sutcliffe Solloway commercial account handler Ben Houghton said that aggregators were giving personal lines insurance “a bad reputation”.
Aviva director of product and underwriting Gary Williams said pricing was the key mechanism aggregators used to attract buyers.
“It hurts the entire market, but mainly customers, who should not just buy on prices. If you buy insurance, you need to buy it so it is fit for purpose, otherwise it will fail clients at claim time.”
He said Aviva did not view personal lines insurance as simply dishing out the lowest price.
He explained: “We do not see it just as a price point. We want to serve customers and take care of our customers. We realise [basing insurance solely on price] is a bad equation for the industry.”
R K Harrison sales executive Jamie Cocklin commented: “The threat of the direct writers remains for the broking industry. The direct writers already have the lion’s share of the motor and small personal lines market, and are slowly entering the commercial field. Their success in the commercial area to date has been limited, although they should never be underestimated.
“Current premium levels are unsustainable; however, the current economy is affecting the ability of an insurer to deliver rating increases.”
Clarke believed that price would continue to rule personal lines because it was a bothersome necessity for most people.
He said: “Nobody wants to buy insurance. People get it out of the way as quickly as possible. That is why they use comparison sites.”
Other brokers agreed with Clarke, saying the competitive pricing of aggregators would continue to give them an edge. However, it was felt that over a long period a sub-standard performance on claims could lose aggregators customers.
The group agreed that there was a big advantage for brokers in commercial lines business, because the specialised advice of brokers could not be replaced electronically.
Although some online pricing services, such as Direct Line for Business, had bitten into the market for small-scale businesses, brokers were still dominant in finding insurance for businesses with large turnovers. Clarke said: “Larger clients want to know they have the right cover in place. They are looking for service. SME clients are going on the [price].”
Brokers said that some insurers were being quite aggressive in their pricing, however. Two names mentioned were Evergreen and LV=, which were winning business through their competitive rates.
Houghton said a lot of clients were simply looking for lower premiums. “You have to look at people like LV=, and we are finding they are quite good with their business.”
JCB Insurance Services account handler Rebecca Samuel said the market was very competitive, with brokers trying to poach business from one another.
Goodwin added: “It is a changing economic environment; you can understand that sales people have targets and retain targets, and perhaps people think that markets are starting to harden. Lots of people pick up and retain business and see what sticks in 12 months.”
Brokers rounded off the discussion by sharing their plans for the future. Bowyer said: “I want to run my own sales team and compete against other sales managers.”
Bennett Gould’s Bronson shared her ambitions: “I like the idea of going up the ladder, either with an insurer or staying with an insurance broker.”
Cocklin had a similarly positive view of the profession: “During my interview with R K Harrison, it became apparent that the insurance industry offers more diversity and opportunity than the stereotypical idea of the ‘insurance man’ suggests.
“I am enjoying my current role and benefiting from my employer’s sponsorship of the Chartered Insurance Institute exams. I am confident that
I will be able to progress. Such is the range of opportunity within the organisation and the industry, it is difficult to envisage where I’ll be in the future.” IT