With insurers chasing growth at any cost, there's an unerring sense of déjà vu about today's marketplace

I’ve spent the last month talking to a variety of insurers about service levels, commission income, profit, expectations around the economy, claims handling, difference in conditions/limits on any transfers, where we see ourselves over the year, acquisition, strategy and who will be ‘looking after’ our business, in terms of relationship management, underwriting and claims handling. I’m sure a good number of my fellow brokers have been doing the same.

Some insurers want growth, some are happy with retention, and some get bad news! Brokers alike will, no doubt, be given targets, be involved in strategic thinking, and may or may not accept what’s on the table. Unlike most years of late, it’s refreshing to actually have those conversations relatively early this year.

So, where do we get growth? Acquire, consolidate, marketing, telesales? Does that result in sufficient growth for a hungry insurer?

Brokers appoint telesales marketers, email marketing agencies, buy databases of potential prospects to follow up, join lunch clubs, business networks, sports clubs and think of interesting ways of attracting clients to their proposition. Many insurers offer marketing budget, marketing assistance, collateral and support, as well as a level of broker entertainment.

History repeating itself

To those of you that are over 50 or so, today’s crazy marketplace must look like déjà vu. For those under 50, these may be perceived as exciting times (you understand that I only know these things by talking to my father …)

What I do perceive is that little heed is paid to some of those historical perspectives and the financial disasters that followed in the interests of writing for market share. I suppose that cynicism pervades all markets – certainly mortgages and banking too.

Is growth a reality in today’s market? One or two think it is. If so, where do we get growth from? There are very little, or no rate increases. There’s over capacity and, therefore, increased competition. There are a number of new A and A+ insurers making good progress into the market, there are one or two major global players making a play for growth by aggressive underwriting. The "we’ll write anything at any price" approach – is that really back in the market place? There are, apparently, still deals to be had with commission agreements, some must have played that card a little too hard and might be finding that deals are harder to determine, while others are still finding a commission percentage advantage point or two across their book of business.

Fierce competition

There are brokers who have MGAs and/or binding authority arrangements, hence cutting costs out of the service price, and who still give good levels of cover backed by an A+ underwriter. There are insurers throwing underwriters into brokers' offices, trying to be first in line to get to quotation and be given first and last shout on a piece of business. The competition is tremendous.

And, as today’s group of young and thrusting underwriters inevitably get their fingers burned, so the cycle will start all over again with yet another band of high-flyers persuading the bean counters, or being persuaded by those accountants, that this is the way to go.

This year it really is a mix of business offers where, clearly, in my view naturally, some of the hierarchy running these big insurer businesses have their head in the clouds and are not in touch with what the market is doing.

Maybe tomorrow’s ‘innovation’ will be ‘buy one get one free’. Nowadays it takes a lot to surprise me!

We’ll see. An interesting 2011 methinks, and I’ll still find time to meet some clients, existing and potential, with a view to doing the real broking job.

Bob Pybus is a director of The Institute of Insurance Brokers (IIB) and a director of NPA Insurance Broking Group.