Looking to hit the commercial scene? We offer some simple guidelines to joining the big boys
What does an insurer have to do to break into the UK commercial market? For me, the two key ingredients are a strong regional presence and a highly targeted distribution strategy.
Several insurers have opened regional offices in the past year. It’s a trend I can understand, as it is the most effective model for any insurer wanting to make its mark.
That said, it is far from easy. You also need a real understanding of how the market works, particularly what brokers and their clients are looking for. And it takes time to become established in a region. An ‘open for business’ sign is not enough to convince brokers to switch allegiances. They are looking for evidence that the insurer is committed for the long term and has the people and service to make a difference. In our experience, that takes four to five years.
It is also important to be clear about your organisational and service model and stick to it. Brokers are often aghast at the speed with which insurers introduce operating models. Sure, they will evolve; there is always pressure to improve costs and efficiency. But it makes no sense to constantly chop and change models and people. Brokers expect and value continuity.
Our preferred model is for regional offices led by professional managers and staffed by experienced, technically strong underwriters who can trade with brokers. It’s simple, but it does make a difference. Too often, we work in a straightforward industry made complicated by its inhabitants.
Then there’s distribution. One approach is to open the door to all brokers and see what sticks. But it is hard to see how this can ever take a relationship beyond transactional level. Business easily won in this way will be easily lost too.
It is extremely difficult to be all things to all men, managing agencies with 3,000 to 4,000 brokers. But two things are clear: it is difficult to focus on the brokers that matter, and brokers often resent terms from an insurer being available to any or all of their competitors.
Our approach is to focus on a small number, with about 80 brokers nationally getting our attention and delivering more than 80% of our income. If you work with brokers that are committed to working closely with you, you target activity in the right places. It can take years to build these relationships but it is worth the effort.
Many independent commercial brokers value a consistent service offering, easy access to decision-makers and a degree of exclusivity. Put these things together and
you can add real value to the broker’s clients.
Here are five reasons why:
1. There is a clear understanding of each other’s strategies, meaning a real focus on working on business where a difference can be made.
2. Local teams with local underwriting knowledge can build and maintain relationships with frontline broker staff.
3. The broker and underwriter can meet with clients when required and tailor propositions that address their needs.
4. Underwriters can build genuine loyalty with brokers and clients.
5. Underwriters can focus on business they can win – and do a proper job on that business. IT
Simon Cooter is director, UK market management and regional operations, at Brit Insurance.