Insurance Times sits down with commercial wheels broker McCarron Coates to explore how the Covid-19 pandemic has impacted its clients and what the sector can expect moving forward

For many commercial brokers, 2020 was a challenging year as a result of the ongoing Covid-19 pandemic.

Putting aside the highly publicised legal battle between insurers and the FCA regarding the validity of certain business interruption policies, other covers have also been significantly impacted, for example commercial fleet propositions.

Independent Leeds-based commercial transportation and haulage broker McCarron Coates, led by directors and co-founders Ian McCarron and Paul Coates, told Insurance Times that it has “felt the pain” on behalf of clients “that have contracted in size” as a result of the mitigating measures imposed by the government to stem the spread of coronavirus.

In the first week following the initial national lockdown announcement last March, the broker “deleted about 3,500 vehicles off policies”.

Coates explained: “Buses and coaches are heavily affected because when schools are closed, the coach operators weren’t taking anyone to school.

”All the sports events were cancelled, no-one’s going on holiday on coaches, so I think 96% of the coaches were off the road and there was very little government support.”

McCarron added: “Our phones were just going crazy. And that was because the schools had stopped. The vehicles didn’t need to be insured and they needed to stop the payments. This [was] really hurting us hard.”

Providing a helping hand

Although its clients were swiftly dwindling in size, McCarron Coates used its resources to support commercial clients where possible – it hoped these businesses would have a resurgence once the pandemic was more under control.

“A lot of our clients mothballed – they went down from 100 vehicles to five,” McCarron said. “We have to be there to support them on the way through because that five will hopefully grow back to 100.

“If that five goes down to zero and they stop trading, then we lose a client. We’ve got to go and find another 100-vehicle client, so it’s really important to make sure that if we can get them payment holidays, if we can get them reduced cover, anything we can do to support them on the way through means that actually, we come out the other side and they survive.”

Furthermore, specialist commercial brokers - such as McCarron Coates - can play an incredibly active role in supporting their chosen business sectors during these economically challenging times, taking advantage of their reputation and niche industry knowledge to raise the profile of sector struggles.

For example, McCarron Coates participated in a campaign set up by coach operators called ‘Honk for Hope’, which called on the government to provide support measures for the industry.

In addition to this, the broker established its own corresponding campaign – ‘Wish You Could Hear’. This supplies physical or electronic postcards featuring a tourism coach, designed to be sent to local MPs to raise awareness of how Covid-19 is impacting the commercial transportation sector.

Morley and Outwood MP Andrea Jenkyns attended the campaign’s launch in early December last year.

“This is not just a job for us; it’s what we do, we stand by our clients,” Coates added.

Meeting clients over the course of the pandemic has also proved problematic for McCarron Coates, which is used to conducting regular face-to-face meetings that suit clients’ needs and timetables, for example having sit-downs at a haulage yard or on a coach.

“The biggest bit that we struggle with is the non-face-to-face interaction,” McCarron admitted.

As more people stay at home in order to adhere to government restrictions around Covid-19, the online shopping and delivery industry has escalated rapidly in response to consumer demand.

McCarron described this “final mile delivery” sector as “a volatile market” as the high customer demand pushes insurance to being an afterthought. For example, a courier that has to deliver 200 parcels during their shift may not be as concerned with maintaining the good driving habits that are helpful for the company’s insurance policy.

“We’ve seen claims increasing and it’s only really going in one direction. Capacity is limited within that marketplace and rates are increasing day in and day out. Trying to adapt to a different way of working with our clients is challenging,” he continued.

For Coates, however, the pandemic has created a drive for quality cover rather than insurers being solely focused on volume.

He said: “There’s definitely a hardening of the rates, but without doubt an appetite from all our carrier insurers to write business. It’s how it’s presented to them. It seems to be more of a focus on writing quality business.

“[There] has been a tendency in the past from certain insurers to write just on a volume basis, but that seems to be waning as the world is changing financially and insurance companies need to make a profit.

“We’ve see more MGAs coming into the market. We’ve seen some MGAs withdraw. We’ve seen a lot of key, influential people move on to pastures new. So, there’s a lot of movement in the market.”

In terms of how brokers themselves have responded to the pandemic pressures, Coates noted that “it’s forced brokers to get up to date”.

He explained: “For a lot of brokers, it’s forced them to update things and I think it’s going to be good news because it’ll drag quite an old, antiquated, traditional [sector] in most ways kicking and screaming to something more akin to today’s life.

“The perception of brokers is old, fuddy-duddy, they never [use] technology and that is true to a certain extent for a lot of insurance brokers.

“We’re the opposite. We’re young and we’re on with the tech. Our preference is always client facing, [but pre-pandemic] we’ve [still] always used [Microsoft] Teams, always used Zoom.”

Insurer partnerships

A large part of working in commercial insurance, said McCarron, is building and maintaining relationships within the London Market.

Although the capital’s insurance hub can be “like an old gentleman’s club”, with each syndicate keeping an eye on where business is placed, McCarron emphasised that his brokerage is “not afraid of a difficult conversation” in this tit-for-tat market.

He said: “We’ve had to really understand our markets because the majority of our business is placed in the London Market and it’s often seen as unattractive business for insurers. We couldn’t insure a coach fleet, for example, with the likes of Aviva, Zurich, AXA – none of them would even talk to us.

“So, what we’ve had to do is really develop, forge and cement our relationships with [the] London Market. It’s a challenging market to work with because, even now, it’s so traditional and like an old gentleman’s club.

“We know if we move one piece of business from one syndicate to another, we are going to have a difficult conversation, or we’re going to have a potential issue moving forwards and me and Paul have always taken the view that actually, we’re not afraid of a difficult conversation if we can stand by the fact that we are doing things that are right for the client and right for the agencies that we work with and support.”

Commercial broking

Source: CII, 2018