Those firms without a clear purpose will find the market ‘a harder place’, says partner
BrokerFest 2023: Insurers and brokers will need to make the difficult choice between size and speciality in the years ahead.
Attendees to a wide ranging panel debate at Insurance Times’ BrokerFest 2023 event last week (23 February 2023) heard that difficult economic conditions were likely to remain challenging for the next three to five years.
As a result, brokers and insurers must be clear on their strategy to navigate those challenges.
Huw Evans, partner at KPMG UK, explained: “If you are a business who knows what you are there for, know your products and clients then it will be a lot easier to progress in this environment.
“The future is to either have scale – to deliver the economies and leverage that goes with it – or be a specialist. You know what you do and you are the best at it in the market.
“For those who are in effect stuck in the middle – who have broad geographical coverage and a broad range of products but are third, fourth or fifth in all the areas in which they operate – the market will be a harder place.”
Phil Williams, chief operating officer at Clear Group, added: “You will need to have a real client focus – it will be an interesting landscape, but change brings with it opportunity.”
Catherine Carey, head of consumer strategy at Consumer Intelligence, said brokers should look to provide added value if they were to prosper.
“The current climate does contain opportunities,” she explained.
“There is always an opportunity to make yourself stand out.”
She cited the example of Vitality Health, which offers its policyholders reduced gym membership, alongside its health insurance products.
“Giving something back at times when customers are finding it hard can reap real benefits,” Carey added.
“Can you add value to what you provide. What can you add in terms of value which is not specifically about insurance?”
However, Williams said the move to offer additional attractions at a time when policyholders were finding it hard to afford cover could backfire.
“I do not want a free coffee,” he said. “I want clarity and truth, especially with vulnerable customers. As an industry we do not want rinky dinks.”
Both Evans and Williams agreed that while lessons had been learned from Covid, the regulatory regime and proposed new rules may provide the biggest potential test for the industry in future.
“A huge amount of time and effort is being spent on regulation,” Williams said.
“A lot of what we have seen is, in many ways, backward looking – we have to deliver the same amount of investment around future risks, but I do not think we are doing that.”
Evans added: “The FCA’s determination not to define what good is has left a lot of firms to decide what good is – for many it is what fits into their business model.
“The concern has to be that, in the future when the FCA makes a decision, we will find firms discovering the view of the regulators is very different from their own.
“It is likely we will undergo a very bumpy period while any new regulations are implemented.”
Williams added: “We need to remember all our work is funded by our clients and UK plc. The money we spend on meeting our regulatory responsibilities is significant and it is putting a cost burden on our industry.”