Around 84% of brokers think being a specialist makes them more profitable
Nine out of 10 specialist brokers believe they have a competitive advantage over their rivals, according to research from Ecclesiastical Insurance.
The study, which surveyed 200 brokers in May this year in collaboration with FWD, sought to understand the power of specialising in the broking market. This work, which was supported by a series of roundtables, found that around half (52%) of brokers in the UK market identify as a specialist.
While sector knowledge was the main consideration for brokers looking to become a specialist (73%), other drivers noted in the survey included brokers’ desire to differentiate themselves in the market (53%) and the opportunity to maximise revenue (50%).
In terms of why being a specialist broker was deemed to be important, the top three reasons cited by brokers were to bring expertise to clients, to provide the best solutions and be more profitable.
Meanwhile, broker respondents also felt customers were more likely to choose a specialist rather than a generalist broker because of trust, specialist knowledge and a more personalised service.
Adrian Saunders, commercial director at Ecclesiastical Insurance, said: “In today’s market, where clients value expert knowledge and advice, our research shows becoming a specialist gives brokers a distinct edge over their rivals. They have a better understanding of the risks facing a client and the cover required.
“As a specialist insurer, we understand that clients want to do business with someone they trust, so it’s no surprise that trust came out on top in our survey as the reason brokers believe customers choose a specialist over a generalist.”
Benefits of specialising
Ecclesiastical’s findings further revealed that almost nine out of 10 brokers surveyed agreed that being a specialist gives them a competitive advantage over other brokers, with 84% saying being a specialist makes them more profitable.
Meanwhile, nine out of 10 brokers also confirmed that being a specialist means they have a stronger relationship with their clients.
In addition, 88% of brokers feel being a specialist makes their business more attractive for investment, while 86% think it provides better development opportunities for their employees.
Around 84% of respondents also said they are more likely to place business with a specialist insurer than a generalist.
The broker survey also explored how specialists differentiate themselves and demonstrate value in an increasingly commoditised market.
Nearly a quarter (20%) of respondents said that helping their clients to get the best cover at the best possible price was the most important way brokers could demonstrate their value.
Other ways brokers can highlight their worth include understanding their clients’ issues and offering bespoke solutions (17%) and communicating policy details to their customers in plain English (11%).
Saunders said: “A consequence of the pandemic is that brokers have had more time to connect with their clients, albeit virtually.
“This has allowed specialist brokers to get to know their clients and demonstrate their value in offering bespoke solutions. The question for brokers is how they replicate that intensity once we return to a more normal way of life.”
Broker threats and trends
Looking ahead, the study found that the biggest threats facing specialist brokers are digital intermediaries (57%), direct insurance (50%) and peer-to-peer insurance (41%).
Despite these threats, when asked about future trends, eight of 10 specialist brokers agreed there would be increased consolidation among specialists, to combat the rise of large general brokers.
Three-quarters of respondents also agreed that there is room for further growth in niche insurance broking, as the bigger players tend to focus on general cover.
Saunders believes the trend towards specialism will continue to accelerate as more brokers realise the benefits of operating as an expert within a niche market.
He said: “What’s clear from our conversations with brokers is that specialism manifests itself in different ways. There are pure specialists, focused on particular products and sectors, there are hybrids, who blend specialist skills with a general capability, and there are more generalist brokers, who access specialist skills and knowledge on a more ad hoc basis.
“The common thread for all of them is you have to be authentic. Specialist brokers have to immerse themselves within their communities so they understand the issues facing their clients.
”If brokers can do that successfully and add value beyond insurance, then they will reap the commercial rewards. As a specialist insurer, we want to help brokers understand how they can harness the power of specialism to best meet their needs.”