Chartered brokers could soon be in line for exclusive products and discounted rates
Are non-chartered brokers at a competitive disadvantage? Not yet, but they could soon find themselves slipping down the commercial pecking order.
Chartered firms can look forward to exclusive products and even discounted rates, heaping more pressure on non-chartered brokers to get with the programme. There are 127 chartered broker firms in the UK, up from 98 at the end of December 2011, and the number is rising all the time.
AXA Commercial Lines commercial director Alistair Stewart says advantages for chartered firms are not yet as clear-cut as discounted rates - but it could happen.
“What I see likely in the immediate future is making exclusive products available. Around the business transaction we’re more likely to see different types of offers before we actually say ‘from now on our chartered broker will get a 5% discount’. I do see it as real potential down the line though.”
Better loss ratios
Stewart adds: “In general the loss ratios are marginally better for chartered brokers. That could be an indication of the type of investment that these companies make in people, in client relationships, or in risk management advice. It might just be coincidence - but hopefully not.”
Brokers of all sizes have gone for chartered status, with the Chartered Insurance Institute boasting of “broad geographic coverage”, and citing the “peer mentality” factor.
CII business development manager Scot Grimmer says: “If you get a very good, very large firm like Jelf or Bluefin, it affects the smaller and mid-size brokers in those geographies (see map, right). If you don’t have it you’re almost the odd one out.”
Communicating benefits
Meanwhile, the challenge for chartered firms is to communicate the benefits to clients and other partners.
Bartlett head of corporate risk Mike Briggs says: “You’d think that a chartered insurer would be seeking to work with chartered brokers, as they have a common belief in what it stands for. I can see it happening.”
Briggs adds that the industry has work to do in communicating the benefits of chartered status to clients and business partners such as banks.
“Since the financial crisis, banks have been drawing insurance brokers into letters of undertaking that the insurance of the company they’re investing in is
fit for purpose.
“What surprises me is that the banks are not making an assessment of the quality of the broker who is writing that letter.”
Personal lines brokers can benefit from chartered status kudos
Chartered status has less pull for personal lines brokers than for commercial because of the commoditised nature of the product. But it still has value, especially when it comes to differentiating from other financial advisers - namely those flogging payment protection insurance.
Towergate group head of organisation and development Fiona Andrews says: “We’re quite different from the banking community in that we’ve done nothing wrong. Consumers probably think that we’re the same as other parts of financial services in the way that we sell. We’ve done a lot of work so that people feel a level of confidence when they come to us for advice that they’re talking to fully qualified and professional people.”
Andrews believes that the industry should be striving towards consumer awareness of when they are talking to a chartered broker, in the same way that they know if they’re talking to a chartered accountant, architect or general practitioner.
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