Schemes specialist insurer MMA has launched the second iteration of its independent Broker schemes survey. This year’s report demonstrates continuing growth in the number of commercial brokers undertaking schemes work and highlights the high level of mobility in schemes placement.
The second schemes study shows an increase in brokers managing schemes, with 52% now managing one or more. This responds directly to MMA’s own findings which have seen a 25% growth in premiums in commercial schemes in the first half of 2012 compared with the same period of last year.
The market is highly mobile, and when looking to select a partner for a new scheme, 40% of brokers would look widely across the market or use a competitive tender process - backed up by MMA’s own 20% increase in new enquiries seen this year. Less than two-thirds of brokers would expect to directly approach insurers with whom they had an existing relationship.
The schemes market is driven by access to expertise, not price. When looking at the frustrations that brokers suffer in dealing with schemes, premium increases rated less than 1%, indicating the biggest issue was a lack of a personalised skilled service from insurers. In fact, the highest rating factors that caused the most frustration were a slow, or lack of, response to queries (29.8%), lack of underwriting flexibility (29.8%) and lack of access to decision makers (26.7%).
The research also looked at the marketing activity undertaken by brokers involved in the schemes arena; it demonstrates that a significant amount of effort is used in marketing schemes. Traditional approaches appeared most often with 41% working with trade associations, 31% undertaking both cold calling and attending trade fairs and 41% using both hard copy flyers and e-mail marketing. Social media made up only 4%.
Commenting on the study, MMA’s Schemes Manager Chris Withers said:
“For such a growth area for commercial brokers, and as such for insurers, I was surprised to see that the key areas of frustration are the most straightforward, the need to offer a personalised skilled service. This suggests a growing complacency from the established insurers which presents opportunities for insurers such as MMA where we are already working with brokers to provide a highly skilled and more personalised service.
“We were not surprised by the number of brokers going out to tender with new scheme ideas; this suggests a mobility in the market when it comes to placing schemes. Brokers are loyal but their loyalty has not been rewarded and with the growing complacency in service provision from insurers they are voting with their feet. The ongoing service is more crucial than price.
“Due to the success of traditional marketing methods in the schemes market it is clear that insurers should be working more in partnership with brokers. The broker brings the technical knowledge and specialism within the sector and the insurer carries the risk and brings the service and perhaps marketing consultancy to help make the schemes successful for all parties involved.
“The growth shown in the research agrees with what we are seeing in MMA, continuing growth in brokers undertaking schemes business. As a growing market insurers should be upping their game, offering a more dedicated service and offering brokers the support they need to make their schemes a success. At MMA we have a dedicated schemes team that work with brokers not only to develop new schemes but to ensure the schemes continue to grow and increase in profitability.” Withers added.
MMA has developed a dedicated schemes division since joining the market. The team’s focus has been to work with brokers to understand their needs, to offer a superior service and develop better, more suitable products. The team works to respond quickly to enquiries, offering more direct access to decision makers and a more flexible underwriting style.
The exclusive survey of 250 UK commercial insurance brokers included 55 National broker, 45 super-regional brokers and 150 provincial brokers and was conducted by independent research company FWD Research during 21st May – 6th June 2012.
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