There is no doubt that 2016 was a challenging year for insurance brokers.
Indeed, many of the hurdles to overcome in 2017 have their origins in 2016. The SSP outage is one such example and, although it first reared its head in the summer, it is still having ramifications.
But it is not just SSP users that have been affected and the issue has got brokers across the market looking at their disaster recovery plans.
Paul Moors, chief executive officer at The Bollington Group, says: “What this incident demonstrates is the need to have a decent plan B, with a workable and well tested disaster recovery strategy.
“We have definitely focused more on increasing our resilience and enhancing our continuity plans since the summer.”
This is a view echoed by Norrie Erwin, director of insurer development at The County Group, who comments: “It is not something you can be complacent about and you have not only got to review it internally, but also with your supplier partners and clients, in terms of the impact on them.
“We work very closely with our IT partners and we treat them as strategic partners. We need them to be fully functioning for us to deliver our business plan.”
I think we will see the expansion of start-ups in specialist areas and they will be using things like data manipulation technology, online training and so on to make a difference. It can be done and brokers can come into the market and make a difference Norrie Erwin
In the months and years ahead the reliance on technology will only increase and so too will the potential impact of future outages. This demands brokers put in place detailed disaster recovery plans that offer them work-around solutions.
Disaster recovery is a message brokers take to clients on a daily basis and it’s one they must ensure forms an integral and well-maintained part of their own operational procedures.
Creating an effective digital proposition will also enable brokers to manage clients of different sizes sustainably, and this will ensure they do not simply lose small clients to the direct channel.
Putting this into a practical context, Jon Newall, principal at Lockyer Insurance, says: “We have a system on our website called My Business Toolkit, which costs us a set annual fee to maintain and keep, but it gives clients all of the HR, health and safety, and legislation updates they need.
“There are also over 3,000 ‘how to’ guides and templates our customers can access. This lets us support smaller clients in a way that is cost effective for us and valuable for them, and so we can maintain our relationship with them even though they do not have a large individual premium spend.”
Insurers are also keen to make sure their IT propositions can support a wide range of brokers and clients effectively.
Paul Tombs, head of package and e-trading at Zurich, says: “We have a multi-market strategy in terms of working with all brokers.”
“We have invested heavily into our extranet capability. It can work with large brokers as well as supporting some of the smaller brokers delivering a quick, easy and simple to deal with solution for them to be able to get quotes and bind covers for smaller customers.”
Getting the best of Brexit
Brexit is another issue that took shape last year, although its full impact is yet to be felt.
Newall hopes that Brexit will strengthen the carriers that have entry to the UK market. He says: “I am hoping that it gets rid of the poorer end of passporting. One of the biggest drivers we have got here in the UK is offshore insurers undercutting UK insurers.
“They are undercutting them because their home countries do not have the solvency, liquidity and regulatory requirements that the UK market does.”
Newall points to insurers such as Liechtenstein-based Gable Insurance and says that the collapse of insurers regulated offshore is detrimental to everyone involved in the UK market. He adds: “I love that we are regulated in the UK – it gives customers more security and more faith in the market.”
If Brexit means these carriers no longer have access to the UK market, then it will raise the bar in terms of operational standards and financial security, but it may make it difficult to place certain risks.
Erwin at The County Group welcomes the potential for Brexit to further raise the standard and strength of carriers operating in the UK market, “provided that solutions can be found among mainstream UK insurers for certain portfolios of business where help is required.”
He continues: “There has to be an appetite from UK insurers to write business which is high risk.”
In addition to changes in the insurer market, the broker market will continue to evolve and consolidation will remain a driving force.
Erwin is positive: “I think we will see the expansion of start-ups in specialist areas and they will be using things like data manipulation technology, online training and so on to make a difference.
“It can be done and brokers can come into the market and make a difference.”
Tombs believes that brokers that put a focus on niche areas and offer particular expertise to clients will create an attractive option for clients.
“Clients will have to decide if they want a relationship with a larger organisation that has a more generic offering or if they want something more niche and tailored,” he says. “The choice is important.”
Consolidation has been a factor of the broking market for decades and brokers understand the need to evolve their model continually and take advantage of the changing landscape.
However, Moors gives one word of caution: “We should be guarded against new start-ups that do not have the right regulatory control.”
For old and new brokers alike, it would seem 2017 offers plenty of opportunity, but there will also be difficulties to overcome.
Source: Edward Murray - Insurance Age