In the lead up to the BIBA conference*, Adam Beckett, Managing Director of Broker and Partnerships, explores how insurers and brokers can work together to survive the soft and changing market conditions together.
Despite the concerns over the economy prompted by the lack of growth in major economies like the US, the UK insurance market is softening.
While that brings lower premiums to customers, it creates new challenges for brokers and insurers alike.
The softening of the market
A softening market typically leads to lower premiums, more capacity, and broader coverage and as inflation stabilises, we’re now seeing a softening of the motor market and the same trend in home insurance, although at a slightly slower pace.
Living in what is an increasingly commoditised world, customer needs, behaviours, and expectations are changing. We have become more price sensitive, I know I have, and the influence this has on our decision making is greater than ever.
Competitive pricing, a decrease in premiums and better coverage options enable us as insurers to better serve our customers, but a disciplined approach to pricing is required to ensure both customers and brokers do not experience shocks.
The risk of a disintermediated market is higher, and the growth of Direct insurers is obvious for us all to see. Insurers must therefore adapt and work closely with brokers to survive the changing market conditions together. There is great heritage for this as brokers have always been entrepreneurial and evolved their businesses to continue to thrive and adapt to changing market conditions.
To survive a softening market together, I believe insurers and brokers should focus on two things: leveraging technology and improving retention.
Technology
With the use of digital tools such as online quoting tools and CRM systems, we must innovate and deploy technology to streamline operations and improve customer interactions.
The introduction and application of data analytics can enable us to identify trends, improve risk assessment, optimise pricing and use insight to drive a more and more competitive proposition for our mutual customers.
For example, through our sophistication of risk selection using machine learning, we were able to anticipate the unprecedented inflationary increases of 2023 and early 2024. By detecting it early, we were subsequently able to respond, remain competitive, and avoid uncertainty for brokers and partners.
Retention
We know customers want cheaper insurance, but we also know there is value in consistency when building brand loyalty with an insurer and broker.
We need value-added offerings that give customers more than just competitive prices.
Providing brilliant customer service may sound obvious, but the impact of it is not to be underestimated. When customers need to make a claim, a competitive price will only go so far. In addition, insurers must work with brokers to extend product ranges and ensure the right product propositions are available for our customers.
Through stability in pricing and awareness of market trends, insurers and brokers must deliver genuine value to customers.
Powerful partnerships
As an insurer, we must continue to take a disciplined approach to pricing, ensuring we build a profitable and sustainable business while delivering good value to our customers.
Our presence in the intermediated market is constant, and our focus on stabilising pricing and staying ahead of economic trends continues. As is our desire to empower the broker with the tools needed to compete with Direct insurers.
*The BIBA Conference is the largest insurance conference and exhibition for brokers in the UK. Delivered by the British Insurance Brokers Association (BIBA), it is a big milestone in the annual calendar during May. We’ll be there discussing how we are maintaining stability in a soft market, and how our support for brokers will enable us to survive these changing market conditions together.