UK Commercial Insurance Broker Survey H1 2008

Introduction

Datamonitor's commercial insurance broker survey analyses the opinions of 154 respondents covering their views of opportunities for growth as well as threats to their business, their experiences of working with different insurers and their attitudes towards FSA regulation.

Report Highlights
Highlights

Large national brokers and direct underwriters posed the largest threat to respondents, with more than 15% of brokers citing direct underwriters as a high threat to their distribution model while a further 14% perceived large national brokers to be a high threat to their business. 'Excellent claims handling', a 'high level of personal service' and 'rapid query response' are all valued highly by brokers. 'Excellent claims handling' was valued most, with 79.9% of respondents citing this, while a 'high level of personal service' and 'rapid query response' were rated as important by 76% and 75.3% respectively. Most brokers surveyed by Datamonitor felt satisfied with the level of assistance they received in complying with FSA regulation from their insurance partners. Almost three fifths cited that their insurance partners were 'helpful' and a further 16.2% cited that they were 'very helpful'.
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TABLE OF CONTENTS
DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Direct underwriting, particularly in the commercial motor insurance market, represents a large threat to commercial brokers 2
Direct insurers and large national brokers are seen as the biggest threats to commercial brokers 2
Commercial motor insurance is seen as being most at risk from the direct channel 3
Norwich Union, Allianz and Zurich are seen as good insurance partners, while excellent claims handling is the number one driver of broker satisfaction 4
More than two third of brokers cited Norwich Union as a particularly good insurer to deal with 4
Excellent claims handling is most valued in an insurer 5
There are opportunities for some insurers to improve their service levels 6
AXA has the most scope to improve its service level to its broker partners according to survey respondents 6
Poor service is the main driver of broker dissatisfaction with their insurer partners 7
Organic growth and the targeting of new customers are the main ways brokers hope to grow. However, many have grown or intend to grow regionally through acquisitions 8
Brokers are primarily looking to grow their business organically 8
Consolidation of the intermediary channel looks set to continue 9
Regional growth is the main motivation behind planned broker acquisitions 10
Around a fifth of brokers acquired another broker in the last 18 months 11
Brokers join networks chiefly for access to a larger panel of insurers. However most remaining brokers do not intend to join one 12
One third of intermediaries belong to a broker network 12
Brokers joined a network to access a larger panel of insurers 13
Most brokers do not intend to join a broker network within the next 18 months 14
Despite consolidator interest, most brokers do not intend to close or sell their business 15
A large proportion of brokers do not intend to sell or close their business 15
Broker consolidators have contacted half of the broker market regarding possible acquisitions 16
Swinton has been the most active in its approaches to other intermediaries 17
Adherence to FSA regulation can be costly for brokers and, even though the majority of insurers offer good advice, brokers would like more assistance with documentation 18
The vast majority of firms estimate that FSA regulation is imposing costs on their annual turnover 18
Insurance partners have generally been good at helping brokers deal with FSA regulation 19
However, the majority of brokers would like more assistance with the speed of documentation 20
Awareness that the FSA is revisiting mandatory commission disclosure is high, but many brokers feel its introduction would have a negative impact 21
A large percentage of brokers are aware that the FSA is revisiting the issue of commission disclosure 21
Mandatory commission disclosure is seen as having a negative impact on brokers 22
APPENDIX 23
Supplementary data 23
Methodology 27
Further reading 28
Ask the analyst 28
Datamonitor consulting 28
Datamonitor consulting 28
Disclaimer 28
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LIST OF TABLES
Table 1: What banding does your company fall into in terms of general insurance premium income turnover? 23
Table 2: What proportion of your business is commercial insurance compared to personal insurance (in terms of premium income? 24
Table 3: What level of threat do the following distribution channels pose to you? 24
Table 4: On average, by approximately what percentage have premiums changed in the last year, for the following business lines? 26
LIST OF FIGURES
Figure 1: Direct underwriting and large national brokers represent the largest threat to respondents 2
Figure 2: Commercial motor insurance is most at risk from the direct channel 3
Figure 3: Norwich Union is considered to be a good insurer to deal with by a majority of brokers 4
Figure 4: Excellent claims handling is valued above all other factors 5
Figure 5: Brokers identified AXA as an insurer with the most opportunity to improve its service levels 6
Figure 6: Poor service is the main driver of broker dissatisfaction 7
Figure 7: Organic growth and targeting new customer groups are the key ways that brokers intend to grow 8
Figure 8: Most brokers do not intend to make a broker acquisition in the next 18 months 9
Figure 9: Regional growth is the number one motivator for brokers who intend to make a purchase 10
Figure 10: One fifth of brokers have purchased a fellow broker in the last 18 months 11
Figure 11: One third of brokers belong to a broker network 12
Figure 12: Access to a large panel of insurers was the most popular reason given for joining a network 13
Figure 13: The overwhelming majority of brokers do not intend to join a network 14
Figure 14: A large proportion of brokers do not plan to sell their business 15
Figure 15: Broker consolidators have been fairly active in contacting brokers 16
Figure 16: Swinton has been the most active broker consolidator at contacting brokers 17
Figure 17: For most brokers, FSA compliance costs up to 10% of annual turnover 18
Figure 18: The majority of insurance partners have been good at helping brokers comply with the FSA 19
Figure 19: Speed and accuracy of documentation are the areas where brokers require the most assistance 20
Figure 20: Most brokers are aware that the FSA intends to look into commission disclosure 21
Figure 21: Brokers tend to feel negatively towards upfront commission disclosure 22
Figure 22: On average, by approximately what percentage have premiums changed in the last year, for the following business lines? 25
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