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SENTIMENT SURVEY
Sponsored by
The laTesT PB sentiment survey continues to offer an insight into the
mindset of UK brokers as they grapple with the dynamics of a market that is
changing rapidly. This time, in addition to questions about trading conditions,
intermediaries have been asked for their views on some hot topics, including the
phenomenon of price comparison sites and the industry’s performance following
last year’s floods.
Comments about market pricing really do not inspire confidence, especially in
commercial lines where a significant proportion of brokers are clear that prices
are still falling (see graph five), with plenty of capacity available to ensure that
risks can be placed easily. New entrants to the market are adding to competition
and, with some insurers doing almost anything to hold existing cases, it seems
unlikely that underwriters are going to have any good news any time soon. The
year ahead looks likely to be very tough and challenging.
The possibility of these difficulties is lent further credence when we look at
brokers’ priorities. Client retention and desire for growth are key issues, while
Welcome to the latest PB Sentiment Survey there continues to be the usual concerns about service, regulation and finding
sponsored by Groupama Insurances. Thank high-quality staff members (see graph two).
you to everyone that took the time to fill out
It is also apparent that most brokers are using the facilities offered by the
the survey, which we feel makes a valuable
growing number of underwriting agencies regularly. While most see this as a
contribution to our market. The surveys
are now conducted every six months, so
very suitable option for niche and non-standard risks, they also like their broker-
look out for the next one later in the year. friendly approach and the high levels of service. The more forward-thinking
Remember, your views count. broker sees the potential for a new revenue stream by taking on insurers at their
own game.
On service, there is little new to report and respondents continue to be critical
of a general lack of responsiveness from insurers. It is clear, however, that high-
quality claims service remains a key competency for insurers that want to keep
brokers happy. almost 80% of intermediaries believe that this factor is paramount,
although the feedback suggests that some in the market are still getting this very
wrong.
Interestingly though, there is a pat on the back for the way in which insurers
managed last year’s weather losses, with 82% thinking that the response was ‘good
to excellent’ (see graph nine). however, there is frustration about the portrayal
of the industry in the media that is perceived to have focused largely on the
negatives.
Nearly half (44%) of brokers have confirmed that they are losing business to
aggregators, although this still appears to be a relative trickle (see graph eight).
Given that price comparison sites handled 30 million car quotes last year, it is no
surprise that 70% of intermediaries see them as a threat. Brokers certainly feel
that the marketing ethos of aggregators is unhealthy and focuses on price at the
expense of attention being paid to cover and benefits. however, many see this
situation as an opportunity to demonstrate the benefits of using a professional
intermediary. so far, only 5% of intermediaries seem to participate on these sites,
mainly for private car cover.
Finally, brokers were asked ‘who is the ‘greenest’ insurer?’ Pleasingly, there were
a few honourable mentions for Groupama. however, in a world where corporate
responsibility is incredibly in vogue, no insurer (or intermediary, for that matter)
seems to have made this area their own and this must present an opportunity.
Cathie Bruce, distribution and customer service director,
Groupama Insurances
34 professionalbroking.co.uk
Top fi ve UK insurers for broker services
Very poor
1.4% Personal lines Commercial lines
Excellent 1) Fortis 1) Norwich Union
7.2%
Poor
10.4%
2) Norwich Union 2) Allianz
3) Zurich 3) NIG
4) Hiscox 4) Fortis
5) Chubb 5) AIG
Good
40.6%
Average brokers feel underwriting capacity is as easy to find as ever,
40.3%
though their original carriers may have changed. One broker
notes: “Motor fleet policies seem to be harder to place with
RSA, Norwich Union, Zurich and Primary, yet Brit Insurance
seem overly keen to place it.”
Service levels from insurers were noted as either ‘good’ or
‘average’ by over 80% of brokers, with NU scoring top place for
broker services in commercial lines and second place for per-
1. In general terms, is the claims service received by you and your sonal. John Kitson, sales and marketing director at NU, says:
clients... “Our broker business remains the most important part of our
business and therefore to say I am delighted is an understate-
THE PB SENTIMENT SURVEY always makes for an eye- ment. Over the last few months our staff has worked incred-
opening read and the first results of 2008 proved to be no ibly hard on every aspect of our service to brokers and so this
exception, writes Charlie Thomas, reporter, PB. For once, recognition is good news. However, rest assured, even with
regulation and consolidation were not the only things on this laurel, we won’t be sitting on it.”
brokers’ minds, though the usual complaints about the state In addition to its fourth place in commercial lines, Fortis
of the market, relationships with insurers and the rise of the took the crown for best broker service in personal lines. Chris
aggregators continue to be big issues for brokers. Dobson, distribution and development director at Fortis,
Concerns about over-capacity in the market were raised by comments: “It is rewarding to see that Fortis has achieved
a number of brokers. In particular, “silly deals” appearing in first place for personal lines. The broker market remains a key
the market were criticised for damaging the reputation of the part of our business focus and we believe that we have dem-
industry in the long term. One respondent says: “There seems onstrated this with further investment in our development
to be no reduction in capacity in the market and there is an strategy by doubling the size of the sales force and aligning
argument that capacity will increase as investors move out of our internal support structures to respond efficiently and pro-
the banking sector and look for an alternative financial mar- fessionally to all of our brokers and intermediaries.
ket that is profitable.” Another broker laments that, while the
number of market entrants continues to rise, the market can- What is the key issue for your business in 2008?
not possibly harden. Current industry pressures are also being
felt across the Irish Sea, with one broker revealing that capac-
“The effect of consolidation on market conditions.”
ity is greater now than at any time in the previous 50 years in
“Achieving Treating Customers Fairly milestones.”
Northern Ireland. “Staff quality.”
Even insurers seem to be feeling the pressure. One broker “The differential commission and treatment as a smaller independent broker
recalls that, on a recent visit by an insurance representative, compared with the larger ones.”
the visitor exclaimed that rates must be put up by 10% for “Credit crunch implications.”
all existing customers; the insurer remained happy to take on “Marketing and growth.”
new business at any price. “Prospects for the construction market.”
Client retention was voted the key issue affecting brokers’ “Merger and acquisitions of clients.”
businesses, followed closely by continuing to promote treat- “Maintaining margins in a market that shows little sign of hardening, despite
ing customers fairly and when the market will harden. Most the noises being made by insurers.”
May 2008 35
SENTIMENT SURVEY
Sponsored by
“The support we receive from the broker market is of funda-
mental importance to us and is the foundation of our success Respondents’ opinions on aggregators
over many years; it remains our clear intention to provide bro-
kers with the service they justifiably deserve. Our thanks go to “Too much emphasis on price.”
all our brokers for their continued feedback and support.” “Driving clients away.”
Efficiency and prompt responses were cited as the most “Seem to have different rates from us.”
important traits for an insurer to possess, but not everyone is “Lack of advice and transparency.”
happy with the service received from them. One broker grum- “Online companies tend to have better support from underwriters than
bles: “All insurers’ service remains woeful. All talk, no action. traditional brokers, which is quite annoying because brokers have been very
I wish that the chief executive officers of RSA and NU could supportive towards many insurance companies. It seems now that if you’re
spend a few days in my job trying to get an answer from their not a big player you won’t get any deals with most companies.”
claims department or trying to get correct papers.” Another “They are an opportunity to increase business.”
“Aggregators are actually both a threat and an opportunity.”
broker complains that Axa’s telephone system makes it dif-
“Clients think they are receiving a better deal because they can see the
ficult to contact them. Commenting on the results, Malcolm
cheapest price but do not necessarily understand the products.”
Tarling, spokesman for the Association of British Insurers,
90%
80%
Not important
70% Quite important or concerning
Very important or concerning
60%
50%
40%
30%
20%
10%
0%
Competitive
Efficient claims
management
renewals
Timely
documentation
Being easy to do
rates
Commission
business with
relationship
response
Accurate
Speed of
Close business
Efficient e-trading
facilities
underwriters
premiums
imarket
Supports
Access to
2. What are your priorities in terms of service from insurers?
36 professionalbroking.co.uk
SENTIMENT SURVEY
Sponsored by
70% In personal In commercial 80%
In personal In commercial
70%
60%
60%
50%
50%
40%
40%
30%
30%
20%
20%
10%
10%
0%
Harden Soften Stay the 0%
same Still easily available Reducing About the same
3. Over the next six months, do you expect... 4. Is current underwriting capacity...
argues that service levels have improved and that, had a dif- but notes that the AA’s latest British Insurance Premium Index
ferent selection of brokers been asked, he is confident the showed car premiums were expected to remain stagnant in
number of ‘excellent’ cases reported would have increased. the short-term.
Meanwhile, imarket received a further blow to its campaign, Andrew Strong, chief executive officer at AA Insurance,
as the majority of brokers (56%) state that it is not important says: “A recent Datamonitor report suggests the car insurance
for the insurers to be compatible with the web portal. industry could become profitable by the end of 2009, however
When asked about the rates for renewals in 2008, 46% of we calculate that an annual premium increase of 20% would
brokers believe that rates will go up in personal lines, while be needed to achieve that. The latest AA Index shows that this
39% of brokers also believe they would go down in commer- is a far-from-realistic expectation. Similarly, speculation that
cial lines. Tarling refused to be drawn into rate predictions home insurance premiums would rocket because of last year’s
Very regularly
Not at all 15.3%
18.8%
Opportunity
29.9%
Regularly
21.8%
Threat
70.1% Occasionally
44.1%
6. Are aggregators an opportunity or threat for traditional brokers? 7. How often do you use an underwriting agency or MGA?
38 professionalbroking.co.uk
“Perhaps we could send policy holders a what-to-do-before-a-
In personal In commercial
50% flood-hits leaflet?” and “Clearer mapping of flood-threatened
areas are required.” Many brokers also highlighted the need
for effective loss adjusters and for no new houses to be built
40%
on floodplains. Tarling agrees with the brokers’ responses
and reiterated the ABI’s calls for the government to produce a
30% comprehensive flood strategy for river, coastal and flood plain
flooding. He says: “We want the government to provide a thor-
20% ough reassessment of all three flooding causes and produce a
much longer flood-term strategy of at least 20 to 25 years.”
Aggregators are still considered to be a threat by the major-
10%
ity of brokers (see graph six), despite the fact that 49% said
they were not losing significant amounts of business to the
0% websites. Of those brokers advertising on comparison sites,
Reducing Increasing Staying the same
68% said they were unhappy with the level of business gener-
ated by them, though it was unclear as to whether this was
5. Are renewal premuims...
due to uncompetitive premiums, poor choice of aggregator or
another problem.
floods was clearly wrong. I expect premiums to continue ris- Generating more comments than anything else, however,
ing over the remainder of the year.” was the focus on managing general agents. This medium of
Nearly a year on from the floods of summer 2007, brokers finding competitive premiums for clients, particularly if they
agree the response of the vast majority of insurers was ‘good’ are looking for a niche product, are becoming more popu-
or ‘very good’. The PR handling of the floods was also deemed lar. Asked how often they use an MGA, 44% of brokers said
to be acceptable, though many brokers believe communica- ‘occasionally’ and another 22% said that they used them ‘regu-
tions between the media and the insurance industry could yet larly’. Of those that do use their services, 21% use five or more
improve. MGAs but 60% said they have no plans to increase their use
The survey results also reveals the wide breadth of lessons of them in the future.
that could be learned by the industry, with comments including Most telling of all were the reasons given by the brokers
Poor
2.5%
Excellent
Yes –
9.3%
significant numbers Average
7% 15.2%
No
49.1%
Very good
34.6%
Good
Yes – but only 38.4%
the odd case
43.9%
8.Are you losing customers to aggregator websites like confused. 9. How would you describe the support that you and your clients
com and comparethemarket.com? received from insurers during the floods of 2007?
May 2008 39
for using MGAs. Nearly 70% agreed that it is their access to
specialist markets and niche insurance covers that make them
an attractive proposal. One broker explained that MGAs gives
their business access to markets that they would not other-
wise have in Northern Ireland, while another called them a
“one-stop shop for all unusual risks”. Many have suggest that
MGAs have better trade knowledge than most insurers while Yes
39.3%
providing good cover and competitive premiums.
There is another side to using MGAs too, as one broker No
points out: “Using an MGA means we can place risks we don’t 60.7%
want to damage our commercial accounts with, for exam-
ple, unoccupied properties.” One broker reflected well the
views of many regarding why choosing an MGA is a simple
choice: “They make it easy for brokers to do business.” There
was, however, a note of caution among some intermediaries
regarding the agencies, with one stating: “We look for stabil-
ity for our clients and so we are waiting for the point where
10. Are you likely to increase the amount of business that you place
we are sure they are here to stay. In the meantime, we cannot with MGAs?
What have you learned from the flooding and where can
insurers improve handling such claims? ignore them as they do sometimes provide market-breaking
terms. We look for stability for our clients and so we are wait-
“Processes remain too bureaucratic.”
ing for the point when we are sure they are here to stay.”
“Insurers seem unable to handle large-scale disasters. Do they have plans in It appears that all of the insurers operating in the UK are
place before these happen?” missing out on promoting their green credentials. Respondents
“Insurers should be pro-active and use the weather reports to give agents were asked which they believe to be the greenest insurer and,
a head start against fraudsters and to help those policyholders who need apart from the odd witty response about it being Evergreen,
assistance.” or NU and Groupama because they had green in their logos,
“Appointing the right loss adjuster and allowing the broker to use a tried-and- the standard answer was: “Not a clue”. Of the few positive
tested adjuster that may not be on a particular insurers’ panel of adjusters.” responses received, Hiscox and Groupama were praised for
“Insurers should outsource only to adjusters that can really cope with the emailing communications rather than using direct mail.
workload.” Tarling says green products are prevalent in the market
“React to initial approach and not wait for claim form.”
already, thanks to the Climatewise initiative launched by the
“Having a mobile claims unit is essential, being on-hand and in the area for
Prince of Wales in 2007. He continues: “CIS offers a hybrid
policyholders.”
car insurance policy, for example, and we believe the demand
“I think insurers need to be more hands-on – offering some staff to volunteer
help and support.” for green policies will grow. It’s an area dependent on cus-
“[We] had more problems sourcing suppliers and builders than problems tomer demand.” Initiated by former Axa chief executive Peter
with insurers.” Hubbard, 38 companies support Climatewise, a number that
“We need to obtain details of any temporary claims teams set up by insurers includes Lloyd’s, Hiscox, ACE, Chaucer, Equity and QBE.
to deal the with influx of notifications. Insurers do well to send out broker One broker remains convinced that customer interest in
newsletters with instructions for any temporary delegated claims authority.” green insurance has not hit the UK yet. He says: “Who cares?
“The government and local councils should be accountable for a percentage Any insurer that has an interest in India, Africa or other devel-
of the flood claims whether insured or not. Most of the claims are a result of oping countries is contributing on a massive scale to global
inadequate drainage and sea defences. Insurers need to stand together and warming. I would say that just about rules out every insurer
demand that the government acts.” in the UK.”
“Interim payments should be made immediately, on-site by appointed
Thank you to all that took the time to complete the survey; the
adjusters. Seeing that people are still living in temporary accommodation
next one will be published in October. If you do not receive the
strikes home the problems that our industry has in trying to deal with large
survey and would like to then please e-mail ro.osborne@incisive-
scale problems and [this] still needs to be looked at.”
media.com with your details.
May 2008 41
