’The ability to gain distribution benefits is a major driver for brokers joining networks,’ says director of policy and public affairs
Distribution was always an important part of the broker network role – even when the first networks emerged over 30 years ago.
The central idea was – and still is – that, by joining forces, smaller brokers can gain the type of clout with insurers enjoyed by their larger counterparts.
But recent digital development and advances in data usage have made the D word more important than ever.
Matt Connell, director of policy and public affairs at the Chartered Insurance Institute (CII), explained: “The ability to gain distribution benefits is a major driver for brokers joining networks. If you have more bargaining power with underwriters, you can have a wider range of products, which can open up new markets.
“Being a network member also makes it easier to get national branding and other marketing advantages which, in the age of social media, can help exploit specific niches. [Plus,] being able to pool data can provide better insights.”
Insurers have also become highly aware of the benefits of working more closely with broker networks.
Zurich reported a staggering 62% increase in new business last year that originated from traditional broker networks – excluding appointed representative (AR) networks.
Jacqui Kelly, head of sales and distribution at Zurich, highlighted a transformation in network digital engagement during the past 12 to 18 months, but acknowledged that the networks probably started working on this years earlier.
She said: “It’s been providing us with true insights about broker profile make up, enabling us to target more effectively and build better relationships with brokers. Networks have been engaging much more with our teams and are pointing us in the direction of brokers they feel are compatible with our business models.
“The combination of the accessibility of data and of the culture within these businesses of supporting regional brokers in the wake of so much M&A has created a massive step change.”
Major initiatives
Speaking to Insurance Times, individual networks were not slow to point to recent initiatives that can enhance members’ distribution strategies.
In March 2023, for example, Bravo Networks launched its Bravo Accelerator, a suite of data, trading and service-driven tools that aimed to facilitate better connectivity between regional broker network members and Ardonagh Advisory’s insurance partners.
It incorporates Bravo Insights, an appetite-matching tool that utilises brokers’ existing data and allows them to have a conscious placement strategy that delivers better client outcomes.
Also included is Bravo Digital Trader, a new platform to facilitate eTrade between insurers and independent brokers to drive efficiencies, Bravo Navigator, to place more complex risks that fall outside of eTrade, and Bravo Specialisms, which connects regional brokers with specialty markets.
Bravo Networks noted that brokers are using these services more than ever and that there has been a 200% year-on-year gross written premium growth on business being supported by its Navigator team.
Cobra Network has also been highly active. In November 2022, it started offering members the Acturis platform as an online portal, saving the average broker from having to key in the same risk details between four and eight times via different insurer extranets.
This February it also began partnering with Broker Insights to facilitate both itself and its members having access to data.
Andy Tedstone, Cobra Network’s chief executive, said: “During the last couple of years, data has become the number one distribution requirement and it should mean that networks become even more important. The data enables us to have and execute a clearly defined distribution strategy for ourselves and our broker partners.”
Regulation connection
Lea Cheesbrough, managing director of AR network Movo Partnership, pointed out that there has been a particular flurry of activity since the Financial Conduct Authority’s (FCA) Fair Value Assessments requirement was implemented alongside Consumer Duty in July 2023.
She explained: “This has had a big impact on distribution. Insurers are paying smaller commissions, so networks are taking smaller cuts and having to try to excel for other reasons. Longer-term members now see networks as service facilitators rather than commission clubs.”
In a more historical context, she also highlighted the part of previous regulatory changes in seeing networks broaden out their services generally – particularly the switch from the General Insurance Standards Council (GISC) to Financial Services Authority (FSA) regulation in 2005.
She added: “Networks really started to flourish when members realised they needed help around what evidence they were required to show with regard to treating customers fairly. The increased regulatory focus on learning and development since around 2010 also really saw them step up their offerings.”
Unstoppable momentum?
With consolidation in the broker marketplace set to continue – and with insurers becoming more restrictive about who they issue agencies to – it is unlikely that further regulatory change will be required to continue the momentum of brokers realising the benefits of both traditional and AR broker networks.
John Dunn, managing director of Brokerbility, said: “Networks are now offering everything from sales, compliance and HR support to preferential deals with systems providers – and they are playing an important part in supporting brokers getting agencies.
“They have become a key component of the insurance ecosystem and it would already be very difficult to be a small to medium-sized independent broker without being a network member. In a couple of years’ time, getting the attention of insurers without such a broader affiliation is likely to be well-nigh impossible.”
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