Findings reveal a picture of increasingly sophisticated customers across the UK, but overseas business centred heavily on the London market
The Broker Service Survey, Insurance Times’ annual survey, which questioned brokers about the service they receive from their insurer partners, also asked some questions about brokers’ customers. Nearly 700 brokers from 324 firms across the UK provided responses to the 2010 survey and their responses threw up some interesting insights.
Brokers were asked about three of their customers’ attributes: the percentage that purchased commercial insurance for overseas locations, the percentage that employed someone in a senior role responsible for insurance procurement, and the percentage of customers who paid a fee for their brokers’ services.
We analysed the findings in terms of broker business size (as indicated by gross written premium) and by the broker’s regional location.
The findings clearly show that more of the customers of very large brokers (with GWP greater than £75m) have these three attributes, and while they are also more likely to be located in London, other regions have their fair share of fee-paying customers and dealings with senior personnel well versed in insurance procurement.
The results and findings are discussed in more detail below.
Buying overseas
Very large brokers reported handling the most international business. Thirty per cent of very large brokers said that at least 50% of their customers bought insurance for overseas locations, a figure that fell to under 10% for all other broker GWP segments.
Since many very large brokers are London-focused with strong links to the London market, it is unsurprising that 35% of London brokers’ customers fell into this category, while brokers from other regions had no more than 10% of their customers with this attribute (see figs 1 and 2).
Buyers’ credentials
The second questioned explored whether customers’ insurance buyers held senior roles likely to understand the complexities of the risks that their insurance purchases were covering. Survey responses indicated that the number of brokers’ with over 60% of customers with these types of buyer fell progressively with broker business size.
Over 50% of all or most of very large brokers’ customers fitted this description, falling to around 15% for very small brokers. Brokers handling these customers were spread across the country, with the highest concentration based in London, followed by Yorkshire and Humberside and the West Midlands. However, no location fell below 25% (see figs 3 and 4).
Fees v commissions
The third question explored the issue of fee payment by customers as opposed to the broker relying on insurer commissions. Once again, very large brokers had the highest percentage of all or most customers likely to negotiate a fee and small brokers the lowest.
South-west brokers had the lowest numbers of fee-paying customers, while once again London topped the list (see figs 5 and 6).
The findings are significant for several reasons. First, if the three attributes are taken together, they create a profile of brokers in terms of their size and location that are most likely to handle the international business targeted by certain types of niche insurers.
Second, they show the extent to which commission payment is relied upon within the industry. This is important as payment of commissions is coming increasingly under the FSA’s microscope and these findings give an indication of the impact that any changes to accepting commissions might have.
And third, the results show the extent to which brokers from across the UK are dealing with sophisticated buyers and therefore their own need for a professional approach.
For more details of the Brokers Service Survey, please contact Liz Telford at Insurance Times (lizzie.telford@insurancetimes.co.uk)
