What are the most profitable schemes and growth opportunities for brokers?

Cyber liability insurance has yielded the best performing schemes for brokers over the last 12 months as the UK’s dependence on digital grows thanks to the Covid-19 pandemic. Between October 2020 and April 2021, commissions earned by brokers grew by 208%.

Furthermore, premiums for cyber liability schemes have improved by 56% and policy volumes have increased by 126% over the last year, according to the Insurance Times Schemes Index.

Produced in association with SchemeServe, the Schemes Index provides a snapshop of the most profitable schemes businesses for brokers.

Between October 2020 and April 2021, broker commissions on first premiums for cyber schemes were up 171%, compared with 140% for renewing premiums.

Speaking on this trend, Adam Bishop, chief executive of SchemeServe, said: “This has been tipped to be a growth area in previous SchemeServe Index reports and we’ve not been disappointed.

“It is probably fair to say that cyber has been fuelled by the demands of the pandemic with the huge increase in homeworking and heightened awareness of cyber risks.

“Overall, the best performing scheme this period was clearly cyber.”

Other schemes performing well include combined liability, which saw commissions improve by 40% over the last 12 months – premiums also increased by 43% and policy volumes grew 17%.

Bishop is also interested in the trends emerging within commercial property owners’ schemes, which he described as “performing well”.

He said: “Although residential property insurance has remained the same during this period, commercial landlord insurance has seen an overall volume increase of 20%, with first premium volumes up 14% and renewal volumes up nearly 30%. Is this indicative of businesses planning a return to work?

“There was also a housing boom last year, so could these figures also reflect high numbers of commercial landlords purchasing new housing rather than residential purchases?

“Commercial property premiums have also gone up 36%, indicative of the hard market and perhaps unoccupancy levels during lockdown.”

New opportunities

Bishop earmarked contractors all risks schemes as a potential “market opportunity for brokers now as we come out of this lockdown” – although it is currently  one of the “worst performing” schemes, according to the research.

Bishop continued: “This has been a best performer in previous indexes, but in this last six months the data has fallen off a cliff.

“There was a huge drop in renewal volumes as contractors were unable to work initially during the first lockdown and we’ve seen an increase in first premium volumes as people were able to get back to work.”

Year-on-year, commissions are still down 85% for this line of business, while policy volume is 11% less compared with last year.

Between October 2020 and April 2021, average first premiums for contractors all risks cover was £1,663.88 while average renewal premiums were £2,432.71.

Another “worst performing” scheme highlighted by Bishop is employers’ liability.

Here, “volumes were static, but premiums have dropped off and commissions are down too, at 32% and 37% respectively”.

On the road

Car insurance schemes have also not had a good year – broker commissions are down 100%, first premium volumes have decreased by nearly 20% and renewal volumes have fallen by 42%.

Bishop said these figures are “not surprising” considering the pandemic, as policyholders drove less during lockdown and more cars were declared off-road.

On the flip side, however, there has been “a clear boom” for caravan and trailer schemes, perhaps influenced by the uptick in staycations as many holidaymakers  steer clear of international travel due to pandemic risks.

Broker commissions for these schemes were up 28% compared to last April, with premiums improving by 24% year-on-year. First premium volumes climbed by 100% and renewal volumes were up 23%.

The impact of the Covid-19 pandemic can be seen across other scheme types too, Bishop noted.

Public liability first premium volumes increased by 93% over the last 12 months, “which could reflect a boom in people setting up their own businesses or going self-employed”, Bishop said.

Furthermore, “event insurance is also down on last year, as expected. However, it is only down by 25% on both new policies and renewals, which could indicate that many expect events to be able to go ahead this year”.

Figures are also “still down” for pubs and clubs schemes. Bishop added that “first premium volumes are down by almost 40% and, with many still unable to open, or have folded, this figure may not recover anytime soon”.