At the latest Insurance Times/Aviva IT Pack event in Glasgow, brokers heard that the market is struggling with over-capacity and how technology will be critical for clients and brokers alike
Scottish brokers are operating in a hypercompetitive market, with more than 160 brokers and 28 insurers vying for business.
This was the reality painted at the third regional IT Pack event in Glasgow last month. Aspiring brokers came together to discuss how they can carve out a career and what the industry will look like in the future.
Aviva head of trading for Scotland and Northern Ireland Paul Ross said the competitive trading conditions would remain until the market hardens and a consolidation of brokers occurs.
“About 80% of Scotland’s 160 brokers are small, regional, independent firms. Once the economy starts to pick up, I think a lot of these businesses will sell out and there will be more consolidation,” Ross said. “But what it does mean is that there is a lot of capacity, a lot of pressure on price, and the market is extremely competitive.”
There are signs of improvement in some areas, however, such as the services, manufacturing and construction sectors.
Broker delegates heard that developing relationships with insurer partners was critical to ensuring success.
“I’m a believer that [insurance] is a people business. It will be the relationships that you build that will give you something sustainable for the long term,” Ross said.
Before these relationships can develop, however, brokers need to quantify their industry knowledge and skills, said Towergate Insurance Scotland and Northern Ireland sales and broking director Dawn Harley.
“If you’re a young broker you should gain your qualifications and become a chartered broker as soon as you can,” she said. “The soft skills will come with confidence and experience.”
Towergate account handler Rachel Johnston agreed that gaining these qualifications is key to continuing the drive for professionalism in the industry.
“A lot of clients consider their accountants and solicitors to be almost a part of their business, and I think in the future this will also be the case for brokers and insurers,” said Johnston. “We have to be seen as a professional service to compete and survive.”
New technology
Technology and the role it will play in the future of broking from both a client and employee perspective was also a key discussion area at the event.
Willis project manager Nick Kincaid said brokers were already investing huge amounts of money into software and technology developments. “Brokers are developing statistical modelling, derivatives and index-based policies in conjunction with insurers, and also buying in third-party products so we can more accurately find out what the client wants and model programmes that best fit them.”
Social media will also play a greater role in broking, said Bruce Stevenson Insurance Brokers’ SME new business account executive Roger Darkins. “We’ll see more and more brokers trading through social media sites like LinkedIn, Facebook and Twitter,” he said.
The IT Pack events are held by Insurance Times and Aviva as part of a nationwide search to find the rising stars in the broking industry. At the Glasgow event, the judges awarded the top spot to Bruce Stevenson’s Darkins, who will now compete at the finale event next month.
The judges also gave special mention to Willis’s Kincaid for his input on the day.
Q&A
Dawn Harley, Towergate
Towergate Insurance Scotland and Northern Ireland sales and broking director talks flexible working, Biba changes and helping brokers
What challenges does Towergate face as a company whose growth structure is primarily based on acquisitions?
It’s difficult at the moment because a lot of people who may have been looking to sell are holding off and hoping prices will go up. But I do think there’ll be more consolidation soon. Towergate has always been one of the key companies when firms consider selling their businesses; however, equally important to our business is organic growth, which we are just as successful with. The best deals are ones where both firms work closely together as a team.
What are some of the challenges that women face in the insurance industry?
I’m the chair of Biba in Scotland, and there’s 11 people in the committee but there’s only one female. So it would be nice if we could start to encourage some more young women to come through. For that to happen we have to have flexible working. Since I started out in the industry it has certainly got a lot better, but there is still a way to go.
Are insurers helping brokers grow?
There are some tough decisions to be made by insurers. The reality is they have to get their combined operating ratios to the right side of 100%. It’s up to the broker to support where we can and push through any increases. If insurers are consistent and clear then it’s something we can manage.
In the end it’s knowing your clients and being able to rationalise the long-term view of insurers.
As the Biba Scotland chair, what is your opinion on how members could soon be split by commission income
and fees as well as by region?
It’s still in consultation but I think it’s a great move because it means that brokers that have turnover of less than £1m, north and south, will have a voice on the main Biba board. We will still have regional committees but we will have people on each committee who represent the different segments. It’ll mean that all different types of brokers will have a say at the
top table.
Upcoming IT Pack regional events
- 11 September Birmingham
- 27 September Leeds
- 23 October IT Pack Finale (London)
If you’re under 35 and have what it takes to be the IT Pack Member of the Year - or you’d like to nominate someone - sign up for your local event by visiting insurancetimes.co.uk/ITPack and clicking on your nearest city. Places are limited.
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