Move outside your comfort zone

As the marketplace becomes increasingly tough for brokers, the ability to stand out from competitors has become a key asset. Identifying a unique selling point can help retain customers and ensure future growth at a time when clients are more selective than ever about who they do business with.

Differentiation, however, is an area where brokers traditionally have been weak. Business management consultant Frazer Dewey believes the sector continues to lag behind when it comes to brokers setting themselves apart. He says many tend to rely on promoting the traditional gold standards of price, service and quality rather than investing in new approaches. “Most can differentiate themselves from a price comparison site or a direct writer. But they haven’t managed to differentiate themselves from each other.”

He adds that brokers are too reliant on under-cutting their competitors rather than focusing on a unique feature. “If you want to differentiate, you have to do something a bit different. That is the whole point.” He also believes that, while some brokers may claim to offer better products, this is of little value if the client fails to understand the benefits. “It is not just about differentiation, it is about perceived differentiation.”

Dewey highlights electrical giant Dyson’s success as a clear lesson in the power of differentiation. By introducing a bagless vacuum cleaner with a different design, the company set itself apart from well-established competitors and sold products at double the standard price to become a market leader. “Dyson entered a market that was already saturated,” he says. “Nobody believed you could do anything different and yet it did.”

Get the message out

Institute of Insurance Brokers?chief executive Barbara Bradshaw warns that, while many brokers might be tempted to curb expenses, it is essential to promote key offerings. “Consumers are being very careful with their money. If they think they can cut costs by going direct, it is vital that the broker is getting the message out there explaining the value of what they do,” she says.

Aon Risk Services sales and marketing director John Keeble concedes that brokers have been slow in distinguishing themselves from competitors.

“It is an area in which the whole industry has not historically done a great job,” he says. “Every broker should be able to demonstrate clearly to his clients what he does that is different in terms of the value that it generates for the client.”

Many larger players are taking steps to promote distinctive innovations, particularly when it comes to new approaches to risk management. Keeble believes that Aon’s Global Risk Insight Platform (GRIP), a real-time electronic system that tracks placements globally from submission to quotes and binding, is one of the broking giant’s key differentiators.

“It is giving us an incredibly powerful benchmarking ability, which allows us to tell our customers very accurately what is happening in the market,” Keeble says. “We have already seen a number of businesses move to Aon or reconfirm their desire to stay with Aon as a result of GRIP.”

Willis has also made inroads in this area. As part of its structured risk solutions (SRS) division, it draws on the company’s expertise of risk engineering, captive consulting, actuarial studies, risk modelling, and enterprise risk management to help the client manage and mitigate risks.

Wills SRS chief executive Phillip Ellis believes this approach moves away from the traditional insurance transaction provided by brokers and offers more value to the client. “We are bringing science to broking and to risk management in ways that have not been done before,” he says.

Go niche

Other key players have focused on specific areas of the market. RIAS chief executive Janet Connor says its specialty of providing insurance to the over-50s has led to success. “Our advisers take the time to understand the lives and needs of this age group, communicating with them with enthusiasm, warmth and empathy. We give our customers as long as they need to discuss their requirements.”

Towergate Risk Solutions’ regional sales and service managing director, Simon Trott, says the company’s ten businesses – with an overall premium worth £150m – focus exclusively on niche areas, including boats, caravans, GPs, therapists, dentists and the armed forces.

He says the company has full underwriting and claims handling authority for these sectors. “What makes us different is the way we have shaped those business models,” he says. “Most of our business is written under delegated authorities negotiated from insurers.”

He believes this allows the company to identify gaps in the market, such as products to cover Botox injections in dentists’ surgeries or for paramedics who use their own cars to run through a red light when rushing to an accident. “This isn’t usually available from the rest of the market,” he says.

But Dewey warns that identifying a key differentiator is no easy task and hiring a consultant can be a positive move. “Having an external consultant is what makes the difference,” he says. “You can’t sit down after a board meeting and thrash out a few ideas. It doesn’t work like that.”

Meanwhile, South Essex Insurance Brokers managing director Barry Fehler believes that something as simple as a keen personal interest can help brokers identify a differentiator. After buying a horse 25 years ago and discovering there was no policy that suited him, he decided to offer a scheme providing equine insurance. “At the end of the day, it is having the knowledge of what the customer wants that gives you the edge,” he says.

He warns there is little point in attempting to muscle into a specialist sector that is already well served, however. “There is only room for so many specialists. If you look at the equine side, there is a finite amount of premiums, so it is fairly pointless for somebody else to enter unless they can provide something where there is an opening and try to do something different.”

Trott believes that few brokers can afford to remain complacent about differentiation. “Unless you have got a different product or a different way of dealing with customers, then you are exactly the same as everybody else, and therefore you are not going to achieve any real growth.” IT

Tips for spotting a differentiator

• The power of perception You need to understand how clients and insurers perceive your offering so that you can identify the reasons why they continue do business with you. This can help to develop key strengths.
• Find a new angle Move away from promoting your business based on price, quality and service. Try to market another aspect or feature to gain an edge over competitors.
• Get outside help If possible, hire a consultant. A trained and objective eye can help you identify strengths and develop suitable business models.
• Stick to what you know Look carefully at your own personal interests and try to identify if there is an opening in these areas. Having an in-depth knowledge of a niche sector can give you an added advantage in the marketplace.
• Look at other industries Monitoring how businesses outside your sector succeed can be a useful guide to differentiation. Certain approaches could translate to the insurance industry or inspire other ideas.