BrokerFest 2021: Broker networks ‘oversell’ their value - Trident Insurance

BrokerFest 2021: Although broker networks can provide market access and support client relationships, they also “try and oversell” themselves - it is therefore important for individual brokers to “go back to the basics” and “know what they are good at”, to establish whether network support is truly necessary for their business, said Trident Insurance director Robert Marshall.

Marshall was speaking at Insurance Times’ BrokerFest 2021 conference on Monday 11 October in a panel discussion titled ‘Networks at the crossroads’, chaired by Insurance Times content director Saxon East. He was joined by Brokerbility operations director Julie Rayson-Flynn as well as RSA sales and distribution director Alex Hardy.

Reflecting on 20 years of broking experience, Marshall explained that brokers are “getting sucked into the belief that we’ve got to be merged in” with a broker network, when actually “many people are really happy doing their own thing”.

“I want people to wake up,” he said. “If you know where to go for what you do, you don’t have to go through a network”.

There is the “perception that big is beautiful [and] big is what it’s all about”, Marshall added. However, for him, “it’s not beautiful”. 

“I used to work for a big international bank and you’re just a number,” he said.

In comparison, Marshall highlighted that smaller brokers have had to localise their business because of the Covid-19 pandemic. As a result, “some local businesses are absolutely thriving by default”, he added.

Net rate versus commission

One of the reasons that brokers do join a network is for increased commission rates, however “there’s nothing wrong in brokers saying, ‘well screw commissions, we’ll just go net – and then the customer has no issue. [They] can take the price or not”, Marshall continued.

In terms of whether Marshall’s suggestion around a net fee rather than commission would be successful in the broker market, Brokerbility’s Rayson-Flynn said the change is “too radical to go in one go”.

She explained: “In essence, insurance is slow. It’s unwieldy, its old-fashioned. It will take a long time, or regulation and compliance will make it get there”.

However, “brokers shouldn’t be scared of” this type of change, she continued. “If you can demonstrate all the value that you can give to your clients, then absolutely go that way,” she added.

‘Power of feedback’

As the FCA flexes its muscles with big regulation changes, Rayson-Flynn stated that “brokers are a bit lost at the moment about what they are supposed to ask [insurers]”. For her, networks can therefore provide “support and cohesion” to assist “building trust between the two”, she said.

As a network, the operations director said that Brokerbility will “never have above 35 members” as “the more you get to know the business – the more you can help them with insurers”. Sometimes, it’s “just that second ear, that shoulder” that can really help the broker, she said.

Building on the benefits of broker networks, Hardy added that it is also about the “power of feedback”. He believes “that’s absolutely a role that networks can and should play”. Furthermore, networks influencing placement should not be “the norm”.

He explained: “Whilst lots of brokers might appreciate the systems and facilities [of a broker network], I’ve yet to meet many [that] really like to be told what they must do.

“By its very nature, [networks are] collaborative - it absolutely has to make sense from a financial point of view and from a regulatory point of view as well. Networks have got to demonstrate value in the distribution chain, so the model has to evolve beyond just commission alone, otherwise it won’t survive longer term.

“Ultimately, networks [that] are delivering [for] the brokers do a great job of raising professional standards, which is ultimately good for the customer.”