Thinking about starting up a scheme? Here are the steps you need to take

Targeted marketing

Schemes are becoming a fast-growing revenue stream for brokers.

But setting up a scheme requires careful thought and planning if brokers are to reap the full rewards of this exciting growth opportunity.

First, you have to identify your target market, and then find an insurer before implementing and launching the scheme.

The final part of the process is to maintain control and monitor the scheme regularly.

Understanding your customers is only the beginning. It is key to be able to reach them.

Once an insurer is on board, be aware that the relationship could be one-sided. The insurer will expect a level of commitment and service from the broker. In return, make the most of the insurer’s services through the implementation, establishment and growth of your scheme, including the use of their dedicated marketing support team.

Above all, be clear about what makes your scheme stand out from the competition, and why you can charge a higher premium than a commodity insurance product.

UK General Insurance head of commercial schemes Tony Bloomer has set out the five key steps to setting up a successful scheme - see his recommendations below.

Step 1: Identify your target market

A scheme must be tailored to customers with a common need.

  • Brokers can start from scratch or create a scheme from an existing book of business, in which case the key is to identify the opportunity to create features in order to add value, and derive growth.
  • Reaching the customer can be done via existing relationships or link-ups with trade bodies, or by acquiring a database and preparing a marketing plan.

Step 2: Find an insurer

Partnering with the right provider is the secret
to success.

  • Find an insurer you are comfortable with, and that shares the ambition to write your risks. Together, you can develop a compelling, well-supported, scheme.
  • In addition to product, rating, cover and trading platforms, what extras the insurer can provide should be considered. These might include added-value services (risk management for example), and agreed joint marketing and funding arrangements.

Step 3: Scheme implementation

This requires the creation of bespoke policy documents, a rating structure, trading platform, management information and data requirements, claims arrangements, and staff training.

  • You will need to agree delegated authority arrangements with the insurer, which will want to know that you have the knowledge and expertise to handle the level of authority required.
  • Think about recruitment at this stage to ensure you have the right team in place to deliver the scheme.

Step 4: Launch

Build interest in your scheme. Whether you choose a mass marketing campaign or a more targeted approach, this is where success will come from.

  • If your scheme is specialised, a labour and cost-intensive ‘shotgun’ approach will only eat into your ROI. Build a database of people who match your customer profile and develop targeted marketing materials.
  • It’s about contacting the customer at the right time, with a point of difference, and this requires investment in time and money.

Step 5: Control and monitor

Once the scheme has been launched, stay proactive and nurture it over the long term.

  • An early audit is essential to understand the quality of business and make any necessary amendments.
  • Creating awareness of your product will take time, and your potential customers may be on a renewal cycle.
  • Success may come only over the medium- to long-term, so be realistic about early ambitions, and plan accordingly.

Topics