UK Commercial Insurance Broker Survey H1 2008

DATAMONITOR VIEW

CATALYST

SUMMARY

ANALYSIS

Direct underwriting, particularly in the commercial motor insurance market, represents a large threat to commercial brokers

Direct insurers and large national brokers are seen as the biggest threats to commercial brokers

Commercial motor insurance is seen as being most at risk from the direct channel

Norwich Union, Allianz and Zurich are seen as good insurance partners, while excellent claims handling is the number one driver of broker satisfaction

More than two third of brokers cited Norwich Union as a particularly good insurer to deal with

Excellent claims handling is most valued in an insurer

There are opportunities for some insurers to improve their service levels

AXA has the most scope to improve its service level to its broker partners according to survey respondents

Poor service is the main driver of broker dissatisfaction with their insurer partners

Organic growth and the targeting of new customers are the main ways brokers hope to grow. However, many have grown or intend to grow regionally through acquisitions

Brokers are primarily looking to grow their business organically

Consolidation of the intermediary channel looks set to continue

Regional growth is the main motivation behind planned broker acquisitions

Around a fifth of brokers acquired another broker in the last 18 months

Brokers join networks chiefly for access to a larger panel of insurers. However most remaining brokers do not intend to join one

One third of intermediaries belong to a broker network

Brokers joined a network to access a larger panel of insurers

Most brokers do not intend to join a broker network within the next 18 months

Despite consolidator interest, most brokers do not intend to close or sell their business

A large proportion of brokers do not intend to sell or close their business

Broker consolidators have contacted half of the broker market regarding possible acquisitions

Swinton has been the most active in its approaches to other intermediaries

Adherence to FSA regulation can be costly for brokers and, even though the majority of insurers offer good advice, brokers would like more assistance with documentation

The vast majority of firms estimate that FSA regulation is imposing costs on their annual turnover

Insurance partners have generally been good at helping brokers deal with FSA regulation

However, the majority of brokers would like more assistance with the speed of documentation

Awareness that the FSA is revisiting mandatory commission disclosure is high, but many brokers feel its introduction would have a negative impact

A large percentage of brokers are aware that the FSA is revisiting the issue of commission disclosure

Mandatory commission disclosure is seen as having a negative impact on brokers

APPENDIX

Supplementary data

Methodology

Further reading

Ask the analyst

Datamonitor consulting

Datamonitor consulting

Disclaimer

List of Tables

Table 1: What banding does your company fall into in terms of general insurance premium income turnover?

Table 2: What proportion of your business is commercial insurance compared to personal insurance (in terms of premium income?

Table 3: What level of threat do the following distribution channels pose to you?

Table 4: On average, by approximately what percentage have premiums changed in the last year, for the following business lines?

List of Figures

Figure 1: Direct underwriting and large national brokers represent the largest threat to respondents

Figure 2: Commercial motor insurance is most at risk from the direct channel

Figure 3: Norwich Union is considered to be a good insurer to deal with by a majority of brokers

Figure 4: Excellent claims handling is valued above all other factors

Figure 5: Brokers identified AXA as an insurer with the most opportunity to improve its service levels

Figure 6: Poor service is the main driver of broker dissatisfaction

Figure 7: Organic growth and targeting new customer groups are the key ways that brokers intend to grow

Figure 8: Most brokers do not intend to make a broker acquisition in the next 18 months

Figure 9: Regional growth is the number one motivator for brokers who intend to make a purchase

Figure 10: One fifth of brokers have purchased a fellow broker in the last 18 months

Figure 11: One third of brokers belong to a broker network

Figure 12: Access to a large panel of insurers was the most popular reason given for joining a network

Figure 13: The overwhelming majority of brokers do not intend to join a network

Figure 14: A large proportion of brokers do not plan to sell their business

Figure 15: Broker consolidators have been fairly active in contacting brokers

Figure 16: Swinton has been the most active broker consolidator at contacting brokers

Figure 17: For most brokers, FSA compliance costs up to 10% of annual turnover

Figure 18: The majority of insurance partners have been good at helping brokers comply with the FSA

Figure 19: Speed and accuracy of documentation are the areas where brokers require the most assistance

Figure 20: Most brokers are aware that the FSA intends to look into commission disclosure

Figure 21: Brokers tend to feel negatively towards upfront commission disclosure

Figure 22: On average, by approximately what percentage have premiums changed in the last year, for the following business lines?