Specialist and niche personal lines schemes for brokers
The variety of channels through which consumers can obtain insurance - and at a range of ever-dropping prices - is no new problem for insurance brokers and intermediaries.
Policyholders’ desertion of the high street in favour of the big retailers where they shop, directly from insurers or online via aggregators has forced brokers to re-think their business models.
But this “democratisation” of insurance has had long-term, in-built weaknesses for the consumer. Mass market insurance products sold cheaply do not always lend themselves to the precise needs of the customer; either the cover is limited or the consumer’s requirements deviate too much from the standard risks covered by standard products.
Where this might confuse and frustrate the consumer, who wants only peace of mind at a time of crisis or loss, it is an opportunity for insurance brokers and intermediaries to carve out new niches. Wherever and in whichever markets they operate, brokers can find an opportunity to provide specialist and niche market insurance products. They just need to be alive to those opportunities, along with having the right specialist and niche insurance company to collaborate with, to develop and underwrite the business.
This means identifying and designing unique and tailored products and schemes for individuals and small communities, which is possible only when a broker has an in-depth knowledge and understanding of the particular requirements of their locality or market sector.
This approach chimes well with the Financial Conduct Authority’s direction, which is to focus on the needs of the customer. Those brokers that can demonstrate how “customer need” is at the heart of their product development and distribution strategy will have nothing to fear from the regulator.
Identifying niche and specialist opportunities
Some brokers might, at first, think that finding a personal lines niche among their existing customers or the wider market is a big hill to climb. But there are a number of approaches that any proactive broker can implement:
- Keeping the conversation going
Maintain a continuous dialogue with your customers and understand their changing requirements which will ultimately influence their appetite for insurance products. Only through a better understanding of the customer as an individual will you know where a niche or specialist requirement lies.
- Emerging trends
It could be argued that within every emerging consumer trend is an inherent risk and, therefore, opportunity to answer an insurance need: for example, people opting to renovate their homes rather than move could require additional property insurance cover to protect insecure or unoccupied homes during the construction phase. Equally, consumers spending more on gadgets, holidays, caravans, holiday homes or classic cars and motorcycles need protection and could even warrant schemes of their own if the business potential is there.
- Seeking out the specialist need in a sector
The variety of specialist niches needing their own bespoke insurance cover are as numerous as brokers wish to make them. For example, UK General has worked with a broker providing home emergency policies for consumers running a particular brand of oil-filled boilers. Meanwhile, another broker came to us with a scheme proposal for writing spectacle insurance cover through opticians. Trade Associations, often comprising a large number of members in need of cover relevant and appropriate to their day-to-day business operations, offer another avenue to explore specially-designed insurance schemes business.
- Thinking outside the underwriting box
The areas of cover that can be built into a scheme are limitless. For example travel insurance aimed at golfers could also include “hole in one” cover to meet the cost of the 19th hole celebrations. Similarly, concierge services could be an additional element of cover in a mid-net worth home insurance policy. And while it might be possible to purchase such cover separately, brokers could opt to offer them as a complete package in a way no other competitor does. Combining a unique product that responds to the specific insurance needs of the customer with excellent service can, ultimately, command a higher premium.
An ambitious, forward-thinking broker - with the help of a niche and specialist insurer - can make this happen and enable that broker to flourish away from the machinations of the mass market.