Reportage - Online schemes: Choosing channels

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How does e-trading apply to schemes? Edward Murray explores whether the returns are worth the time and money brokers invest in putting schemes online or if they sell better off the back of face-to-face relationships.

The mainstream personal lines sector has led the insurance market's migration into the online environment. Can those dealing in other areas - and particularly in specialised schemes business - benefit from following suit?

The answer is an overwhelming yes and here's why. In very broad and simple terms there are two major benefits: first, there is the wider market that a scheme can access by going online; and second, there is the lower cost base of working this way.

But just what's involved, what does it cost, and what sort of schemes can be taken online?

The good news for brokers operating in the more complex and specialised end of the schemes market is that this is not a problem. Literally any scheme can be successfully moved online and enough have already made the transition to prove it is not only theoretically possible, but also physically practicable.

Kevin Child, director at software house SSP, says the firm has put large hotel schemes, shops and office schemes and tour operator schemes online and they are all feasible. He comments: "As long as the rating and the rules are in place then you can put it online."

Essentially, there is a basic route to the online market that any broker must follow. First off is the creation of an online brand. As the online marketplace is not restricted by geography it is important to have a brand that reflects this. Why push people away with a heavily regionalised brand when you're trying to attract as broad a market as possible?

Equally, it is important to realise that when people are looking for insurance on the internet they will put certain terms into the search engines. If a broker does not match up their offering to what people are looking for then they will never feature in the search results and will find it difficult to generate business.

Google's AdWords tool will let brokers find out how many searches have been completed for any given term, allowing them to see just who their market is and the difference it makes to get the keywords on their site right.

By way of example, the term 'performance car insurance' is searched for 9,900 times on an average monthly basis, but the term 'sports car insurance' attracts only 4,400 searches. This is less than half and shows just how important it is for brokers to get the right keywords attached to their site.

Online presence

Once the brand and design of the website is in place, with all of the appropriate keywords, it is then a case of developing the site to incorporate the required software and applications needed to make it work. Thereafter, testing has to be robust and ongoing marketing will help make the most of the online presence.

For many brokers, the fear of moving online is often more about their lack of IT knowledge than their lack of willing to trade in the new electronic environment.

However, brokers will already have relationships with software houses through the administration systems they run their business on, while there are any number of online marketing specialists who can project manage a move online from start to finish.

Paul Davies, director at RMS PR, helped broker The Alan Stevenson Partnership take its scheme for professional photographers online, overseeing the whole process.

Mr Davies says one of the most important things to remember when designing any scheme site is what he refers to as the seven-step rule. He says: "The trick is to move clients through the funnel as quickly as possible."

He also says it is important to remember that most insurers are happy to work with brokers looking to move their business online so long as they can show the site is secure, the brand chosen fits in with the insurer's own brand ethics and the questioning and risk selection tools used are robust.

Peter Stevenson, managing director of The Alan Stevenson Partnership, says the experience the broker had with Hiscox when putting the scheme online was very positive and the carrier was quick to provide both time and money in helping get things up and running.

With seven out of 10 clients who get a quote going on to buy cover, Mr Stevenson says he is very pleased with how things have worked out and adds: "Overall, it has cost us around £30,000. We expect to be making a profit comfortably within two years, and possibly within one, and we are targeting a total of 1,000 new clients."

While it may not be possible for brokers to pick and choose which insurer they work with, given there may only be a set number prepared to actually underwrite their scheme, it is worth getting a handle on just how helpful they will be in moving things online.

Mr Child comments: "There is a different reaction from insurers across the market." In some cases, he says, insurers can over-engineer the solution leading to long, drawn out discussion and delays, which are best avoided. It is not about rushing the project through, but about getting up and trading as soon as is reasonably possible. In the online market where things change so quickly, spending too long in getting started can see others steal a march on your plans.

K Drewe is one firm that has gone wholeheartedly into the online schemes market, offering its range of leisure insurances to other brokers on a wholesale basis. Roger Harvey, managing director of the firm, says: "Online trading is particularly applicable to schemes where pricing comes into play, such as with small, premium products like caravan, where it makes sense for both the wholesaler and the broker to use a cost-effective online facility. Plus, of course, all the other advantages like 24/7 availability, automatic processes for all transactions - new, mid term, renewal - and saving in paperwork."

Improved efficiency has also enabled the broker to grow policy numbers without having to increase staff numbers and Mr Harvey says this has helped prevent the business from having to make any redundancies during the recession as many others have been forced to do.

It would seem getting ahead means getting online just as much in the schemes market as it does in the personal lines market.

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