Least and most profitable scheme lines revealed

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Data from SchemeServe has highlighted the best performing schemes in its inaugural Schemes Premium Index.

Insurance schemes software provider SchemeServe has released data from its first annual Schemes Premium Index, highlighting the most and least profitable schemes for brokers.

The Index examined 24 separate lines of insurance as currently managed on the SchemeServe platform during the period from May 2018 through August 2019. 

Performance
Based on the data, the most profitable lines were excess of loss, employers’ liability and public liability, SchemeServe outlined. 

The least profitable lines were household and caravan, although the provider noted that premiums for caravan have been rising. Average premiums have risen most dramatically at renewal for excess of loss and caravan.

According to the Index, public liability offers the highest commission percentage at renewal at 22.3%, up from 16.9% at policy inception. 

The average first premium for excess of loss liability was £84.99 with renewals at an average £302.41.

Commission
Brokers’ commissions also increased here from £15.52 at first placement to £52.69 at renewal, an increase of more than 240%, making this the most profitable scheme for brokers based on the data.

Data on employers’ liability schemes show that brokers earned a little more than double in commission at renewal, with renewal premiums averaging £963 and first premiums averaging £419. This makes it the second most profitable scheme for brokers during the period, according to SchemeServe.

John Price, COO of SchemeServe, commented: “The increase of premiums at renewal on excess of loss could be driven by businesses growing and increasing the number of staff over the first year of trading.

“Those increases in staffing levels are reflected in employers’ liability product figures as well. It’s well worth nurturing these businesses, particularly when one considers the commission increase. Excess of loss liability appears to be a good news story for small businesses in the UK and brokers alike.”

Cyber
In other highlights from the data, renewal figures on cyber were described as surprising with commission rates 20.1% at renewal, up from 4.9% at inception. However, of the 170 policies sold a year ago, only two renewed and they renewed at a lower value.

Event insurance also offered a notable performance. Last year, the average first premium for event insurance was £84. This increased to £302.41 for this year. The average commission earned from these extra policies has also increased to double that of the previous year.

Price continued: “The figures clearly show that cyber policies are suffering widely. In my view, this is because no one really understands the implication of having the cover. Often, there is an element of cyber cover in liability policies and people believe that enough cover is already in place.

“It [cyber cover] needs to be very near the top of businesses’ lists of things they need, and not at the bottom as an afterthought.”

The provider said the SchemeServe Index has been developed as an annual pulse check on the schemes market. 

SchemeServe said it operates more than £150m of gross written schemes premium for brokers, insurers and MGAs via its cloud based platform. 

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