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In Depth: Build an affinity with trade groups

Cogs

Sam Barrett explores the strategies brokers need to employ when building schemes cover for trade and affinity groups

Working with an affinity or trade group to promote insurance to its members wil deliver some attractive benefits. However, the addition of this third party to the relationship means that brokers need to adopt a different strategy when developing schemes for these groups.

The benefits can be significant, as Gary Williamson, managing director
of Kingsbridge Insurance Brokers, says: “When you work with an affinity partner or trade group, you’re able to leverage their brand and name in the market. As well as access to a ready-made customer base, this will give you the ability to trade on their credibility.”

This can make it easier to engage an insurer for the scheme. Matt Schofield, chief underwriting officer at Q Underwriting, says associations and other affinity groups usually have much more data to support a scheme.

“They can be more demanding when it comes to price and product, but they’ll also be able to share much more insight into what their members want and the challenges they face. They offer a unique distribution channel, which will bring benefits,” Schofield explains.

A well-run scheme also tends to be a long-term proposition. Provided that all parties are benefitting, and the scheme is well managed, and evolves in line with market forces, then the relationship between the group and the broker can last for many years. As an example, Aston Lark’s scheme for funeral directors has been running since 1994 when a new trade association was established.

Opening doors

To build relationships with affinity and trade groups, brokers need to immerse themselves in the sector, with trade shows, Facebook groups and association meetings all become part of their role.

“You need to be part of the community. If you can think like the industry or sector, then you’ll be able to understand the issues they face,” says Lee Scott, director at Aston Lark.

While it’s possible to do this from scratch, developing the relationships on the back of a personal interest or hobby, many brokers find it’s easier to open doors when they can demonstrate that they have experience in the sector.

For Chris Lennon, sales and development director at Specialist Risk Insurance Solutions, both approaches have proved successful. “We’ve developed new specialisms after being approached by trade bodies or invited to tender to be their insurance partners, but in other areas our relationships have been established off the back of our existing trade specialisms and exclusive products,” he explains.

Group relations

Whatever sparks the relationship, getting the most out of arrangements requires a considered approach. For starters, Jonathan Forster, SME distribution director at Travelers Europe, says it’s essential that the broker understands the role and influence of the trade or affinity group when establishing a connection.

“Some are like co-operatives and will put together a variety of discounted benefits, including insurance, for their members. Others will have a more influential role and will expect any partners to support this. Exploring why their members join will give some insight into the role of the group,” he states.

The group’s motivation for setting up the scheme often dictates the way the relationship should be managed. Williamson explains that while some groups will see an insurance scheme as a commission generator, so broker involvement tends to be limited, others will expect much more of a hands-on approach from the broker. “They’ll want support with risk management advice for members and ways to keep premiums affordable. It’s a good way to demonstrate expertise,” he adds.

Perfect partnerships

Whether it’s an arm’s length or a hands-on arrangement, competition from other brokers means that close working relationships are essential when providing a scheme through an affinity or trade group, and David Birch, managing director of SMEs and partnerships at Gallagher says: “It’s important to take a true partnership approach and engage directly with the organisations you support.”

How often meetings happen depends on the size and nature of the scheme, but monthly informal catch-ups, complemented with a formal quarterly review, are recommended as a bare minimum. Specialists will recommend regular updates with the insurer partner to discuss scheme performance, especially where there are trends or risks emerging, or cover needs may have changed. Maintaining a close working arrangement is necessary from a governance perspective. Lennon says the compliance challenge is amplified with any scheme and affinity partnership.

“You need to ensure there is clarity around duties and responsibilities, and also that your trade partner is aware of what’s required,” Birch adds.

As well as speaking to the management behind the affinity and trade group, Peter Knowles, sales and marketing director at Lycetts, recommends that brokers should speak to its members.

“We regularly invite members of these associations into the office to ensure staff know what makes them tick. Dog walkers and cattery owners are regular visitors, but we’ve even had a barn owl and a falcon in the office through our pest control scheme. The more empathy that you can establish with the group and its members, the better,” he says.

Beyond insurance

Developing this insight means brokers will often work with the affinity or trade group to create additional bespoke services for their members. This might include advice on risk management and business continuity, but also keeping members up to speed on any regulatory changes that might affect them.

Knowles says this is where a broker can be proactive. “It could be new regulation, or you may spot a trend coming through in claims such as a higher risk of fires from a particular model of oven on your artisan bakers’ association scheme. Members will really appreciate this level of support,” he explains.

During the pandemic, this collaborative work went further. With lockdown forcing some businesses to grind to a halt, Scott used his scheme knowledge to identify synergies.

“Chauffeurs were unable to work, but through our connections on other schemes we were able to help them get work as couriers. Understanding the challenges our customers face is a key part of running of a scheme,” he details.

Knowles is also going beyond the remit of an ordinary insurance scheme with his support for the cattery and kennel owners. “They fell through all the gaps for financial support during the pandemic, forcing some of these businesses to close down. I’m working with them to explore how they can get some redress for their lost income over the last couple of years,” he explains.

This level of support for a scheme can win long-standing loyalty from trade groups and their members, but, as Nathan Anders, specialist schemes director at Towergate Insurance Brokers, says there’s no room for complacency in an affinity or trade group scheme.

“These schemes can last for a long time, but you need to keep reviewing it to ensure it’s still right. Think about what good looks like: you want to get to a position where what you offer is so strong that they won’t look elsewhere,” Anders explains.

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