Looking to the future


Premium Finance Week: Despite coronavirus the broker space is still set to be a hive of activity for the remainder of 2020. Jonathan Swift finds out more with Close Brothers’ Paul Trail and Steve Wallis.

At the beginning of the year, many were predicting that 2020 would be a bumper year for consolidation in the broking sector, with so many well capitalised brokers looking to grow through mergers and acquisitions. 

Covid-19 might have slowed this down a bit but Close Brothers Premium Finance (CBPF) sales director Paul Trail is still predicting plenty of activity over the next 12 months: “Consolidation will carry on with private equity supporting it; and there will be the odd new player that is spun out of one of the bigger ones that have been acquired and look to go again like Phil Barton from Marsh Commercial, who’s recently launched Partners&.

“So the consolidators will get bigger and there will be fewer small independent brokers which concerns me a bit as it is nice to have new entrants.”

Whilst broker M&A has been a constant among the broking space for two decades, one new change, however, according to CBPF commercial director Steve Wallis, is that the sector will see greater adoption of technology among commercial intermediaries. “[This] is a trend I have seen emerging over the last few years in terms of how they transact with us. For a long time, personal lines brokers have sought to trade with us in a way that did not exist in commercial, but now you can see similar demand among low premium [commercial] brokers where they want automation to support them transact efficiently. With the assistance of technology, the outlook is strong.”

With commercial brokers adopting more technology Trail asserts there is an onus on the like of CBPF to invest in this space and assist partners so they get the best out of their investment: “We have a team of data scientists who we put into three or four brokers via a request from them each year. And what they do is focus on a particular area of concern for that broker, which is what happened 18 months ago with Brightside who wanted our help to manage their cancellations. So we put our specialist team in and they worked with the broker to change the processes and technology with positive results.”

“We also have strong relationships with the bigger software houses and emerging insurtech providers too,” adds Wallis.

“Through these we get economies of scale in that if we do it once, multiple brokers can benefit. And this is a no brainer for us in terms of making investments that support brokers, their clients and deliver the best experience.”

In terms of other changes post-pandemic Trail predicts if the expected hardening market does emerge over the next two years, brokers will do reasonably well: “Especially those in niche markets that tend to fare better than those that deal with more run-of-the mill stuff. I suspect a lot of personal lines brokers will also start to look at small commercial and trying to adapt it into their models. I don’t think there will be too much disruption, but margins will continue to get squeezed. 

“One thing I can see changing is that we won’t see too many non-UK based unrated insurers coming into the market after the number of recent failures. They all seemed to go into the same marketplaces, thinking they could make quick money, but failed.”

Wallis continues: “Everybody has embraced technology as a way of working as a result of Covid-19and I think that can offer an opportunity to enhance the client experience. One example that springs to mind is that I know some brokers are using voice analytics to detect potential fraud with calls. But that could go further in terms of video conferencing on camera where you get additional visual clues that could indicate someone is not being entirely truthful.”

Coming back to CBPF and what it is planning Trail responds: “From a financing perspective we are happy where we are in growing Payment Services. [And] being part of a bank means we can also offer a lot of different solutions from asset management to motor finance to asset finance.”

“I keep abreast of wider payment industry trends and Payment Services for us provides a framework that no longer relies on existing payment technologies,” concludes Wallis. “I think we are going to see payments evolve massively over the coming years.

“Nobody likes paying with cash for many good reasons; cheques are cumbersome and awkward; and bank transfers aren’t that great because a broker still has to reconcile it manually - and that is testing because people tag them with references like ‘my insurance’ and get the amount wrong.

“As a result, I see the emergence of online payment methods that allow transactions – not limited to low value, but higher value commercial as well – to be completed in a much more integrated fashion.”



Partnership holds the key to a thriving broking sector

By Sharon Bishop, Chief executive, Close Brothers Premium Finance

Has the UK been saved by technology? From where I stand, I have no doubt that technology, and our dedicated and motivated colleagues, enabled Close Brothers Premium Finance (CBPF) to operate successfully during the lockdown. We provided laptops, softphones and other specialist kit for colleagues working remotely, and we will continue to use this kit as the world gets used to the new normal.

It meant that, working with our broking partners, we were able to keep business moving. Renewals were agreed, financing arranged, and millions of customers could get affordable cover. Our Payment Services technology, which enables a commercial broker to offer their clients a quick and easy way to choose and process premium payment options, is a great solution to meet the demands of ‘the new normal,’ and we anticipate growing demand for this service to spread the cost of insurance, especially if premiums continue to rise.

Commentators have been writing off the broking sector for decades, yet time and again, brokers have shown how they can flex and adapt to change.

Post pandemic will be no different, although I am not alone in believing that big changes are on the way. Such as, fewer independent brokers, and/or personal lines brokers looking to write small commercial, powered by new technology, and a renewed focus on niche and specialist business. All these changes were predicted before the pandemic, but the pandemic has significantly accelerated the pace of change.

Forward thinking suppliers like CBPF are moving with the times too.  Payment Services technology already anticipated the move away from cash, and was designed to help brokers to help business owners better manage their cashflow, but the pandemic has put a rocket under the system.

Looking ahead, we will continue to champion partnerships with our broking partners. It is in all our interests that brokers thrive and prosper, so we have created new ways to support them, for example by making our data scientists available to help them resolve specific data analytic issues in their brokerages in order to boost performance and drive better outcomes for customers

Elsewhere, our complimentary CPD-accredited sales training programme will improve broking partners’ sales team’s performance when selling products and premium finance, creating a virtuous circle where everyone benefits.

While governments have largely acted alone to deal with Covid-19, the global scientific community has risen above politics and worked across borders and boundaries in search of a vaccine. That spirit of cooperation is a lesson for our own sector. Working together for the benefit of our customers will be key to the success of our industry in the decade to come. 

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