Innovation is the key to niche broking

In those dim and distant pre-regulation days, being termed a 'niche broker' appeared to offer immunity from the doom and gloom merchants that told us we had to be either niche or massive to survive.

The list of niches is virtually endless and continues to grow as the ever-resilient broker market seeks new ways to ply its trade.

Niche brokers position themselves as specialists in business classes that can be difficult to place at a competitive price. It is often the case that these products are developed by brokers that have strong connections with the market they are selling into, almost a 'self help' scenario.

Taking the market of classic and vintage cars and a widely acknowledged, competitive niche as an example, Lancaster Insurance Services was started as the insurance division of the MG Owners Club back in 1984 to service the needs of that niche. It now services numerous other car clubs. However, the importance of the relationship with the MGOC in the early days should not be overlooked. To gain market share in any niche a strong relationship with the industry bodies, groups and clubs within the niche is fundamental to success.

Focusing on a niche market, providing it is done well, brings a higher degree of loyalty between broker and customer. Given the expertise of the broker in their chosen field, time can be dedicated to product development, account performance and marketing, which, when implemented correctly, improves the chances of customer retention and long-term loyalty. There is then the obvious opportunity for cross-selling, far easier when the customer has a strong empathy with your brand.

So how do you market to your niche without the huge expense? This is difficult, as each niche may react differently to certain types of promotion.

Obvious avenues are advertising and mail shots, although the latter is proved to have minimal impact. It is important to be creative. For example, an online quote facility, white-labelled to client requirements has seen web-sourced business contribute 10% of Lancaster's business within one year.

To end on a cautionary note, insurance has no copyright as such. If you are successful, others will follow. Fact. Niche brokers need to constantly innovate to continue to hold the key to niche broking.