Regional offices - Local presence in demand

Some insurers have been rationalising their regional presences in recent months, among which was Allianz - which closed offices in Tunbridge Wells and Horsforth in September last year. Despite this action, demand for local insurer presence remains. Research conducted by MMA on more than 1,000 brokers last year showed that intermediaries value a local presence in their insurer partners.

In 2007, RSA astonished brokers by announcing that - unlike its other regional offices - its new office in Leeds would have an "open-door" policy under which brokers could walk into the office to speak to an underwriter (Post, 14 June 2007, p.4.)

As some insurers reduce presences in the UK's regions, others are stepping into the void to meet remaining demand. In the last 18 months, LV has opened offices in Leeds, Croydon, Glasgow, Sheffield, Bristol, Bournemouth, Manchester, Birmingham and Maidstone - all regions where it wrote little business before. Meanwhile, in February, Equity Red Star also announced plans to expand its regional presence with the opening of an office in Bristol.

"Many big insurers have been closing offices in recent years, leaving regions without fully empowered underwriters. Other insurers are coming in to fill the void they have left as the service levels from those who moved away has dropped," says Simon Cooter, distribution director at Brit, which opened an office in Belfast last year.

Findings

Research released by LV at the end of February highlighted that 60% of brokers surveyed said regional offices provide better service. Charles Earle, chief executive officer at Arista, agreed that regional offices provide the best service for local brokers.

He commented: "Face to face always works better. Brokers and underwriters are more honest and upfront with one another and understand each other's goals when they spend time together in person."

Meanwhile, the LV research also showed that 63% of brokers believe regional insurer offices are under-resourced. Mike Crane, commercial director at LV's broker division, said that, to remedy this problem, insurers need to give their local offices greater authority: "There is no point having a local presence if you try to control everything centrally. Branch managers need to be capable of running their own businesses."

People

Earle said that hiring the right staff is essential for insurers looking to open a regional office if it is to be able to maintain its underwriting authority. He believed that this is where some insurers that are now closing offices went wrong. He said: "There is no point employing underwriters that cannot bring in enough business to cover their costs."

Earle believes that the knowledge brought to Arista's regional offices by recruiting experienced underwriters is vital in a recession. He told PB: "Every region is being affected differently. Our underwriters know the local businesses and can react quickly to get new products and advice out to brokers where required."

MMA has opened offices in Glasgow, Manchester and Birmingham since October 2008 but it does not plan to stop there. The insurer has plans to expand further and intends to have a much-expanded regional network by the end of 2009. Derek Plummer, commercial director at MMA, remarked: "We are strong at the SME end, so going to the regions is the sensible solution for us. We are logically working our way through the regions and making sure the new offices are working for both us and the local brokers."

Cooter believes that it will take approximately three years for new offices to have a significant local impact, though Brit is determined to become an insurer that local brokers can trust. He commented: "You cannot just put an 'open for business' sign on the door and expect brokers to flock in. We are in for the long haul."