Adapting to change

Change and chance

Premium Finance Week: Close Brothers, Paul Trail and Steve Wallis reflect on how brokers have responded to the challenge of Covid-19.

On March 23 Prime Minister Boris Johnson formally announced a strict lockdown in the UK to stop the spread of the pandemic Covid-19 on these shores.

However, many within the insurance sector had already taken affirmative action to work remotely in anticipation of the Government’s move. Those that hadn’t had to quickly adapt to the new guidance.

Reflecting on how the insurance businesses transitioned from offices to remote working, Close Brothers Premium Finance (CBPF) sales director Paul Trail describes the sector as collectively doing “pretty well”.

His colleague commercial director Steve Wallis adds: “I agree that in overall terms the sector has handled it pretty well; the majority of brokers I have spoken to have coped remarkably well given the circumstances.”

Focusing on his own business, Trail reflects: “If you look at the personal lines market, volumes were down 20% at the peak of lockdown; but that has been balanced out by the commercial volumes which were up by the same amount.”  

“Obviously we only see what we see, it is not the entire market but it is a large amount of gross written premium,” Wallis continues. “Heading into the early stages of the lockdown, and during that initial period, there was a drop off in new business that we were writing which was compensated by an increase in renewals. 

“And we were seeing renewal premiums holding up pretty well. Since lockdown has been eased we have seen new business come back very strongly. We are not at a business-as-usual position yet, but never-the-less the numbers are much stronger.” 

Commenting on the main driver behind the rise in commercial business Trail notes that businesses that have never taken premium finance before - or historically might have had it a decade ago – have looked to this solution since March to conserve cash and protect their balance sheets.

Another area that has kept CBPF busy during the early days of the pandemic lockdown was forbearance requests with customers concerned about how they were going to make their payments. A situation that led the business to hold constructive conversations with the Financial Conduct Authority (FCA).

“We started to offer forbearance as soon as the Coronavirus took hold, and have worked closely with the regulator and our broker partners to ensure the best possible outcome for our mutual customers, building on the support we have offered brokers and customers since the start of the lockdown,” Trail says.

In terms of sectors that have been hit particularly hard he adds: “Taxis have been impacted massively; as well as most things in the leisure sector from restaurants to night clubs. Parts of the motor market have struggled and the motorbike space is down, but as it is seasonal many riders only insure themselves for the summer when they can go out, but it has recovered.”


Expert view

Brokers survey the landscape after herculean effort to support clients during lockdown
by Sharon Bishop, CEO, Close Brothers Premium Finance

The optimism among brokers which greeted the beginning of 2020 contrasts sharply with the sober mood in our industry now. 

Brokers made herculean efforts to support their clients throughout the crisis. Having swiftly moved to remote working, they got on with the job, fielding and dealing with thousands of calls from worried clients as the lockdown gripped the country in March.

Tough trading conditions were exacerbated by a tsunami of worried clients asking brokers for help managing cashflow. One survey, from Edinburgh Business School found that 68% of the UK’s most dynamic entrepreneurs had cashflow issues, up from 28% pre-crisis, and 59% experienced a significant fall in business turnover.

In times of crisis it’s ok to ask for help, and it was vital that broking, and those, like Close Brothers Premium Finance (CBPF), who work with brokers, all stood together. It quickly became apparent that many commercial clients were going to need help with their premium payments. CBPF went above and beyond the prescribed guidelines to support all customers, including extending forbearance measures to ease the pressure for commercial clients too.

I am convinced that early support to safeguard clients’ cashflows counted for a lot. In a crisis, people remember who helped them, and who didn’t. In a nervous market where the very value of insurance has been questioned, maintaining a good client relationship is critical, especially when the public see little distinction between brokers and insurers.

Of course, while we must stay vigilant, there are welcome signs appearing of a return to some sort of normality, not least the start of the re-opening of the hospitality sector on 4 July, but the pandemic will exert a powerful influence on business and society well into the future.

Brokers more than ever relied on technology to manage their way through the crisis, and the use of technology is likely to accelerate. The pandemic also taught me how critical it was to look after the welfare and well-being of colleagues.  And that extended to our brokers. In a crisis you find out who your friends are, and I am proud of our role in supporting our broker partners support their clients. We really were, and are, all in it together.

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