Help on the horizon

Brokers are under pressure on all fronts. Regulation, competition, margins, reputation - where does the harassed intermediary turn for solace and support? What practical measures are available to help brokers defend their sector and grow their businesses?

Thankfully, the pro-broker insurer community remains active and one of its proudest achievements is its collaboration in the development of imarket. This technological initiative has the reach and potency to breathe new life into broking and ensure its survival and prosperity. But for it to succeed it needs active and enthusiastic participation from brokers themselves.

The grim truth is that many people still regard imarket with suspicion. They point out that broker-underwriter relationships have evolved over many years and depend on shared understanding and mutual respect. Why put that at risk by using a faceless system such as imarket? Is not the experience and expertise of the broker market what sets it apart from the direct sales arena?

Brokers have little option but to respond to the pressures they are facing. The current model is under such threat that its viability is being seriously challenged. We need to find a way to meld the traditional skills of the broker market model with the contemporary attributes of a solution such as imarket.

Pressure on rates

What are these dire threats? The first is pressure on rates and rapidly increasing competition, especially in the small to medium-sized enterprises commercial lines market. We may have seen efforts to push through selective rate rises in personal lines motor business but the general picture across the insurance landscape is of rates remaining soft because too many players are fishing the same waters.

Cut-throat competition between traditional underwriters is bad enough but now we also have to factor in the impact of the big retailers looking to leverage the strength of their brands in our market.

Tesco and J Sainsbury have scored notable successes with life and personal lines covers and, encouraged by this, they are sniffing around the packaged commercial lines market - witness Tesco's commercial-vehicle policy launch. It is a sure bet that any initiative from Tesco will be harnessing the latest communications technology.

We must also pay regard to competitive factors within the broker market itself. Recent years have seen sustained consolidation, with the seemingly inexorable rise of ever larger firms boasting significant marketing resources and sufficient muscle to negotiate favourable terms with insurers.

Networks and alliances

We have seen the creation of networks and alliances of various kinds, again predicated on the belief that bigger is better. Where does all this corporate activity leave the smaller broker that is doggedly trying to hang on to its independence?

Another significant change is in consumer expectation and behaviour. With the arrival of the internet, people have grown used to speed, efficiency and choice. They have also benefited from lower prices, as providers have achieved cost savings. Anyone hoping to maintain a presence in the e-enabled market needs some sort of e-capability.

So why is imarket being promoted as the answer to brokers' needs? Simply because it addresses all these issues and brings with it a host of positive enhancements that will improve the potential for traditional brokers to compete with rivals, whether they be giant regional intermediaries or supermarket-brand behemoths.

imarket works by providing brokers with a powerful tool with which to fight the threats they face, particular on SME business. It is a valuable business portal that can offer genuine support and added value to their marketing and business management strategy, giving the broker the power and flexibility to compete in a hostile market.

Closer understanding

What about the supposed 'de-personalising' effect of using imarket? Does it mean brokers no longer have human interaction with their underwriting contacts? Quite the opposite. The time savings achieved by using imarket means brokers and insurers can forge a closer understanding based on a deeper exploration of capabilities and aspirations.

If brokers can free up time via imarket to have more meaningful conversations with underwriters, think what it means in terms of communicating with customers. With imarket reducing or eliminating mundane chores and administrative hassle, brokers can accelerate their progression from being policy providers to genuine business consultants who add substantial value to the process.

Why not make it clear to the client that you have the potential to act as their insurance/risk management/business continuity/disaster recovery consultant and that, if they need to contact you, you'll never be too busy chasing paper to turn them away? Why not encourage greater face-to-face contact? Any insurance practitioner worth his or her salt knows that you learn more in 10 seconds when you visit a client's premises than you do in 10 minutes on the phone.

Time saved thanks to imarket could be earmarked to support the construction and maintenance of an online advice centre or any other customer service facility that can continue to enhance the relationship.

It is all about cementing customer loyalty and achieving differentiation between the broker offer and the direct sales counterpart, which will focus on commoditisation and price at the expense of advice and ongoing support.

This all sounds tickety-boo but is there any evidence to suggest imarket can deliver on the promise of streamlined service that boosts standards while achieving cost savings? The answer is yes. Research by Acturis has shown that brokers can achieve 30% time savings using imarket. As far as cost savings are concerned, the research shows that administrating SME business gobbles up 35% to 40% of expenses but with imarket this comes down to just 10% because there are fewer key-strokes, less duplication and fewer mistakes.

Savings make impact

Brokers transacting high volumes of low-value business can exploit the efficiencies and accuracy offered by imarket to make modest policies worth the bother. The average premium for SME package business is less than £1000 and for tradespeople it is often less than £200. For brokers entirely reliant on commission, the case rate in such instances means any savings could make a real impact.

With imarket, therefore, the broker is able to sell a good product, quicker and more efficiently. There is also the added value of offering independent advice, treating customers fairly and ensuring contract certainty. This is known in advanced technical marketing parlance as a 'no-brainer'.

Not every case can be processed straight through imarket but that is precisely the point. It probably warrants extra attention and expert input and, thanks to imarket, the appropriate people will be available. imarket can still help via secure email and 'X-forms' to help standardise processing and administration. So brokers and underwriters have the time to do the work they were trained to do, rather than engage in an endless paper chase.

Reduced work burden

Another concern is that insurers are promoting imarket because it shifts some of the burden of work away from the insurer to the broker. This is not something brokers need worry about. First, imarket reduces the overall administrative burden for the broker, notwithstanding that they do have a greater involvement in the 'front-end' processing of the business. Second, insurers need the reduced costs and increased competitiveness this brings. It means they can feed value back to the broker, both in leaner premiums and meatier responses to complicated cases that call for expert intervention.

Greater broker involvement also offers brokers much greater control. They can work as and when required/desired to achieve the service standards they set themselves. There is no hiding behind the skirts of insurers, no passing the buck, no dodging the blame. But there is the opportunity to take all the credit and move the business proposition to a new level.

There is no doubt that imarket is good for insurers but surely we are beyond the stage where brokers automatically think that is a bad thing? Think of the insurers that remain committed to the broker cause - there are not that many of us left.

Would we have stuck to our distribution guns for this length of time, and through such market turbulence, simply to help create a system that lined our pockets at brokers' expense?

No sinister motive

Broker-friendly insurers back imarket because it will sustain and perpetuate the broker market. It is as simple and straightforward as that. Those who seek a sinister motive do so in vain.

Thanks to imarket we and the broker channel can work together to bring products to market that compete with anything on offer from the direct sector. imarket helps level the playing field. With the skill and experience of professional brokers added to the mix, the prospects for intermediated sales in the SME arena remain healthy.

Did you know?

- Up to 50% of commercial insurance documents contain errors that necessitate their return.

- About 20% of these forms are still incorrect or incomplete after three attempts to rectify the problem.

- Administrative costs on non-imarket business account for 35% to 40% of premium.

- imarket reduces these administrative costs by about 60%.

- Average small to medium-sized enterprises package premiums are less than £1000, generating commission of £125 or less. The need for enhanced efficiency is obvious.