Mid-market service - Mid-corporates need service overhaul

The Chartered Insurance Institute and accountancy firm Ernst & Young have shown in a report that the insurance profession spends £1.3bn a year servicing the mid-market sector without consistent results. The research identified the need for a new agenda between brokers and insurers to deliver good customer service and address the inefficiencies prevalent in the market, which could deliver savings of at least £80m. Although no customers were surveyed, 69% of brokers and 87% of insurers were interviewed for the report, Delivering World Class Service. Among this number were senior staff at insurers and brokers, as well as 732 CII members.

Stratification

Alasdair Stewart, head of business development at the CII, commented: "There is need for greater segmentation and understanding of clients. There is too much emphasis on size and the market needs to be smarter in working out which are the more profitable risks." Commenting on a perceived inability to sell on service rather than price, he added: "When it comes to the larger risks, the ability to differentiate is key and brokers should not be frightened to take their insurers out. In the large cases, there will be frequent contact between clients and insurers." Stewart also said that investment in technology and claims handling needed to be stepped up.

The market is worth £5.3bn and there are 43,500 customers with turnovers of between £5m and £250m, with the top 140 brokers and 12 insurers controlling around 80% of the market.

Inefficient approach

According to the report, there has been a tendency to adopt approaches developed for the small to medium enterprise sector to mid-corporate business. It reads: "Cost-cutting, commoditisation, support for managing general agents and other network routes have been wrongly applied to the lower end of the mid-corporate market ... little consideration has been given to the end-to-end value or service chain. This has led to large degrees of duplication with no obvious improvement in industry efficiency." This is particularly disappointing given that the cost of margin involved is almost double that of smaller risks.

Andy Hawkes, managing director at THB, said: "We have never got it right in this area. How many brokers vote with their feet and move insurer when they aren't receiving the appropriate service? Until insurers lose business because of poor service, they won't change. I think there is still too much reliance on commission by brokers when placing business; we need a cultural change."

- The CII has set up a task force of senior general insurance practitioners as part of its campaign to raise professional standards. The task force will develop a common framework for all aspects of professionalism within the industry and is chaired by Barry Smith, deputy president at the CII and chief executive at Fortis Insurance.

Help required for research into insurer service

Give a few minutes of feedback on your commercial insurers' service levels and we will send you a complimentary copy of PB's hard-hitting Insurer Service Report 2009 - an invaluable business tool for senior managers.

Discover what 600 of your peers say about different insurers' strengths and weaknesses, compare the performance of your existing panel against the alternatives, gain vital insights on which insurers you should be considering an agency with - and which you may wish to avoid. Our highly-readable illustrated report details the service performance of each of the UK's leading 40 commercial insurers in turn, complete with full league tables and frank, revealing broker commentary - all based on input straight from the brokers that do business with them. All responses will remain strictly anonymous.

To receive your complimentary copy, email pbeditorial@incisivemedia.com and request the URL link to our online questionnaire. We look forward to reading your verdict on insurer service and to posting you your copy.