myi: Has the market changed much since 2007?
I don’t think that anyone would argue that the property market has changed dramatically. It completely stalled following the credit crunch and while there has been a degree of recovery, I doubt that we’ll reach the same volume of mortgage transactions as we did in 2007 for many years yet. It’s a different picture in terms of general insurance sales via intermediaries.
A little over a third of home insurance policies were sold through intermediaries in 2007, and that figure has grown by less than 10 percent according to Mintel’s latest UK Home Insurance report. I find that pretty surprising given that intermediaries need to generate new income streams as a result of the continued state of depression in the property market.
myi: How do you think brokers can reposition themselves in this changed environment?
Brokers and intermediaries need to be more flexible and adapt their business models if they are to win and retain clients. From the conversations I have, I know that they’re really concerned about the impact of direct sales on their business. To combat this threat, I think that they have to diversify their current activities and maximise the cross-selling opportunities amongst their existing client base.
Upping their game when it comes to marketing will be essential. If they don’t maintain regular communication and demonstrate their value to their clients, they run the risk of someone else filling the gap.
Around half of all household insurance policyholders shop around on renewal, and a significant number of these will be visiting the price comparison sites to source a cheaper quote. Intermediaries run the risk of losing a client and valuable income if they don’t keep the communication channels open and provide value for money service.
myi: Due to the current economic climate, consumers are looking to cut costs by choosing to let go of their financial security and are cancelling their insurance policies as a result. How do you think the role of the broker is going to change over the next few years?
I don’t think it’s a question of their role changing. They’re going to continue to do what they’ve always done-providing advice and guidance on the best products for their clients’ individual needs. And this is where I see an increasing importance in their role as an adviser.
The growing influence of direct players and price comparison sites is a threat, no doubt, but brokers can maximise their face-to-face contact with their clients and play a greater educational role – a service that I don’t believe a website can offer.
The range of financial products from insurance to mortgages to protection is vast and, left to their own devices, many consumers simply buy on price without considering what they really need to cover.
Brokers have an opportunity to demonstrate their value to their clients by helping them truly understand the risk of not having adequate cover in place and the implications it could have on their financial well-being and lifestyle.
myi: Where do you see the future of the market going?
I sadly see little change in the short-term.
We’re still bumping along the bottom of the economic cycle, and there is a lot of uncertainty over the financial stability of many of our European neighbours which continues to impact the UK’s recovery. I think we’ve seen the best of the market right now and need to be prepared for a few tough years ahead. But that doesn’t mean to say that intermediaries should bury their heads in the sand.
There are opportunities out there to diversify and generate new income streams particularly in niche areas such as the rental market. It’s going to be challenging, but for those who are prepared to flex and adapt, I think they’ll make it through the current times and come out the other side even stronger and better positioned to grow once the market turns upwards again.
myi: The insurance sector is a highly competitive market, how do you feel Assurant Intermediary differs from its competition?
We strive to provide benefit-rich products that are competitively priced, enabling our intermediaries to tailor cover and premium to meet their clients’ individual needs. And we don’t sit back and wait for the insurers we work with to bring new products to market; instead, we actively work with them to develop new covers such as our mortgage and short-term income protection policies that were the first to be underwritten at point of sale.
We want to make it easy for intermediaries to do business with us, so we back all this up with what I firmly believe is an unparalleled level of service to our brokers and intermediaries delivered by one of the largest sales support teams in this sector of the market.
myi: If you were Prime Minister for a day, what would you do?
Personally, I would bang as many heads together as possible in Whitehall to get some practical and sustainable measures in place to kick-start the housing market.
It’s a key driver of our economy here in the UK, yet there’s been too much talk with a focus on headlines rather than actual delivery. I’d get members of the industry – those at the coalface who are meeting consumers every day – involved rather than leaving it up to politicians and civil servants.
Gary Little is head of key accounts at Assurant Intermediary, which specialises in delivering a range of general insurance products to the intermediary market.
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