, , , ,

Would you like to increase your broker revenues by up to 37%?

The Hidden Opportunity

Recent research into the relationships between brokers and insurance companies has revealed a significant opportunity to
increase the overall share of wallet that an insurance company can achieve from its brokers. This opportunity could result in increasing premiums by up to 37%.

5-YEAR RESEARCH PROGRAMME

Deep-Insight worked with six broker divisions of its insurance clients over a 5-year period, from 2007 to 2012. These insurers spanned the general, life and health markets in the UK, Australia and Ireland. The objective of the analysis was to determine what factors caused the brokers to place more, or less, business with a particular insurance company, and what those insurance firms could do to increase the share of wallet they enjoyed from a particular broker community. Until now, nobody has been able to quantify the impact of a good, or a unique, relationship on the amount of business a broker is prepared to place with an insurer. The views of more than 10,000 brokers who actively placed business with our insurance clients, were sought as part of this 5-year research programme.

GAINING A UNIQUE VALUE ADVANTAGE (UVA™)

There is a considerable body of academic research pointing to the value of being seen as ‘Unique’ in the eyes of your customers.

Deep-Insight measures ‘Uniqueness’ on two dimensions:

    • Problem Solving. How does the insurance company solve the broker’s problems, and help build value for the broker by providing a unique solution to meet his needs?
    • Relationship Experience. How safe and trustworthy is the experience for the broker?
    • If the insurance company scores well on both dimensions, it will gain a Unique Value Advantage (UVA™) in the marketplace.

But exactly how much of an advantage?

RESULTS: OPPORTUNITY TO INCREASE REVENUES BY UP TO 37%

Deep-Insight’s analysis shows that:
  • While the majority of brokers had a good relationship with our insurance clients, fewer than 1 in 5 brokers viewed the relationship as ‘Unique’ (see graphic – Unique Value Advantage);
  • In fact, 1 in 4 brokers had a very poor perception of their relationship with the insurance company, viewing it as ‘Anything But Unique’ (RED quadrant in the graphic);
  • Brokers typically split their business between four or five insurance companies, but not all insurance companies were treated equally;
  • Where the brokers felt the insurance company was ‘Unique’, the share of wallet was 37% greater than average. Where the brokers felt the insurance company was ‘Anything But Unique’, the share of wallet was 29% lower than average.

These findings were consistent across different types of insurance business (general, life, health) as well as across countries (Ireland, UK, Australia).

COMMON ISSUES MUST BE ADDRESSED TO ACHIEVE A UNIQUE VALUE ADVANTAGE (UVA™) IN THE MARKETPLACE

Three major themes emerged from our analysis. Insurance companies need to address these common issues if they are to win over their broker communities and gain a larger Share Of Wallet from these brokers :

  • Communication. For example, several insurers make changes to products but fail to inform either the broker or the policyholder. But equally important: most brokers are looking to be contacted on a much more frequent basis;
  • Quality of Broker Consultants/ BDMs. We noticed major differences in the quality of the insurer-broker relationship, depending on the skills and capabilities of the account manager or Business Development Manager (BDM). Insurers need to invest more in training and up-skilling;
  • Administration. Back-office and administration bottlenecks were a significant issue formany brokers, particularly if they affected commission payments. Ease of use of online systems was also a key issue for many brokers.