I have always thought there are a number of lessons that the insurance sector can learn from what is happening in other industries, with retail being a prime example.
2015 is set to be another challenging year for the big four supermarkets as consumers continue to look for the value provided by discounters Lidl and Aldi or, conversely, an upmarket shopping experience. It is hardly surprising then that Waitrose expects to create 2,000 new jobs while its competitors are abandoning plans for expansion or closing existing stores.
Consumers are also becoming more discerning and are adapting their retail habits as their lifestyles change. Previously accepted norms are being challenged as customers purchase less, but more frequently, and a move away from large shops, less often is clearly happening.
You may be wondering what all this has to do with the world of insurance, but there are some striking similarities.
In the next few months, we will see significant disruption in the aggregator channel as the Competition and Markets Authority reforms come into effect. Once wide most favoured nation clauses are banned, policies can be sold cheaper on one site than another, and it will be very interesting to see how the increased competition plays out.
The added regulatory scrutiny will also serve to raise awareness in the public domain. Consumers will react to this, which brings us back to the more discerning shoppers. These individuals are willing to pay to ensure they get the right cover and level of service, rather than just focusing on the cheapest price.
As pay as you use/as you go products gain further popularity, shoppers will also require more specialist guidance, which provides further opportunities for brokers to benefit from the engagement and relationships they have with these consumers.
This means that, just as the big four supermarkets are looking to differentiate themselves to survive the changes in shopping habits, so there are real opportunities for brokers to stand out through customer efficacy and the provision of good advice and service.
With the High Street coming back to life, brokers in particular are well placed for a resurgence.
That’s one of the reasons why I am delighted to be back at the helm of Keychoice at such an exciting time for the industry. The vibrant trading community in the Keychoice segment is reflected in the fact that its members are outperforming and overperforming other brokers.
Based on our view of the market, Keychoice brokers were able to grow their total GWP by more than 7% during a tough trading period, when non-Keychoice brokers saw their total GWP fall by more than 18%.
In 2014, Keychoice members wrote 59% of the total personal lines business that flows through SSP, an increase of more than four percentage points over the last three years. The impact has been even more pronounced in commercial lines, with Keychoice brokers’ cut of the total GWP written by SSP brokers growing from 57% to 65% in the same timeframe.
2015 is set to be a great year.
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