Market viewpoint: Staying in the saddle

Mention 'The Grand National' to most provincial brokers and they'll assume you're talking about one of their bigger rivals that has acquired ideas above its station. The flat season? Well, that runs from January through to December for most

Many runners and riders in the broking market have been finding the going heavy over the past few years. Competition from direct sales, a cavalier attitude among many composites, and the increasingly demanding hurdles thrown up by regulation mean that survival is not guaranteed. So what sort of broker will stay in the saddle and find its way to the winner's enclosure?

Let's agree that in 2003, you don't even deserve a place in the stalls if you merely act as a source of cheap quotes. There are machines that can sift through prices and direct buyers to the appropriate bucket-shop - and such facilities are no longer confined to volume commodity markets. All brokers, whatever their speciality, need to steer away from any temptation to win business on price. After all, if you do, the odds are that you will lose on price on the next circuit.

And the fact of the matter is that technology is only going to make the situation worse. Technology and standardisation go hand in hand. So in theory everyone will ultimately be able to offer a good price and to do so quickly and efficiently. So just where is that edge that wins the business? In the electronic world, what is it that will make that all important difference?

Clearly, brokers must discover how to add value to their offer, which means increasing the emphasis on service. Specifically, brokers must accentuate the provision of risk management and claims handling, thus anticipating their clients' requirements at all stages of the insurance relationship. Offering that little bit extra or that extra facility that your competitor fails to identify could be enough to put you in the saddle and your rival into the mire. And keeping it simple will help too. After all, these days the busy client just doesn't have the time. They want their broker to take their worries away - not add to them.

So offering good old 'peace of mind' is a key element of the marketing process. The customer just wants to know that when it comes to protection needs it will be a 'once and done' deal. Remember: in these competitive times, if a rival sees as much as a chink of light, it will pounce. The holding broker needs to create a genuine partnership with the policyholder that removes the need for the latter to look elsewhere for support or advice.

Of course, this aspiration will be better achieved if the broker chooses the right insurance company stablemate. Indeed, all parties should strive to forge a three-way relationship that sees the participants working in concert to manage and/or transfer the risk to the benefit of each.

The partnership will work most effectively if the three allies are able to adopt a long-term perspective. One of the factors which makes our business so difficult and potentially frustrating is the fact that, every 12 months, there is potential for huge upheaval. This hobbles planning and restrains investment. With such a cloud looming on the horizon for much of the time, where is the incentive to build a mature strategy?

Progress will only be made if each partner trusts the others and is willing to commit to a longer-term future than some time next year. We need a fundamental shift in attitudes so that the link between insurance buyers and their advisers/suppliers becomes more akin to the professional relationship that is naturally established with accountants and solicitors.

The deeper and more enduring the relationship, the better the management of the risk will become. It is only over a period of time that the fruits of serious risk management effort will be appreciated. Increased efficiency, improved safety and enhanced operating effectiveness cannot be delivered overnight. It is the task of the broker/insurer team to get that message across.

Continuity is sometimes compromised, not by any breakdown in the relationship per se, but because there is a change in the business makeup of one of the participants. Both the broker and insurer markets have seen massive upheaval in recent years, with the number of operators reducing steadily. What is vital is that any such change is managed sensitively and constructively so that it does not prejudice the interests of the policyholder.

Brokers will no doubt have plenty of colourful opinions on how some insurers have handled the process, but for their own part, they must endeavour to ride out any change of ownership or control without compromising the standards which underpin their approach to serving clients.

This also means taking a step back from any proposed merger or acquisition and assessing whether the two business cultures will make a good fit. It is not just a question of seeing whether the numbers make sense. Is there a common set of values? Do both operations seek to deliver the same type of service?

Equal weight must also be given to the way the relationship with insurers may be affected by a change at the corporate level. Will the partnership approach endure? Will the commitment to risk management and claims handling be as imaginative and whole-hearted?

Although the field itself is shrinking, brokers and insurers will continue to jockey for position. Those who emerge as favourites will have a clear idea of their own objectives and pursue established ways of delivering a blue-riband service to their clients. What is clear is that it is no longer sufficient to hack around the market picking up scraps of business - only those prepared to keep a tight grip of the reins and stick to a well-thought through, service-oriented strategy have a chance of getting to the finishing post ahead of their rivals.