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Nine out of ten specialist brokers believe they have a competitive advantage over their rivals, according to new research by Ecclesiastical Insurance.
The study by the specialist insurer, which sought to understand the power of specialising, found that around half of brokers in the UK market (52%) identify as a specialist.
The survey of 200 brokers, supported by a series of roundtables, found a clear commercial imperative for specialising. While sector knowledge (73%) was the main consideration for becoming a specialist, the desire to differentiate themselves in the market (53%) and maximise revenue (50%) also emerged as key drivers.
When asked why being a specialist was important, the top three reasons given were to bring expertise to clients, provide the best solutions and be more profitable.
Trust, specialist knowledge and personalised service were the top three reasons cited by brokers for customers choosing a specialist over a generalist.
Adrian Saunders, commercial director at Ecclesiastical Insurance, said: “In today’s market, where clients value expert knowledge and advice, our research shows becoming a specialist gives brokers a distinct edge over their rivals. They have a better understanding of the risks facing a client and the cover required.
“As a specialist insurer we understand that clients want to do business with someone they trust, and so it’s no surprise that trust came out on top in our survey as the reason brokers believe customers choose a specialist over a generalist.”
Almost nine out of ten brokers surveyed agree that being a specialist gives them a competitive advantage over other brokers, with 84% saying being a specialist makes them more profitable.
Nine out of ten also agree being a specialist means they have a stronger relationship with their clients, and the majority believe it makes their business more attractive for investment (88%) and provides better development opportunities for their employees (86%).
84% also said they are more likely to place business with a specialist insurer than a generalist.
The survey explored how specialists differentiate themselves and demonstrate value in an increasingly commoditised market.
Helping their clients to get the best cover at the best possible price (20% most important), emerged as the most important way for brokers to demonstrate their value. This was followed by understanding their client’s issues and offering bespoke solutions (17%) and communicating the details of the policy to their customers in plain English (11%).
Adrian said: “A consequence of the pandemic is that brokers have had more time to connect with their clients, albeit virtually. This has allowed specialist brokers to get to know their clients and demonstrate their value in offering bespoke solutions. The question for brokers is how they replicate that intensity once we return to a more normal way of life.”
The biggest threats facing specialist brokers are digital intermediaries (57%), direct insurance (50%) and peer-to-peer insurance (41%), according to the survey.
Despite these threats, the future looks bright for the specialist model. When asked about future trends, eight of ten specialists agreed there would be increased consolidation among specialists in order to combat the rise of the large general brokerages.
Three quarters also agreed there is room for further growth in niche insurance broking, as the bigger players focus on general cover.
Adrian said: “I believe we’ll see the trend towards specialism continue to accelerate as more brokers realise the benefits of operating as an expert within a niche market.
“What’s clear from our conversations with brokers is that specialism manifests itself in different ways. There are pure specialists, focused on particular products and sectors, there are hybrids, who blend specialist skills with a general capability, and there are more generalist brokers, who access specialist skills and knowledge on a more ad-hoc basis.
“The common thread for all of them is you have to be authentic. Specialist brokers have to immerse themselves within their communities so they understand the issues facing their clients. If brokers can do that successfully and add value beyond insurance, then they will reap the commercial rewards. As a specialist insurer, we want to help brokers understand how they can harness the power of specialism to best meet their needs.”