After the insurance premium tax (IPT) hike late last year, UK brokers are worried that the resulting higher premiums may have an adverse impact on business levels and profitability. This was revealed in a survey commissioned by insurer Covéa.
The study involved 515 commercial and high net worth brokers and sought to determine their opinions regarding various market conditions such as their preparedness for the Insurance Act and chartered status.
More than six out of ten (64%) brokers expected their business to grow over the next 12 months, despite market challenges. The increase in IPT and intense competition were cited as the most likely hindrances to growth, as well as the emergence of ‘online’ trading, especially in the personal lines market. The higher IPT may cause customers to shop around for better prices, according to several respondents. One broker predicted that this may lead to some consumers to ‘self-insure’.
On a positive note, one opportunity that brokers are eyeing is cross-selling, with several brokers focusing on growth via cross-selling of products between high net worth and commercial clients. It appears that high-spending customers appreciate face-to-face interaction with a broker more than simply going online. Many of the brokers surveyed were optimistic about customer loyalty, anticipating a rise in repeat business, and incorporating this into their growth strategies.
The study also revealed a spirit of professionalism and customer service amongst brokers, as less than 1% of respondents said they did not feel ready for their obligations arising from the Insurance Act when it becomes effective in August, and 62% saying they either already had, or were considering, CII
Commenting on the results of the survey, Simon Cooter, Covéa’s commercial lines and HNW director said: “This research has given us valuable insight into what our broker partners would like, and their priorities in the context of broader market conditions. We will be using the detailed responses to refine our product proposition further, and look forward to announcing plans for enhancements to a number of our commercial and High Net Worth products later in the year as part of our ongoing commitment to providing our broker partners with first class products and service to ensure our mutual profitable growth.”