IFM Insurance Brokers MD on the regional insurer gap

"There is no insurer underwriting presence in the city of Sheffield"

IFM Insurance Brokers MD on the regional insurer gap

Broker focus

By Mia Wallace

Like so many of his peers, MD of Sheffield-based IFM Insurance Brokers, Mark Barlow (pictured), fell into the industry and he has since worked within an eclectic assortment of roles including an underwriting position at Prudential as well as positions at local and national brokerages. Sometime around the turn of the century, he said, he’d had enough of being in the national broker space and enough of being treated more like a payroll number than an individual which, he said, is what can happen in big organisations.

Speaking with Insurance Business, Barlow detailed the central challenges facing regional brokers in the current market and outlined the appalling state of local infrastructure where he works.

“There is no insurer underwriting presence in the city of Sheffield, and there hasn’t been for many years now,” he said. “Norwich Union, now Aviva, were effectively the last underwriting office in the city and they moved out maybe six of seven years ago now.”

And the issue is not limited to Sheffield, Barlow said, highlighting how the local conurbations around his local office including Doncaster, Barnsley, Rotherham, Chesterfield and other regions across the country have no insurer presence. This comes with a range of challenges for regional brokers, he said, and the most significant of these is around relationship building.

IFM has a good relationship with the underwriters in Leeds, he said, but the fact remains that Leeds is a completely different city with a different identity and different people. And in a people business like broking, he said, relationships develop and grow through meeting people.

Barlow understands the logistics of insurers not operating in multiple regional offices, but he believes insurers are missing a trick with their lack of presence in these regions.

Some insurers have acknowledged this gap, Barlow said, indicating how Aviva has made sure it has a presence in a lot of broker offices with a ‘bonus underwriter’ who provides brokers with direct access to the company. Other insurers have tried to implement this with varying degrees of success, he said, and the larger players, in particular, are beginning to identify the need to have their people sitting face to face with brokers, holding renewal surgeries, etc.

“Transacting everything online and via email makes it hard to gauge a reaction,” he said. “You can’t gauge anything out of a transactional relationship, whereas you can with a trading relationship.”

Insurers are not wrong to want to trade smaller ticket business online, Barlow said, but they are often failing to identify that not every risk can fit on that kind of platform.

“If a risk doesn’t tick every box to neatly fit within their risk criteria you’ve got a ‘computer says no’ attitude. This is even more of a problem when you are dealing with a business hub which is located further away even than Leeds,” he said, “where the people you are talking to are lacking not just basic underwriting knowledge but also local knowledge or knowledge of the type of risk that you are talking about.”

A knowledge gap is developing, Barlow said, as people of experience have exited the regions and they have either exited the industry altogether or moved to the insurer hubs such as London, Manchester, Leeds and Birmingham.

Those working in the smaller ticket offices simply do not have the same level of experience and are reliant on computer systems dictating their decisions when, for Barlow, underwriting has always been about taking a calculated or measured risk and evaluating that risk, eventually making a decision based upon that evaluation. Once the art of doing that and making that contact is gone, he said, it is likely to have been lost forever.

The lack of an insurer presence in Sheffield has had a strong negative influence on talent acquisition within the broking sector of the region, Barlow said. In prior years brokers could avail of experienced staff with excellent training and a grounding in insurance who no longer wanted to work for an insurer and wanted instead to work for a broker, he said. The issue now, he noted, is that these people are not in the community at all because insurers simply do not have the same footprint across the UK.

“Areas like Leicester and Nottingham have a similar kind of scenario,” he said, “these cities with a manufacturing or e-commerce base have got reducing pools of ‘insurance people’ to pick from - in fact, there’s no pool at all.”

The impact of the core challenges facing the regional broking sector is being exacerbated by the immobilising transport infrastructure available, particularly within the north of England, Barlow outlined. Governments in the past have talked about having a northern powerhouse, he said, and that would be very much welcomed but the question that remains is how far they are willing to go to facilitate that.

“You’ve only got to look at the cities of Sheffield and Manchester, divided by only around 35 miles, and the lack of a single adequate transport link between these two major cities in the north,” he said. “To me, that’s not creating a northern powerhouse. The transport links between the cities should be superb and they’re not.”

Barlow highlighted the recent election and how the government was elected due to significant changes in voting patterns, particularly in the north of England, where people felt betrayed by Labour councils. The Conservative government would be foolish not to fulfil its promises to spend and invest in infrastructure, he said, though how long it takes for these changes to filter through to regional businesses and local economies is another story.

Whether insurers are likely to return to the regions is a question that Barlow has considered and he outlined how insurance has always been cyclical in nature. He described how, in the past, insurers have closed regional offices down to move to central hubs only to spin back out into the regions. However, he believes that this cycle has been broken due to technology and the requirement for fewer people within underwriting roles.

The reliance on the e-trading side of business means that insurers are only speaking with brokers about risks which are involving increasingly high levels of premium and sophistication, he said.  The sector is moving into more of a ‘price versus advice’ space, he said, with insurers putting more and more of their products online, which is of no help to the end-user. Barlow outlined, however, how there are certain elements of insurance that simply cannot become commoditised and which still require broker expertise.

This goes back to the value of the relationships brokers can build with insurers, Barlow said, as brokers must be able to tell underwriters about the risks which do not fit on their online trade platforms or online products.

“Insurance is changing because people have got access to insurance products online that they never used to have,” he said. “But advice is still needed, and I think often when people are going directly to insurers or just using electronic platforms, they’re missing out on the quality of advice that might just save their business going forward.”

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