The following is an opinion article written by Dave Bailey of Ageas Insurance Ltd.
Scheme business is an area ripe for development right now. Why? Because over the last couple of years there has been a marked growth in the number of businesses in the UK according to ONS data. Professional, scientific and technical businesses have grown faster than any other sector, with 26,000 new businesses emerging in these fields in the past year – an increase of around 17% – and construction firms are on the up too, with 11% growth. There is greater support for SMEs too – with initiatives such as HSBC’s £10 billion lending fund announced in April this year.
More businesses means more entrepreneurship, innovation and opportunities with new and existing niches being developed – from microbreweries to artisan bakers. When any sector grows, innovates or diversifies, tailor made schemes meet the demands for insurances covers offering specific benefits to that business segment.
The diversity of covers is what really makes schemes business so interesting. They can cover anything from Churches to Am Dram societies along with adaptations of standard books of business such as Tradesman or Property Owners.
What should be clear from the outset though, is that the essence of a good scheme is the broker’s knowledge of that particular market, their ability to run the scheme without too much hand holding and the potential opportunity for the type of cover needed.
Ideally it should be a relatively untapped area of business or one where the broker has spotted an opportunity to sell a packaged product that would be difficult for the target audience to find elsewhere.
While the broker is hands on, using agreed bespoke wording and delegated underwriting authority from the insurer concerned, the insurer is very much behind the scenes, underpinning the broker’s expertise.
Affinity led schemes are really sought after as they offer insurers the chance to develop a long term relationship and with brokers who have specialist knowledge in a certain product segment or niche trade, such as Farm or the Security industry.
Schemes are a great example of how insurers and brokers work effectively together, complementing each party’s skills.
How to pitch a scheme
When pitching a scheme, either an existing scheme or new, there is always a need for full details and information to ensure that any ideas can be considered fully by the insurer.
Here are Ageas’s 10 top tips for brokers to consider when pitching a scheme:
- Brokers need to demonstrate their expertise in the niche market or scheme segment, especially if that involves managing niche areas of underwriting.
- If an existing scheme is being pitched, provide information on its past performance.
- Provide an overview of the credibility, affinity, proposition and area for the scheme.
- Brokers should be able to have the fundamental ability to manage risk and governance processes and preferably separate these from the ‘Broking’ function.
- A full business and marketing plan is a must, especially where it is a new scheme. Ideas, concepts and innovation are great, but to be successful there needs to be credible ability to deliver Gross Written Premium.
- To achieve schemes growth, consider traditional delegated authority, electronic management and digital distribution.
- Be clear about how claims will be managed.
- Provide expertise to develop the product and a framework to evidence underwriting control.
- Don’t underestimate what it takes to manage a full, binding authority.
- Be mindful of the strict criteria that may be applied by the insurer, so they are able to demonstrate the governance control to the FCA, and bear this in mind when considering scheme.