It’s not every day that you get to strike a deal with the British Insurance Brokers’ Association (BIBA) – but for Jackson Lee Underwriting, last week’s news of the renewal of its GAP scheme represented the continuation of a partnership dating all the way back to 2012. Insurance Business spoke to the firm’s joint MD Mark McLaren (pictured left, with BIBA CEO Steve White) to discover how the deal came about.
“We initially pitched for the BIBA GAP scheme back in 2008, but the market was a very different landscape back then and BIBA felt GAP was too heavily monopolised by the motor dealership market,” explained McLaren. “We could see that things were changing and that brokers would be in a prime position to capitalise on the emerging GAP market, but it wasn’t until 2012 that we approached them again in partnership with the ‘AA’ rated Tokio Marine, that we secured the exclusive BIBA GAP scheme.
“By then, the market opportunity combined with the strength and quality of our capacity, the fact that we had invested in our own proprietary online quote and buy system (ABEL) that made the sales and administration of the policies easy, plus the fact that we offered brokers comprehensive face to face or online training, made us stand out to BIBA.”
To be able to renew the deal some seven years later, however, the firm had to keep progressing – with McLaren stating that it has “built momentum over the years.”
“We’ve developed both the product and the training over time,” he said. “The initial product was very similar to the commoditised product offered by the motor dealerships, but for them the driving factor is the revenue stream whereas for brokers it’s as much about advising customers on risk and providing a service to drive loyalty and retention, as it is about revenue. We made the policy more flexible, introduced options for annually renewable GAP and developed more tailored GAP products, for example in commercial and fleet motor. We created a Universal GAP product with just three exclusions and a plain English wording for improved transparency and contract certainty; we have paid 100% of claims.
“These changes revolutionised the GAP market. Our brokers have confidence in selling a valuable product from a trusted provider.”
While brokers may be able to have confidence in the product, there is little denying that the GAP market has been a complex environment for most in recent years. It has suffered from notable contraction with McLaren outlining that a “number of insurers” have shut up shop meaning there’s less available capacity.
“At the end of the day GAP is an ancillary product for time-strapped brokers,” he said. “Sales of GAP are still more prevalent in the motor dealer market, so there is still clearly a massive opportunity for the enlightened broker with access to the right product. Broker training and awareness of GAP is the key to unlocking that potential.
“For example, brokers should be aware that motor lease agreements are not designed to be terminated early; this presents a potentially business critical risk for an SME operating a fleet of commercial vehicles. Every commercial vehicle should have GAP cover because of the way it is usually funded. This is just one of the many clear opportunities in GAP that brokers should be capitalising on.”
The company told Insurance Business that it is working on a new fleet GAP proposition – a mobile tablet quote tool for brokers to do fast binding quotes with consumers on-site – and is also looking at developing a GAP product for pay-as-you-go motoring. But there is a challenge too presented by the evolution of the market, and particularly from the internet, with McLaren explaining that “non-advised sales of GAP” – i.e. those sold purely on price – are creating a “lot of noise and confusion for consumers.”
“Internet sales of GAP don’t tend to perform as well on retention either, and the internet won’t negotiate with the insurers on your behalf when it comes to a claim,” he said. “Brokers should play to their strengths, focus on the quality and security of the policy and the professional advice that they and their providers can offer – engage and interact.”