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"We have been selling policies we want to sell, not necessarily what the policyholder wants to buy"

"We have been selling policies we want to sell, not necessarily what the policyholder wants to buy" | Insurance Business

"We have been selling policies we want to sell, not necessarily what the policyholder wants to buy"

I am writing this column while sitting on a plane heading to Germany for a meeting with a major insurer. Why, I hear you ask?

Well, our European friends and colleagues look at the UK insurance market, often in wonder. Our global footprint identifies our skills and knowledge of the subject matter but also innovation of products and delivery methods. It reflects the UK passion for all things new and as such the insurance market is often viewed as an example to others and something to aspire to. This is certainly true when you look at MGAs and how they are always pushing the boundaries of cover, placement of risk and distribution.

Respected industry commentator, Tony Cornell, referred to MGAs as the third force; an insurance entity independent of other pressures and built around underwriting, and where distribution naturally follows.

We have already seen what insurtech companies are doing and how they are shaking up the insurance market. But let’s be honest, would we really design the insurance market the way it is today?

Recent analysis of MGAA members has shown that over 80% of their distribution channel is via insurance brokers. By being present in the market we are providing brokers with additional access to market for their policyholder clients. And as we are independent from broking houses, albeit we may be owned by one, the provincial broker can rest assured the MGA business model is not handling policyholders direct, so we are not intent on stealing their clients.

BUT and it is a big BUT, we must also look to see how our client base wants to purchase their policies, and what type of policies they want to buy. For too long we have been selling policies we want to sell, not necessarily what the policyholder wants to buy. This was bought home to me recently when a new insurtech business used available data of an affinity group and asked them about the type of policy they wished to buy. What was interesting was that the vast majority did not want to see an excess. When the policy came to market over 75% of people buying this policy opted to pay a little extra knowing that in the event of a claim they would not have to fork out for the excess. I found that really interesting.

So why am I on a plane to Germany?

Our European cousins have an insurance income of circa €70 billion and they too are looking at the UK, how we are developing and the journey we are taking. They also find this intriguing and no doubt will start a process to learn from us and develop their own underwriting and distribution model.

So, Brexit aside, we could not get away with this could we - let’s continue our relationship with our friends across the water and both learn, understand and work together to ensure our respective clients benefit for the use of new technology and potential new ways for brokers to secure good quality policies for their clients.