The purpose of COVER’s Future Fit Broker Survey is to track the levers to growth, as seen by brokers themselves. Our first survey assisted us in determining certain levers and to measure the impact these have, based on the opinions of surveyed brokers.
About two thirds of brokers surveyed felt their growth outlook to be stagnant or under 10%. Only one third expects growth higher than 10%. This underlines the importance of finding and using the levers to growth that will assist the intermediated market to grow.
Those expecting under 10% or stagnant growth sited economic growth (mostly clients downsizing and business failures), emigration, direct challengers, a hardening market, and the regulation burden as reasons for the lack of growth.
The one third that expects over 10% growth are those focusing on selling and new clients, diversification, adding additional value to clients and including VAPS products in their line-up.
What is interesting is that nobody raised technology as a lever when commenting on the reasons behind their growth expectations, although later in the study we see that most see technology as crucial or especially important for their future.
Matt Gurran, CEO of Garrun Insurance Brokers:
“Over the past three years, many claims were paid in the South African market, including those related to SASRIA, floods in KZN, and COVID business interruption. This has resulted in reinsurers repricing, which could pose both a threat and an opportunity for brokers.”
The following growth levers dominated the feedback
- Relationship:
Many brokers responded that retaining clients through challenging times is an essential strategy when growth is slow. This is where a trusting relationship pays off. The issue that needs further unpacking is what the secrets are to building this trusting relationship.
Clients (word of mouth, understanding risk, managing expectations, trust) Underwriters (personal contact, understand specific needs of both sides), adding extra value.
- Diversification:
Personal lines under pressure but most still positive for this bus saying it helps get into bus market while clients also look for personal touch. Risk management service NB across the board. SMME, Emerging risks - Regulation:
The biggest issue, with compliance is the amount of time it takes, which limits the time for sales and client interaction. This was raised by all respondents and came up in various areas of the survey. Exploring Regtech will be crucial to understand how to move the needle with this lever, as regulation is here to stay.
Debbie Holroyd, Scottfin CEO:
“The continuous change in regulations is affecting the efficient running of brokerages and making it difficult to remain competitive.”
- Skills:
Underwriting, sales, risk management
Most feel they have the skills needed for SME business or are working on growing those skills. There is an opportunity here for insurers as brokers still rely heavily on product provider training while a substantial number also focus on private external training. Internal training efforts are low key and are mostly combined with provider training.
Finding staff skilled in underwriting is difficult or exceedingly difficult for most. This is also why 97% sees access to skilled underwriters as crucial or very important. Again, this could be a competitive edge for both insurers and brokers who get this one right
Debbie Holroyd, Scottfin CEO:
“The industry needs to go back to basics and train their staff on fundamental insurance principles before jumping into compliance training”.
The shift towards more risk management engagement with clients, 50% of respondents felt they were very prepared for risk management with the other half saying they are upskilling staff, leaves a whole are open for strategic initiatives.
- Technology:
Although the bulk of respondents sees this as critical, 50% have just started on the digitisation journey with many saying they have a long way to go.
The key issues are time and cost. This becomes a real issue as the bulk of respondents said using their own system is important. Interestingly, most said the choice of platform was not that important, an issue that needs to be explored further.
- Product suite:
Well priced, innovative products were crucial to 65%, while it was important to the balance, second in importance only to access to underwriters/ assistance with claims. Again, defining what would determine a product to be innovative is unsure and would be interesting to unpack with brokers.
Elliot Schwarts, Independent broker, and marketing consultant:
“The essence of competitive advantage in business is to be better than everybody else at something the client is prepared to pay for”