UK Commercial Insurance Distribution 2010 now available at ReportsandReports

Dallas, TX: ReportsandReports announce it will carry UK Commercial Insurance Distribution 2010 Market Research Report in its Store.

Browse complete UK Commercial Insurance Distribution 2010 Report

Introduction

This report gives a comprehensive analysis of distribution in the UK commercial insurance market. It explores issues including the growth of direct insurers in commercial insurance and the acquisitions occurring between commercial insurance brokers. The report also includes data and insight on SMEs’ purchasing behavior, broker consolidation and the latest activity of the managing general agents.

Scope

Insight into the latest issues affecting the commercial insurance market and the impact these are having on distribution.
The latest data on SMEs’ purchasing behavior, managing general agents and broker consolidation in the UK commercial insurance market.
The latest data on the size of the commercial insurance market and GWP splits by distribution channel.
Forecasts up to 2014 of the market share of different channels in the UK commercial insurance space.

Highlights

SMEs have been generally loyal to their commercial insurance providers, most commonly maintaining the relationship for two to five years. However, SMEs were perhaps expectedly motivated to stay or leave their provider according to price, implying a high level of potential churn in that sector.

For the past year, broker networks have continued to acquire regional brokers in a bid to increase their market share and improve their regional coverage. According to Datamonitor’s commercial insurance broker survey, 45.7% of commercial brokers are part of a broker network or club.

A number of insurers withdrew capacity from managing general agents (MGAs) in H1 2009 but the total number of MGAs is set to increase. The cost efficiency and penetration into niche markets are benefits many insurers are keen to exploit and as such major players such as Giles have been forming new MGAs.

Reasons to Purchase

Understand issues affecting the commercial insurance market such as the promiscuity of SMEs, potential growth of MGAs and channel preferences.
Understand the future level of consolidation in the sector and the companies which are most likely to drive this consolidation.
Gain insight into the prevalent broker network model, factors driving the model and why the direct and affinity channels are of increasing importance.

Table of Content

Overview

Catalyst

Summary

Executive Summary

Total general insurance GWP declined in 2006

Brokers continued to dominate the distribution of commercial insurance

National brokers have lost distribution market share to the direct channel, chain brokers and telebrokers

Larger companies are more likely to have switched brokers between 2006 and 2007

Companies with a large turnover are more likely to switch broker

The market saw a number of mergers and acquisitions, many involving brokers

The broker channel is dominant in UK commercial insurance distribution, however its share of the market is declining

Brokers are forecast to see a 1% decline in market share between 2007 and 2011

Table of Contents

Table of figures

Table of tables

Introduction

What is this report about?

Who is the target reader?

How to use this report?

Market Context

Introduction

Total general insurance GWP declined in 2006

The motor insurance market recorded its fourth consecutive year of decline

Property insurance GWP rose very slightly in 2006

General liability recorded a significant fall in GWP

Accident and health was the only business line to record strong growth

Pecuniary loss GWP fell by 3.2%

The general liability, commercial property, commercial motor and pecuniary loss markets recorded a fall in GWP in 2006

The UK business parc is continuing to grow steadily with most of the impetus coming from the smallest firms

The majority of UK businesses have no employees

Distribution Dynamics

Introduction

Brokers continued to dominate the distribution of commercial insurance

National brokers have lost distribution market share to the direct channel, chain brokers and telebrokers

The direct channel increased its share of commercial insurance GWP by 1% in 2006

Affinity groups remain a small channel for the distribution of commercial insurance

Banks and building societies continue to play a small role in the distribution of commercial insurance

Organic growth remains a key strategy for brokers, although broker acquisitions remain popular

Brokers are keen to pursue organic growth

More than one fifth of the brokers surveyed have acquired a fellow broker

More than a third of brokers surveyed are considering planning an acquisition in the next 12 to 18 months

Increasing premium turnover and regional growth are the key motivations for planning a broker acquisition

The broker network model remains popular as many brokers wish to gain access to a larger panel of insurers

Over a third of brokers are part of a broker network

Many brokers joined a broker network to gain access to a larger panel of insurers

The proportion of brokers considering joining a broker network has decreased since the H1 2007 survey

Customer Focus

Introduction

Larger companies are more likely to have switched brokers between 2006 and 2007 while Jardine Lloyd Thompson performed well in terms of acquisition and retention

Companies with a large turnover are more likely to switch broker

Commercial clients are more likely to switch from a multinational than any other intermediary but overall those who switch are more likely to move to a smaller broker

Jardine Lloyd Thompson leads the pack in successfully acquiring and retaining customers, with Willis a close second, whilst Marsh and Aon in particular suffered negative net retention

Aon was the largest net loser of clients between 2006-7, shedding clients to brokers from both within and outside the top four

SMEs buy mainly through brokers and long-term relationships are the norm

In general SMEs are content with their insurance providers and satisfaction levels remain high

Retention levels among SMEs remain high with most staying with their provider for longer than two years

Almost 90% of SMEs are not considering a change of provider in the next year

A small group of SMEs are willing to switch provider in search of lower prices

Only 16 per cent of SMEs have changed insurance provider in the last two years

Premium costs are particularly a concern for those that have switched recently

One in 10 SMEs are considering switching their insurance provider in the next 12 months

Recent switchers show lower loyalty levels than other SMEs

Price is the dominant concern for potential switchers

Most SMEs would approach a broker if switching but some are open to alternatives

Brokers remain the top choice for SMEs to approach if they had to switch provider

Many SMEs are willing to consider alternative channels when prompted

Up to 44% of SMEs would consider using a bank as an insurance provider

Almost three quarters of SMEs would be willing to consider direct insurers, in the hope of cost savings

Many SMEs are open to purchasing insurance by telephone

Even more SMEs are willing to buy their insurance via the Internet, showing the potential of this platform

Commercial motor and property insurance are most likely to be purchased through alternative platforms

Alternative distribution channels face a number of challenges in attracting switchers

A core group of SMEs will not buy direct, as they believe that direct insurers are more expensive

Brand awareness in the commercial sector remains low, hampering progress for direct insurers

Over 50% of SME will not consider buying from bancassurers

Direct insurers and bancassurers also have to overcome the unwillingness of some SMEs to buy by telephone or Internet

Two thirds of SMEs consider purchasing commercial general insurance too complex for the telephone

A majority of SMEs view commercial general insurance as too complex for the Internet

Competitive Dynamics

Introduction

The market saw a number of mergers and acquisitions, many involving brokers

AXA acquired numerous commercial brokers in 2007, reinforcing its position in the SME sector

Groupama acquired a majority stake in Lark Group in August 2007

Direct Line began to offer business insurance in 2007

Equity Insurance Group recorded a large number of small-scale acquisitions

Towergate continued to acquire numerous brokers in 2007

Other brokers acquiring included Jelf, Giles, Broker Network and Oval

The top ten brokers have a market share of 96% of client turnover

The greater the turnover, the greater the market share of the multinational brokers

Of the companies in Datamonitor’s Insurance Broker Database, 22 arranged their insurance in-house

Aon acquired Footman James in 2007 and is looking to improve its claims process

Aon to use InterResolve to revolutionize claims process

Aon acquired specialist motor insurance broker Footman James in 2007

Willis is planning to grow its SME business and introduced a new commission structure in 2007

Willis aims to grow its UK SME business

Willis alters remuneration package by introducing 2.5% commission on top of all fees

Jardine Lloyd Thompson is to establish a new underwriting division and has said that a transformational deal may happen in future

Jardine Lloyd Thompson asserts independence from big 3

JLT bought niche personal lines broker Pavilion in 2007

JLT to establish an underwriting division

The Future Decoded

Introduction

The broker channel is dominant in UK commercial insurance distribution, however its share of the market is declining

Brokers are forecast to see a 1% decline in market share between 2007 and 2011

The direct channel will see its commercial insurance distribution share rise to 11% by 2011

It is anticipated that insurers will make more affinity deals with retailers and associations to sell commercial insurance

Banks are expected to retain a distribution share of around 1% between 2007 and 2011

Company staff and agents will see slight reductions in market share

APPENDIX

Definitions

SME

Definitions of ABI terms

Brokers

National brokers

Other intermediaries & brokers

Chain brokers & telebrokers

Direct

Other company agents

Utilities/retailers/affinity groups

Company staff

Banks/building societies

Written premiums

Methodology

Datamonitor’s UK Commercial Insurance Broker Competitor Database

Source of data

Industry sectors

Pages

Market Research Reports at ReportsandReports

Aug 11, 2010

UK Commercial Insurance Distribution 2010 now available at ReportsandReports

Related Post

Find Me at Bloggers

Blog Archive