Chubb's Sara Mitchell on how insurers and brokers must service the mid-market

Sara Mitchell, head of corporate division, UK & Ireland, Chubb

  • The mid-market is challenging for insurers and brokers because of the diversity of its businesses
  • Packaged policies are not suitable for these businesses
  • Insurers must support them through product innovation and responsive customer service

The middle market is the engine room of the UK economy and insurers should work closely with brokers to support the sector, says Sara Mitchell, head of corporate division for UK & Ireland at Chubb.

The danger when considering the middle market is to define it by what it isn’t. It isn’t the home-based start-up; it isn’t the 12-person IT business taking on new premises; it isn’t the major international pharma company with offices and laboratories in five continents. It’s the thing between those extremes. It’s the middle – the heartland of the insurance industry.

Thinking about it in those terms offers a very passive view of the UK’s middle market. This is arguably a flaw in the way the insurance industry has traditionally viewed this broad and diverse segment. After all, it’s human nature to comprehend something by sensing its extremities or its boundaries – how it interfaces with the rest of the world. Where the middle market is concerned, this risks losing sight of the foundations of the businesses that form it.

So let me offer you two observations about the middle market. First, it’s a sector that flourishes outside the capital. While large global accounts tend to huddle inside the M25, mid-sized corporates are just as comfortable in the UK regions, Scotland and Ireland. This means that regional and independent brokers play a much greater role in this sector, many of them placing tens of millions of pounds of revenue with insurers, alongside their national broker counterparts.

Second, the mid-market is growing – and doing so more vigorously than either of its neighbours. Whether mid-sized businesses are less exposed to the vagaries and general uncertainty we are experiencing in the UK or are better adapted to the rigours of the current economic conditions are moot points. The net result, however, is that while we are experiencing undoubtedly tough market conditions, we are also seeing some aggressive actions that could undermine insurers’ credibility and our market.

What is significant is that during this period of considerable change and unpredictability, the UK’s mid-market is playing a pivotal role in shoring up UK PLC’s balance sheet. According to accountants Grant Thornton, mid-market firms are increasing revenue by an average of 6.7% per year. And that contribution is set to rise. Recent data reveals that the UK economy will receive an 18% boost from these companies over the next five years, climbing from £285bn in 2015 to £335bn in 2020. Growth is a key part of this contribution, but as one mid-market CEO commented in the media, mid-market firms cannot grow without the necessary financial, regulatory, legal and professional support – which is surely our cue, if ever there was one.

The mid-market is particularly challenging for the insurance market because of the sheer diversity of businesses and the changes they will undergo. These are firms that may be exporting to the US for the first time or leasing new premises in different parts of the country. SME-style commoditised packaged products are no longer suitable, but they will probably not yet have developed a fully-fledged risk management capability. This is why the broker’s role is so important – and what brokers are looking for are holistic solutions, not short-term pricing and silo thinking.

It’s clear that the UK is relying on its middle market to be the engine room for the economy, which means it falls to UK insurers to do their utmost to support this sector, be that through product innovation or responsive customer service. That means working closely with brokers, who don’t want to spend hours placing any accounts with underwriters who fail to understand the complexities of this dynamic market.

The middle market has got its act together. It’s time for insurers to do the same. Being stuck in the middle is no longer an option. We need to be here by choice.

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