Specialise to prosper

For brokers, the insurance market for SMEs is vibrant but very congested. Many small businesses still choose to use brokers to buy their cover, so it's vital for them to make it easier for clients to pick them out from the bunch.

A lot has been said about how the UK insurance market is now mainly based on price. But many people have individual requirements that might not be reflected in cheaper, generic products. Tuning into customer needs could be the key to thriving, rather than simply surviving in today's tough climate.

After 30 years in this business, spent working in the UK, Europe and the Middle East, I've become a great believer in brokers specialising in schemes for particular trades or affinity groups. I've seen brokers turn their passion into a winning business formula; others have become experts in a field by dealing with particular trades over many years, while some have simply stumbled on a niche.

But, in my experience, they've all found that making themselves specialists in their chosen field, whether that's beekeepers or electricians, has really helped to set themselves apart from their rivals.

Boiling it down, it's simply about giving clients what they want. But also, if your product is the best, it doesn't necessarily have to be the cheapest.

With schemes that are based simply on price, brokers may keep clients for only a year and may find they've actually made a loss on them when they leave.

But if you've spent time building a brand name for good, specialised products and services, then you're likely to keep your customers for much longer than that.

Taking time to find out about a particular group's needs means you can approach insurers to discuss a specially tailored cover that solves those problems.

If you have plenty of the same risks, then it becomes quicker and more efficient to transact business with an insurer. You develop strong links that offer you direct access to the underwriter.

That, in turn, helps to keep down the price. If you bring an insurer a lot of the same risks they can do more actuarial analysis, which may lead to a more accurate price. It will also help ease the claims process, because claims handlers will also have built up a better understanding of that particular business.

Through offering schemes we have seen brokers grow their businesses and expand despite the economic turmoil. It's one of the few bright lights in today's tough market.

But a word of warning: do your homework to find out whether your passion may also make you money. From the large number of golf club schemes out there it's not hard to work out the favourite pastime of many brokers.

John Heaney, head of Professions and Speciality Commercial, Hiscox UK