Combining a generalist approach with specialist knowledge is essential for insurers seeking to differentiate themselves from the competition.
To be crowned Mastermind champion, contestants need to excel in both general knowledge and a chosen specialist subject. For most major insurers, the challenge is not much different.
Writing multiple lines of business will broaden an insurer’s market footprint and help it engage with more brokers and clients.
However, this generalist focus needs to be combined with specialist knowledge – it is only by having a specific understanding of each of its lines that an insurer can serve more sophisticated clients and create a sustainable and successful future for itself.
For example, where an insurer has nurtured a specialist level of expertise in a particular line of business, this gives it the knowledge required to better understand the needs of its clients operating in that particular market.
It is common sense that in understanding the risks that potential clients face – and the scale of the liabilities they have to manage – insurers are better placed to design the most appropriate risk management and insurance solutions for them.
This also extends to specialisms. Where an insurer is well versed in a particular market, it will know how risk profiles are changing, based on factors such as evolving legislation, developing business models and the increased use of new materials or commercial techniques.
Operating at this specialist level should allow insurers to identify the best risks in a given market and provide clients with the most effective insurance programmes available. This should deliver profitable results, and help the insured further improve their risk for the future.
For the generalist insurer that lacks such sector expertise, it will be difficult to deliver insurance solutions that are as well tailored to the specialist needs of their clients.
But not all generalist insurers seek to insure specialist risks – rather they choose to cover clients with simpler or packaged requirements, so this may not be an issue. There are insurers that have gone down this road and successfully attracted a wide client base by focusing their proposition purely on price, ease of transaction and brand.
However, this does not work for everyone. Where insurers want to cater for more sophisticated clients and deliver strong and sustainable results, a more in-depth approach – rather than a focus on price and convenience – is necessary.
Being specialist does not mean insurers have to operate on a monoline basis, but it does mean they have to genuinely understand the particular areas within each line of business in which they want to operate. They need to specify the exact parameters of their risk appetite and be disciplined enough to stick to them.
This means developing a specialism is not something that can happen overnight. When insurers move into a new market, it can take up to five years before they get the requisite amount of claims data to really understand all the dynamics at play – it is not an easy undertaking.
Longstanding insurers in a particular market will have built up expertise through hard-won experience. They will understand what minimises loss and what drives the best results, from both a claims and underwriting point of view.
However, expertise is not just borne of experience or longevity. It requires detailed research and proactive consultancy with sector practitioners and associated professionals. It also requires insurers to recruit – and then develop – talent.
By combining trading experience with a wide-reaching recruitment policy, insurers can generate the deep well of knowledge they need, and refine it over time through training and ongoing professional development.
For the larger insurers with big workforces, it is important to offer exciting and well-defined career paths to make sure talent is neither lost nor under‑utilised, and that people are encouraged to work in the areas to which their skills are most suited.
As an alternative to (or an extra tactic alongside) recruitment, it is possible for insurers to buy in significant levels of expertise through merger and acquisition activity– although it is not always possible to identify the right target, for the right price, at the right time.
Even where insurers can find and secure an appropriate acquisition, they should not look to rush their entry into a new market. No matter how much research and analysis they carry out, there will still be things they have to learn through trial and error.
There are likely, for example, to be operational issues to resolve around the acquisition, so great care should be taken in adjusting the volume of business written and stress-testing the new venture. This is certainly the case where the new venture has been set up from scratch.
When insurers seek to move into new markets and prove themselves as sector specialists, a great deal of their future credibility will depend on how they manage their market entry.
Yes, there will be hiccups, but if they are unable to manage them positively and consistently maintain their commitment to the new market, it will be extremely difficult to retain the confidence of brokers and develop the expertise they are after.
And the hard work does not stop after the initial stages. Once that expertise has been created, it is important to use it effectively. Sector-specific knowledge will help an insurer design and deliver the most appropriate insurance programme for its clients.
However, insurers do not have to do it alone. Where they can pass on that expertise to broking partners, it will help them win more business and develop more profitable accounts. Clearly this is hugely beneficial for both the insurer and the broker.
Brokers have demonstrated a substantial hunger for in-depth, tailored training – and this is exactly what specialist insurers can provide. Working with individual brokers to discuss the nuances of their particular client base and overcome any technical issues is one way insurers can put their expertise to good use.
Similarly, training seminars provide a platform for insurers to share their knowledge and give brokers the market insight they need to differentiate themselves from competitors.
Close collaboration of this type enables insurers to spell out their risk appetite in great detail, and it also helps brokers see which of their clients would be best suited to the proposition on offer.
The best insurers are also working hard to make access to detailed information as easy as possible for their broking partners. In addition to personally delivered material, there is also a wealth of written, audio and video information available online.
Indeed, not only are the best carriers looking to create knowledge banks that brokers can use for themselves, they are also going the extra mile and enabling brokers to brand much of that content as their own, and use it to populate their own websites and to present it to their own clients.
The level of knowledge insurers provide – and the way they share it with brokers – will help reinforce their credentials and differentiate them from competitors. Brokers are keenly aware of exactly what each insurer provides, and are determined to take advantage of the best training and the best technical information to improve their own performance.
Providing information and expertise not only develops the relationship between insurer and broker, but it also generates the potential to produce greater volumes of the desired business in the future.
The appetite for professionalism among insurers sits very comfortably with the move many of them are making towards offering a more specialised proposition in each of the lines of business they write.
Professionalism is all about in-depth understanding, excellent technical knowledge and superb service. Where insurers can develop and maintain a particular expertise, they will be able to demonstrate this through each of the above three factors.
It is also important for brokers to set out their stall to clients and detail exactly what they are providing. Most brokers are looking to provide more than just the cheapest premium, and in setting out exactly the services they offer, the understanding they have of a client’s needs and their ability to meet them, brokers can instil confidence in their clients and set themselves apart from their peers – all enabled by strong communications from insurers.
The professionalism agenda, therefore, pulls the best insurers and brokers together and helps them create a compelling and effective proposition for their clients.
Just because general insurers are underwriting a portfolio that runs across many different lines of business, it does not mean they cannot be a specialist in each of those individual areas.
Indeed, if they have not analysed, understood and outlined their particular risk appetite in each line of business they operate, it is unlikely they will be able to offer the most suitably designed products. For brokers and their clients, such a proposition is hardly likely to be attractive. For insurers, the time starts now.
John Dawson, head of distribution, Zurich
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