When you think of the heartlands of insurance, what springs to mind? The City of London’s financial district is sure to top most lists, while hubs in New York and Singapore may not be far behind. Then there are popular offshore destinations like Gibraltar or Malta, or maybe an up and coming city like the home of BIBA’s annual conference, Manchester.
Or, then again, how about… Falkirk?
It may not seem like an obvious insurance hub but, once a year at least, the Scottish city becomes exactly that – playing host to the BIBA Scotland event, an annual gathering of brokers north of the border to debate the issues that matter to them. Indeed while Falkirk may not be the ‘obvious’ choice for such an event that perhaps a Glasgow or Edinburgh would be, it is perhaps a more ‘authentic’ option. It casts aside the glitz and glamour that often accompanies BIBA’s Manchester showcase - with appearances from celebrities, and future Prime Ministers issuing their intentions to run for office - and replacing it purely with brokers, insurers and MGAs gathering together in one room to discuss the issues that truly matter to them.
So, what is on the insurance industry’s mind in Scotland? It seems there are plenty of issues front and centre.
“Brokers are under pressure from insurers – winning new business is a major challenge,” said Derek Cluderay, account manager for North East and Scotland at Commercial Express, speaking to Insurance Business at the event. “Overall, it’s about trying to find new ideas to win new business.”
“The main challenge in our sector is risk appetite,” added Damon Clulow, senior credit insurance consultant SME and major new business, Scotland, at Euler Hermes. “There is no question that Brexit has brought the economy some issues and we are juggling, sometimes, to provide the level of cover that clients are looking for.”
“Some of the challenges brokers have spoken to me about are around capacity – many of the Scottish insurance offices are no longer there or you have to have a certain sized book of business to use them, otherwise you have to use an HQ down south,” said Graeme Trudgill, executive director of BIBA.
However, as Trudgill points out, while the discount rate in Scotland is slightly different to that in the rest of the UK – and so too are the injury awards – ultimately, the countries “have the same regulator, the same insurance companies, and most of the laws the same.” That means, he states, “most of the challenges are the same” – something BIBA CEO Steve White concurs with.
“It’s a hardening market on both sides of the border,” said White. “Capacity isn’t perhaps as freely available as it once was. One of the challenges there is that there is a generation of execs that haven’t lived and worked through a hardened market – they’ve never had that conversation with customers before about premiums going up. When it’s a soft market you’re having a fairly simple conversation with your customers about reducing premiums but here you’ve got premiums going up – customers aren’t used to it, account execs aren’t used to it, so there’s a training development issue that brokers are going to have to work their way through. It’s not necessarily unique to this market but it’s certainly prevalent here.”
So, what are the solutions to these issues? According to White, it’s about getting back to “old fashioned broking.”
“It’s getting to know more about your customer, having earlier conversations with them and utilising the relationships you have with your underwriters,” he said. “You will have developed those relationships during a soft market and now is the time to really call those relationships in and make sure you utilise those.”
Trudgill agreed that relationships are vital during this period.
“Insurance is a people business and we have most of the Scottish market here talking to each other,” he said. “Those relationships are really important – when there’s a claim and you need to make sure it’s paid it’s really important to have those relationships in place for the hard times as well as when you’re placing the business.”
Cluderay meanwhile, had advice for brokers looking to stand out in an often “oversaturated” Scottish marketplace.
“Try and look at niche areas that not a lot of brokers going after,” he said. “For example, you have a lot of brokers going after property and construction – trades where they feel they are more guaranteed to get business. But I feel they need to start looking at more niche areas.
“The emergence of insurtech is something they need to look at as well. Consider the client experience – from the brokers that I know, that’s what they are looking into. They are preparing for the future.”
