As a business strategy, the diversification of products and services can present a wide range of benefits from offering increased variety, boosting a brand’s reach and protecting a firm from competitors. But as discovered by the team at Financial & Legal Insurance Company (FLI), the reverberations of diversification go far beyond just external considerations.
Sitting down with Insurance Business to discuss the diversification strategy that she has helped lead as managing director, FLI’s Karen Beales (pictured) highlighted how the firm had broadened its scope to add specialist ancillary motor products to its traditional remit as an LEI insurer. Beales joined FLI a matter of weeks before the UK was plunged into the first COVID-19 lockdown and the pandemic merely added to an already troubled after the event (ATE) landscape.
“Historically, FLI was predominantly a legal expenses insurer and, more predominantly, ATE legal expenses,” she said. “When I joined, part of our strategy was to diversify the products that we are writing and look to extend into other general insurance products rather than ATE which are single policies for a single accident and loss that have no longevity to them.
“We’ve now expanded our BTE [before the event] products hugely – we’ve more than doubled our policy count in the last 12 months, from about 700,000 to about 1.5 million. And we’re ready to launch our new motor ancillary products, after a period of seeking regulatory permission and doing all the necessary market research.”
In addition to the new customer base and expanded product proposition that this diversification has offered FLI, Beales noted that its diversification efforts had gone down well with its broker partners. The products have initially been targeted at the broker contacts the firm has already established and she believes that a lot of its success has been down to the fact that brokers can now come to FLI as a single source for all their LEI and motor ancillary products requirements.
Insurance brokers typically like a straightforward, simple solution, she said, and they like to work with partners they know well and who they understand. Being able to offer a real range of products instead of just very specific or niche products has strengthened FLI’s broker partnerships. It also means partners are less likely to move on as having a broader relationship with them offers the opportunity for exponential future growth.
The Civil Liability Act saw ATE products and services take a substantial knock so it was to the advantage of FLI that it had already waded into the BTE space. And the firm’s diversification has also had positive ramifications for FLI’s team as well as its partners.
“It does give longevity to colleagues,” she said, “From their perspective, they weren’t sure what was going to happen post-CLA either. So, this whole range of new products means that they’ve got confidence that we’re here for the long term. These [products] are now annually renewable as well so, it’s not like the ATE one-off policies, there’s a longevity to our new product range. And they continue to see opportunities for them as individuals which is great for the business as well as those individuals themselves.”
To complement and accentuate its diversification, FLI has also been building out its internal team and has recruited a commercial director and head of risk and compliance who will be joining the firm in the coming weeks and months. It will also be making further recruitment drives in its claims and underwriting teams as well, she said, and while recruitment is a challenging market right now, its new proposition has the FLI team feeling confident about attracting bright new talent looking for diversified opportunities.
“I think to recruit individuals, that whole diversification model - across the collective group of companies, as well as just individually within FLI does appeal,” she said. “It’s not a single product or a single type of distribution, it’s giving them something different. That’s for the individuals who join but also for our current colleagues who are already working with FLI. It’s giving them the opportunity to maybe digress into different types of products to claims handle or underwrite. So, it makes their jobs more interesting.”
2022 and beyond is looking bright for FLI and for Beales as MD, particularly as the UK moves into a post-COVID environment. Joining just as the business went into lockdown came with its own challenges, she said, and she’s seizing every opportunity to get back into the market and meet with colleagues and partners alike while promoting FLI’s new product range and plans for the future.
“We’re just continuing to do what we’re doing,” she said. “We’ve had a transition period where we’ve been getting the regulatory permissions. We’ve been through that process so now we’re confident and want to grow the business in a steady manner. We don’t want to grow too quickly, we want to make sure we can manage the business that comes into us.
“We’re on a managed transition into a much larger and more interesting business. It’s very exciting times for us. Certainly from a shareholder point of view, it’s exciting for them as well because they’re seeing the growth of the business in new and different product lines.”
