Perhaps it’s a half full / half empty scenario and depends from which angle you look, but data and analytics firm GlobalData has new insights on commercial insurance distribution in the UK that you might want to think about.
In its new report “UK Commercial Insurance Distribution 2018,” GlobalData examined distribution trends and how purchasing behaviours and preferences are impacting market share. In particular, it took a closer look at SMEs and the growing slice of the pie for “brokers”.
For commercial insurance distribution in the UK as a whole, GlobalData cited brokers’ dominance, with an estimated footprint of £13.3 billion in 2017. In terms of business size, brokers are said to be getting a piece of the action in the SME market as well – albeit through other means.
“The broker channel had been steadily declining up to 2016, but the emergence of the digital channel in commercial insurance has reversed this,” said Ben Carey-Evans, financial analyst at GlobalData. “Price comparison sites, which are classed as brokers as they refer customers on to insurers, have established a foothold in the small and medium-sized enterprises (SME) market, and innovative, modern brokers, such as Simply Business, have also taken shares from more traditional brokers.”
According to GlobalData, with larger businesses almost never going direct as they need brokers’ advice, movement in the commercial market is shaped by what goes on in SME insurance. It attributed the rise in online cover and price comparison sites to the nature of smaller organisations – whose owners, such as sole traders, often do not have the luxury of time nor do they purchase intricate policies.
GlobalData’s 2017 UK SME Insurance Survey showed that price comparison sites hold 14.6% of the overall SME market.
“A lot of the policies aimed at sole traders and micro SMEs are very similar to personal lines products, such as motor and tool cover for tradesmen, meaning that the crossover from personal lines – where price comparison sites have had great success – is natural for the customer and insurer,” added Carey-Evans.
Do you think price comparison sites should be considered part of the brokers group and, thus, an expansion of the non-direct channel? Or are they an entirely different classification competing against brokers? Let us know by leaving a comment below.
