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With capacity expected to constrict even further next year, more and more brokers will likely be hoping that delegated authority (DA) arrangements will help them to grow their business in a very challenging marketplace. They will want to partner with solid insurers on these schemes and of course provide excellent products and services to their all-important customers.
But from the other side of the fence, what are the carriers really looking for when striking these DA deals? Gary Head, Director of Delegated Authority business for AXA UK, lists some of the qualities and skills that insurers look out for in brokers when forming a DA partnership.
Like in other relationships, compatibility comes more easily if the two parties complement each other. The insurer will be keen to partner with a broker who can reach a customer segment that it can’t – or won’t – reach itself. Certain risks require targeted marketing, deep understanding and thorough expertise, which larger carriers may not have the experience of or may not want to specialise in. For example, designing the right cover for a street food vendor or an ice cream van is not the same as providing business insurance for a restaurant. And the risks involved with protecting a scaffolding company differ vastly from those being assessed when offering off-the-shelf construction cover. To assess, mitigate and underwrite these risks well, you’ll probably need scaffolding experts on your team, who can keep up to date with the latest techniques and developments and who know exactly what constitutes safe practice.
That is one of the reasons why good delegated authorities tend to be so niche. Insurers choose their DA partners for their market access, specialist knowledge and/or their rare skills. These key factors can be specific to a professional occupation, a particular industry sector, sport or leisure activity, or even a regional way of doing things.
However, that doesn’t mean that a carrier will partner with just any partner calling themselves a specialist out there. It will want to find the right type of people: brokers with strong professionalism and who are in it for the long term. It will want them to have the right culture and attitude: they will need to be customer-focussed and obsessed with creating good client outcomes; they will need to tailor their products to their customers’ needs. Besides that, they will need to have the right capabilities: historical data, underwriting skills, a clear business plan and a realistic marketing strategy. They will also need to supply the insurer with the management information required to meet their all-important governance and regulatory requirements. If they simply pay lip service to this crucial part of the partnership, then it is doomed to fail from the get-go.
Finally, these brokers will need to understand the value chain and ensure that they deliver value for all parties – the customer, themselves, any retail broker, and last but not least, the insurer who foots the bill at the end of the day. To achieve that, transparency can go a long way – and this will ensure that the customer is paying a fair price for a quality product which has a demonstrable value to them.
Most brokers deal with several insurers, not just one, and all insurers need to check the same things, including governance and business continuity plans, but they all do it in a slightly different way. Now in the interests of transparency, simplification and delivering value to customers, carriers are looking for ways to harmonise those checks. Insurers could create a portal in an agreed format where brokers would submit relevant documents – business continuity plan, for instance – just once. That would be pragmatic, it would make life much easier for brokers and it would crucially contribute to a better outcome for the end customer.
That is how a great DA relationship should work: the broker brings their niche expertise and market access, the insurer brings their capacity, brand and solidity – and with industry cooperation, some simplicity – and the end customer benefits from all of that. It really is a win-win-win relationship.
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