MMA has today revealed a new study that suggests a significant uptake in the number of brokers undertaking schemes work.
According to the new study half of UK brokers now manage schemes. However, differences can be noted across the regions with brokers in the South West and Wales being the most likely to run their own schemes. Size was also a factor: 61.4% of national brokers managed schemes compared to 49% of super regionals and 45% of regionals.
When looking at factors that encourage brokers to change their scheme provider, unsurprisingly the number one factor that motivates a broker to transfer a scheme is the level of commission. 48.% said that the prospect of better commission with another insurer would persuade them to transfer the scheme.
Poor service was the second most common reason cited for moving a scheme (42.7%) with the lack of an effective working relationship coming in third (27.4%). Factors such as the incumbent insurer’s perceived lack of knowledge of a sector, local knowledge, online services or better policy wordings had virtually no impact on brokers’ thinking.
The study also revealed the regularity that the majority of schemes will be re-tendered, 16.9% re-tendered annually and 13.7% every two years. The most common frequency for retendering is every three years with 29% of schemes. 72% stated that the current economic climate had not been a factor in encouraging more regular retendering of schemes.
Commenting on the study, MMA’s Schemes Manager Chris Withers said: “It’s fascinating to see that insurers make great play of valued added services to attract schemes when the brokers are saying that service and remuneration are the two things that really count.
As a relative newcomer to the schemes market, MMA’s focus has been to work with brokers to understand their needs, to offer a superior service and develop better, more suitable products. We create bespoke propositions with a strong focus on a level of remuneration which reflects the amount of work undertaken by the broker together with the volume and profitability of business delivered.
“Accurate market data about the volume of schemes business in the UK is scarce, so the fact that half of all brokers are now managing their own is tangible evidence of how important they’ve become for the sector. All our figures suggest that schemes business across the market will continue to grow, and the same is true of our own book of schemes business. This is an area in which we see the potential for significant growth in the medium term.”
Source : MMA
