Press release affinity and partnership marketing in uk commercial non life insurance
Online aggregators have revolutionised the distribution of personal lines insurance in the UK. However, they have not repeated this achievement for commercial non-life insurance, and themselves rely on specialist brokers for selling commercial liability, property and professional indemnity insurance.
Published on: Mar 4, 2016
Transcripts - Press release affinity and partnership marketing in uk commercial non life insurance
PRESS RELEASE Over 40% of potential distributors of commercial non-life insurance have established an affinity scheme Towergate, RK Harrison and Bluefin are the leaders by number of schemes managedLondon, 25 March 2013 - Online aggregators have revolutionised the distribution of personal linesinsurance in the UK. However, they have not repeated this achievement for commercial non-life insurance,and themselves rely on specialist brokers for selling commercial liability, property and professionalindemnity insurance.This is one of the findings of Finaccords new report Affinity and Partnership Marketing in UK CommercialNon-Life Insurance, which analyses the distribution of commercial lines through a wide variety of actual andpotential affinity distribution partners. Most notably, these include professional and trade associations plusother types of organisation such as automotive associations, banks, building societies, online aggregatorsand brokers, sports organisations and trade unions.In total, Finaccord investigated 1,320 organisations and found that 535 of them offer at least one type ofcommercial insurance policy, or 40.5%. This rate exceeds 50% for three categories of distributor, namelysports organisations (84.2%), online aggregators and brokers (70.0%) and professional associations(53.2%). This data is shown in Graphic 1 overleaf.However, it should be added that sports organisations and professional associations tend to offer a limitedrange of policies to their members, concentrating on commercial liability and professional indemnityinsurance, respectively. In contrast, online aggregators and brokers typically offer multiple types of cover,including commercial liability, motor, property, and professional indemnity insurance. Across all thesecategories of distributor, only trade associations offered a fuller range of policies, on average.Nevertheless, there is a major difference in approach between more traditional insurance brokers such asEndsleigh, Hastings Direct and Swinton, and online aggregators. While brokers usually offer policies thatthey intermediate themselves in the normal manner, the major online aggregators have usually formedpartnerships with other brokers to act on their behalf, with the exception of commercial motor insurance.In particular, Towergate Underwritings YOUR Insurance brand works with both Comparethemarket.comand Confused.com (for commercial liability and property risks), while Simply Business is used byGocompare.com, Moneysupermarket.com and Tesco Compare (for commercial liability, property andprofessional indemnity insurance)."By its nature, commercial insurance requires more specialist underwriting than personal lines and there arefewer underwriters active in some of these fields, so it makes sense for aggregators to work with brokers forthese policies" comments David Parry, Managing Consultant at Finaccord. "Commercial motor insurance isan exception where the aggregation model works well - in fact, affinity and partnership marketing schemesrun by most types of distributor rarely include commercial motor insurance, because aggregators andspecialist motor insurance brokers handle it best".Across all of the distributors examined by Finaccord, brokers were found to be the most important type ofpartner used for commercial affinity schemes. Finaccord identified a total of 1,345 of these initiatives,counting a partnership for, say, commercial liability and motor insurance as two separate initiatives, sincedifferent underwriters can be involved for the different risks. In total, more than 80% of these commercialaffinity schemes are organised through a broker, sometimes with one specific insurer used to underwrite therisks.
Finaccords research also ascertained that a very large number of brokers are active in the commercialaffinity market, since it involves a wide variety of distributors across a range of industries, each with differentinsurance needs. Finaccord identified a total of 228 brokers involved in at least one of these schemes,running a combined total of 1,264 initiatives between them.In this highly fragmented market, only four brokers held a share of 3% or more of this total, led byTowergate, which is the clear leader measured by number of partnerships at 8.9%. It is followed by RKHarrison (4.0%), Bluefin (3.3%) and Giles Insurance Brokers (3.0%). This data is shown in Graphic 2overleaf. In addition to the online aggregators mentioned above, Towergate also works with the RAC andseveral trade associations, notably the Federation of Small Businesses."Affinity and partnership marketing can require detailed knowledge of an industry sector, and RK Harrisonworks with several trade associations where it has this expertise" concludes David Parry. "The otherapproach is to handle a high volume of small businesses, which is the strength of Simply Business.Towergate is exceptional because it combines both of these approaches, for example acting as broker formembers of the United Kingdom Home Care Association and for customers of Confused.com". --- END ---Media contact: Roberto Napolitano, +44 (0)20 3008 4406, firstname.lastname@example.orgFinaccord is a market research, publishing and consulting company specialising in financial services. Itprovides its clients with insight into and information about major issues in financial services in the UK,Europe and globally, with a particular focus on marketing and distribution topics such as affinity marketing,bancassurance and strategic alliances. Finaccords research titled Affinity and Partnership Marketing in UKCommercial Non-Life Insurance covers the distribution of commercial liability, motor, property, professionalindemnity and specialised insurance by 1,320 organisations. It is one of a series of reports, with other titlesconcentrating on personal non-life insurance, life insurance, retirement products and financial advice, pluspayment cards and consumer finance.Sample graphics from the research, showing respectively penetration by category of partners and brokershare of product relationships of affinity and partnership marketing schemes for commercial non-lifeinsurance.
Graphic 1: Affinity and partnership marketing schemes for commercial non-life insurance: provision rate by category of partnerBanks, building societies and lenders 18.1% Lif estyle organisations 41.9% Online aggregators / brokers 70.0% Other 11.7% Prof essional associations 53.2% Sports organisations 84.2% Trade associations 43.3% Trade unions 30.5% Average 40.5% 0% 20% 40% 60% 80% 100%Source: Finaccord PartnerBASE
Graphic 2: Affinity and partnership marketing schemes for commercial non-life insurance: broker share of product relationships Towergate, 8.9% RK Harrison, 4.0% Bluef in, 3.3% Giles Insurance Brokers, 3.0% The Insurance Partnership, 2.6% Perkins Slade, 2.5% Jelf , 2.1% T.H. March, 1.9% other, 71.5%Source: Finaccord PartnerBASE