EXECUTIVE SUMMARY
Brokers remain dominant in a market shifting towards online purchasing
Key findings
Critical success factors
COMMERCIAL INSURANCE: THE DISTRIBUTION CHANNELS
Introduction
Brokers remain dominant despite growth in other channels
The complexity of commercial insurance sustains the dominance of the broker channel
Brokers are becoming less significant in the distribution of uncomplicated products
The distribution of SME insurance is moving away from brokers
SMEs are purchasing commoditized commercial products online
The direct channel is competitive against brokers within the SME market
Micro enterprises are driving the growth of price comparison sites, whereas small and medium enterprises are driving the growth of the banking channel
Commercial insurance distribution and the direct channel
Insurers are growing their direct channels
Product commoditization has limited scope within commercial insurance
Only a few commercial insurers have developed a direct proposition
AXA’s commercial direct offering is now digital-only
Direct Line for Business offers customers a range of additional online features and service options
Hiscox offers guidance to help customers build their own insurance package
NFU Mutual offers a traditional broker-like direct service
Aviva has brought back its direct offering for commercial insurance
Allianz has a long-established direct offering called Premierline
Price comparison sites and commercial insurance distribution
Aggregators target SMEs with commercial insurance products
Price comparison sites’ commercial offerings are in partnership with Simply Business and Towergate’s YOUR Insurance brand
Moneysupermarket.com and Comparethemarket.com are favored by SMEs
Banks and building societies and commercial insurance distribution
Banks and building societies are the least used channel through which commercial insurance is purchased
Banks have the potential to cross-sell insurance with their existing business services
Barclays and Lloyds are the leading banks providing SME insurance
Barclays’ business insurance is underwritten by Allianz
Lloyds Bank tailors its business offerings by company size
BROKERS AND THE DISTRIBUTION OF COMMERCIAL INSURANCE
The broker landscape is dominated by the top few global brokers
Global brokers have the largest share of commercial insurance revenues
The broker landscape is dominated by the top few global brokers
JLT is now the UK’s largest broker
Marsh is expanding into the UK SME market through acquisitions
Aon’s revenue remains steady year-on-year
Willis merges with Tower Watson to offer insurance broking and consultancy
Growth has slowed for Arthur J. Gallagher as it integrates its acquired businesses
There is a downward curve in revenue from global brokers to provincial brokers
National brokers handle significantly less GWP than global brokers
Super-regional brokers’ revenue is representative of their varying stages of growth
National, super-regional, and provincial broker growth strategies
Brokers are looking to use their existing products and expertise to grow
Brokers look to create a multi-channel distribution strategy by growing online
Acquisitions are an effective way to rapidly grow revenue
Brokers are using social media to engage with clients
National brokers are looking to expand their range of online services
Super-regional brokers have prioritized online quotation systems
Provincial brokers are less concerned about developing their online propositions
THE FUTURE OF UK COMMERCIAL INSURANCE DISTRIBUTION
The Insurance Act 2015 will modernize UK commercial contract law
UK insurance contract law is undergoing transformation
The Duty of Fair Presentation will pass disclosure responsibility from clients to insurers
Remedies for non-disclosure will be proportionate to the breach
Warranties will now only suspend cover until a breach has been remedied
Insurers can now only recover sums paid since an act of fraud
Insurers will have to highlight disadvantageous terms
The Insurance Act 2015 will have a positive effect on the commercial insurance market
How will the distribution landscape change in the coming years?
The SME market will become more dominant within commercial insurance
The decline of the non-SME market will cause brokers to lose share
Online offerings will rule for SMEs regardless of channel
Micro and small-sized enterprises will drive change in the SME market
The future of the SME market will be indicative of future commercial distribution
APPENDIX
Abbreviations and acronyms
Definitions
Brokers
Direct
MGA
SME
Methodology
Primary sources
Secondary sources
Bibliography
Further reading
About Verdict Financial
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